Protect Your Savings from a Potential Financial Storm

4.21.23: Audio automatically transcribed by Sonix

4.21.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Money Matters with Mike, with your host, Mike Zaino. Get set for a full hour of financial information and economic news affecting your bottom line. Mike works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Mike Zaino.

Mike Zaino:
What's up? What's up? What's up? It's Mike Zaino coming to you from Fort Mill, South Carolina. Happy Saturday, people. What a great time to be alive in these United States of America. Money Matters with Mike is a show designed to arm you with information and give you plenty of meat on the bone to chew on each and every single week. And today is no different. We are absolutely bringing the heat again. On today's show, we are going to prepare you to buckle up because the earnings recession is about to start. As always, I have the distinct honor and privilege of being joined by the one and only my co-host and producer extraordinaire, Mr. Matt McClure. Matt, how are you doing today?

Producer:
I'm doing good, Mike. I'm getting my my seat belt ready to buckle up here. We've got a great show over the next hour, I feel like. But it's, you know, it's sort of, I don't know, maybe going to cause some uneasy feelings for people. But but the point is, despite all the uneasiness, there is hope. And you can prepare for whatever is to come.

Mike Zaino:
Absolutely. The the the the biggest issue is proper prior planning prevents pitifully poor performance. Right. And so today's show is going to be about preparing you for the earnings recession that's about to start. Words are hard today, Matt.

Producer:
It's the first day with your new tongue and I know it's no big deal. No big deal there. But folks, if you hear anything that you are interested in this hour or that piques your interest or, you know anything that you have more questions about, feel free to reach out to Mike Zaino. Go to MoneyMattersWithMike.com. That's the website for the show MoneyMattersWithMike.com. You can get some past episodes of the show there. Actually all the past episodes of the show that we've got for for several months back now. You can get all of those episodes and really get a lot of great insight into what is going on, not only in the economy as a whole, but kind of how you can really weather, as we say, whatever storm is on the way. You know, we've got stuff that we've been through over these last several months and that we've come out on the other side of. And there is more to come because it's you know, the economy is a cyclical thing, right? We have the ups and downs all the time. But you can go to MoneyMattersWithMike.com also and not only get all those past episodes but reach out to Mike with any questions that you might have or reach out for a free consultation.

Producer:
We'll talk more about that as the show goes along. You can also call 704 560 1573. Mike always has his phone on him. He's got it on him right now and he will answer it. And if he doesn't answer, I can guarantee you he'll get back to you because that's just the kind of guy he is. All right. Well, Mike, we got a lot of great stuff coming up here. We're going to really share some insights on the economy in general and how people can really, as we say, weather that storm. Paul Dietrich is a is a chief investment strategist. And I know that he sends out kind of a newsletter every so often. You are a subscriber to that. And a lot of the stuff that we're going to talk about today is really stuff that that comes from those great insights that he has. And he's been doing this, you know, money management thing for a long time.

Mike Zaino:
Yeah, and he's not the only one. There are several chief investment strategists, there are several economists that all believe that we are on the brink of something that they're likening to the Great Depression. I don't say that for to fear monger, because that's just not my style. But you'd like to know that it's on the way. That's why tornado warnings, sirens go off, right, to, you know, just make people aware of the impending danger. And hopefully we're going to sound the alarm today enough to where people kind of wake up and take control of their own financial situation and might be able to protect themselves from from experiencing what could be especially for those of you who are in that retirement red zone, those five years before and the five years immediately in retirement a cataclysmic type event. Yeah.

Producer:
And it's and again we don't say these things just to to scare you or to, you know, make you sit up in your chair and go, Wait, what? You know, can I get an extra dose of my blood pressure medication, please? No, that's not the point here. The point is so. That you can be prepared for whatever is to come. And so we'll have a lot of analysis and talk over this next hour about what could very well come around the corner. And, of course, we'll take a look at, you know, the the sort of, I guess, those telltale signs that that economists look for when they're trying to predict a recession. That is going to be a little bit later on in the show as we take a look at those leading economic indicators. Right. And those flashing red lights, like you say, Mike, to to warn us about what is coming around the corner, what could very well be coming anyway. So we'll get to that here in just a moment. First, though, as we kick things off, let's get into it with our Quote of the week.

Producer:
And now Folsom Financial Wisdom. It's time for the quote of the week.

Producer:
And our words of wisdom this time around might come from Warren Buffett. He is obviously a wise person when it comes to money because he's made a heck of a lot of it himself. And he said this, quote, I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful and you try to be fearful when others are greedy. Um, I like that because, you know, there's a lot of fear going around right now. And so, hey, maybe, maybe at least according to Warren Buffett, it's the time to be greedy, you know?

Mike Zaino:
I mean, yeah, there's a lot to be said for contrarian investing, which is doing exactly what he has done. And obviously he's made himself a very, very, very wealthy man. But for the layperson, you know, I think that those those kind of folks just need to be prepared one way or another and decide whether they're going to, you know, dip their toes in the water with a little bit of caution or whether they're just going to dive in head first without really knowing what lies underneath the crest of the water. So we talked about last week, you know, the things that we've seen literally so far this year. The second and third largest bank collapses in history. Multiple different companies across the globe that are ditching the United States dollar. You know, for the Chinese yuan. Think about that. Interest rates, you know, where were at the highest level that we've seen in 15, 16 years. Since 2007, we saw President Trump get indicted, the first US president to ever face felony criminal charges. We we talked about the fact that corporate bankruptcies are at a 12 year high just in the first couple of months so far in 2023, and that the debt to GDP ratio is higher than in any time. Think about that in any time post World War Two. So that's just in the past couple of months, since the beginning of the year, in the last three years, we've seen a whole bunch of stuff. What do we see there? Well, the largest pandemic in over 100 years, almost $6 trillion in printed stimulus money.

Mike Zaino:
We saw them literally drop the interest rates to zero overnight. I remember when oil the price of oil was negative. And I was thinking to myself, you know, hindsight is always 2020. I should have taken every penny of that. I owned and bought oil when it was negative. And now that it's, you know, wherever it is today, you know, they're trying to get it to that $100 per barrel mark. I'd have been a wealthy guy just by doing that. Right? Inflation is coming down, but we saw historic highs. I mean, 40 year highs for inflation. The total debt increased by $8.2 trillion where it took 230 years. Think about that, 1776 all the way to 2006 before it got to 8.2 trillion. And we've done that just in the last three years alone. And one of the big concerning things that I see is that there's record high record, high credit card debt approaching $986 billion. Matt. And so, I mean, that's a lot of people that are putting a lot of money on plastic. Okay? And with all that, the stock market was still up last quarter, still up last quarter. And so it's one of those things where it doesn't make a whole lot of sense. And I think investors are putting a lot of of of money into a bubble that's about to pop. And that is where caution is warranted. And yet we're seeing things that we haven't seen before.

Producer:
Yeah, you know, in some ways it's like when you talk about a bubble that's that's kind of getting ready to burst here. That evokes visions of a couple of things, like, you know, back 20 plus years ago with the.com bubble back early 2000 ease. Then we had like mid 2000 with the housing bubble bursting. Then we had, of course, the financial crisis 2007, 2008. And so it's like, oh gosh, are we on track for one of those kind of big events and. When you're looking at the numbers, it at least a lot of analysts think, yeah, you know we could we could be in fact in store for something like that and hopefully not but possibly worse.

Mike Zaino:
Yeah. I mean, when we think back to 2008 especially, that's the one that that is the freshest in everybody's mind as far as, you know, the cataclysmic event that took nine years just to get back to even, you know, everybody would say, well, what about, you know, Covid and the coronavirus? Well, that dropped the fastest it ever had. But five months later, we were already at all time highs. The difference is, is that the banking is the lending practices have been tightened. In fact, right now we're seeing the most unaffordable housing market in history. Okay. Even less affordable than in 2008, if you can think about that. And so investors seem to believe, you know, that the banking crisis is over. You know, that was the first thing that they believed. They believe that lower interest rates are coming. And then they also believe that these earnings are just going to miraculously go up in a slowing economy. The Fed has been raising interest rates to kind of get a grip on inflation. But what they're really doing is making it very, very difficult for most folks just to go out and be able to spend money. So, yeah, of course, the the economy is contracting and yet people are just thinking that earnings are going to go up when businesses aren't able to produce and sell as much as they normally would. That doesn't really make sense to me.

Producer:
Yeah, you know, it is very it's very counterintuitive. And this is the thing. Like I have you know, I used to work for a while on on Wall Street reporting on the markets. And when you do that, you learn very quickly that a lot of what happens on Wall Street has to do with feelings. It has to do with investor sentiment. It has to do with the way that people are feeling about a particular situation on any given day and really at any given moment. And then with the way that technology works today, some people can just, you know, kind of and we saw this with Silicon Valley Bank kind of freak out and then it causes other people to freak out. And then there's just this big, you know, snowball effect of the freaking out. And so, yeah, it's it's one big freak out snowball sometimes. But yeah, it can be very counterintuitive when you look at what's happening on Wall Street versus what's happening on Main Street. Sometimes the two just really don't mesh, right?

Mike Zaino:
I mean, like you said, that's exactly what happened to Silicon Valley Bank. And once that run on the bank started and depositors wanted their money and the bank had to then sell their long term treasuries that were valued well below that hold to maturity price. And they just couldn't service those uninsured depositors. And they're not the only ones. Several regional banks are in similar situations, and if there were to be a run on those banks, they would have to sell their long term treasuries at a significant loss. And so that's why the government has kind of stepped in and is now covering all depositor losses. And they've created this new facility that's going to loan distressed banks their full par value of their Treasury portfolio so that let's say that five times fast. Like I said, words are hard so that they won't have to resort to that fire sale. The problem bigger is that there's a more systemic issue, you know, with with banks and that historically, how do banks make money? Well, they make money by borrowing short term bonds from the Federal Reserve and then lending that money out. Okay. To businesses and to other folks. But that only works when long term rates are higher than the short term rates. And right now, we have what, what's called an inverted yield curve, which means that the short term rates are actually higher than the long term rates. And over the last hundred years. All right. We have a hundred years of data on this. An inverted yield curve has always predicted a recession and it's now more inverted than in any time in the past 40 years. So that is what has a lot of people kind of just wondering what is going on, because it is very difficult for these lending institutions, the banks, to make money when the yield curve is inverted.

Producer:
And that's yeah, normally, you know, we see the yield curve headed in in a direction where the long term rates are higher than the short term. Of course, as you say, we are backwards. As they say, the inverted yield curve is what we're dealing with now. And we've seen it, you know, as you say, over 100 years, several times, and each time it has been a precursor to a recession. Another thing here that I think is a good time to to kind of pause and mention this that you sort of hit on a second ago, Mike, is that, you know, banks don't have to. 100% of the money that you deposit at that bank. They don't have to keep it there. You know, it's not just in a safe locked away when you deposit it. They only have to keep a fraction of the deposits on hand. And so when there is a run on a bank, that's when they have to sell those, you know, those debts to then be able to satisfy the demand for the deposits that people are, you know, coming to, coming to get if it's beyond their ability to meet the obligation that they have at that particular moment with cash on hand, a lot of the larger banks, 10% reserve requirement, that's all they're required to keep some banks is even less than that. But there are many more options out there for people. If you're looking especially for saving for retirement. A lot of options out there where there's a 100% reserve requirement at an insurance company or, you know, an annuity insurance company where they, you know, all those deposits that's required to be kept at least 100% on hand to be able to satisfy any any demand that might come. Yeah.

Mike Zaino:
So so 2022 saw a record year for annuities. And I think that many people who are again, in that retirement red zone, they are looking to protect what they have worked their entire life saving for. Right. They don't want to take a chance that right when they're retiring and supposed to be enjoying the golden years that that banks go under or that there's a huge depression, much less a recession. Right. But if we go to the likes of a depression similar that happened, what, 95 years ago now, then the annuities are providing a guaranteed stream of income as long as they live, no matter how long they live. And so while the bank or the government rather, stepped in and created that new facility, that probably stopped that the stock market bank panic. The bottom line is, is that with everything going right now, we're going to start seeing banks lend out less money. And that's called a credit contraction in the economy for at least the next year or so.

Producer:
Yeah, And that, you know, is obviously not the best thing. And part of this, too, is is the point of what the Fed has been doing right is to slow down the economy so that inflation will come down because, you know, the economy has been very close to, if not overheating over the past couple of years where as there is, you know, with the Covid shutdown, there was a lot of supply because the economy had been rolling along for a long time, for years and years and years, the economy just been kind of rolling along, steadily growing, steadily growing. And so then you see all of this supply in the economy and demand just falls off a cliff. When all the shutdowns happen, then things start to open back up. Well, what's happened then is the supply chains are all screwed up because there's you know, there's been nobody working to to, you know, keep up with the getting supply to market. And so then the demand goes through the roof and there is no supply to meet it. And so that's why when you've got that off kilter supply and demand, a whole lot of supply or a whole lot of demand rather, and very little supply, that's when you've got inflation. And that is just sort of a very elementary look at exactly what happened over the past couple of years. But the Fed is trying to use the tools that they can to tamp that down. One of those consequences, or maybe even the point of it is to slow down the economy.

Mike Zaino:
It is. And so so for the past 14 years, we've seen what is known as quantitative easing. That's where, you know, the government makes it really easy. And the banks and the lending institutions make it really easy for you to get money. Money is cheap. Okay. I remember refinancing my home at 2.25% just a couple of years ago. And if I were to sell my house now, I would have to settle for a mortgage interest rate somewhere between five and a half and 6.5%. Now, I'm a veteran, so I have access to the VA programs, but still we're talking about 2 to 3 times more than what I just refinanced my house at a couple of years back. Now, what the Fed is doing is they're ushering in a new era of quantitative tightening. And that means that businesses and home owners and car buyers, they're going to find it much, much more expensive and difficult to actually qualify to be able to borrow money in the near future. And so because that is happening, the prices of everything is going to go up. It costs more. And that by its nature, Matt, is inflationary.

Producer:
Yeah, And this is also brings to mind something that is very worrisome in the economy right now, too, because you mentioned a minute ago that there's. You know, record high credit card debt as well. And so with people carrying balances, if you carry a balance on your credit card each and every month, there's a thing called compounding interest. You know, you pay interest on not only the purchase that you made, let's say you go out and you, you know, buy something at the local big box store for 100 bucks and you put that on your credit card, Well, you're going to pay interest on that 100 bucks. But if you were to carry that 100 bucks over to the next month, then you're not just paying interest on the 100 bucks, you're paying interest on the 100 bucks plus whatever interest was then charged on that 100 bucks the next month and then so on and so forth. So it compounds each and every month. And as interest rates go up, that only compounds the problem further. It does.

Mike Zaino:
And that is precisely why Albert Einstein called compound interest, literally called it the eighth wonder of the world and said that those who understand it will earn it, but those who don't understand how it works, Matt, they unfortunately are going to end up paying it. So if you're out there and you're having to use credit cards, as long as you use them responsibly, that is awesome. But at least pay more than the minimum payment each and every single month. And if you're able to make sure you pay what's known as the statement balance each and every month, that way you don't carry any interest whatsoever. If you just pay the statement balance, there will be no interest charged to your account for those purchases during that month. So, I mean, I think that is huge right there. As far as just a little tip for most of our listeners out there that are having to use credit cards just to kind of make it through some of these these times where where money is not no longer cheap. So yeah, one of the thing like I personally know people who have invested money into REITs, which are real estate investment trusts, and because people have been exposed to a pandemic and were told to stay home, they got used to working from home and with the invention and of several online platforms to video conference.

Mike Zaino:
I mean, Zoom's been around longer than the pandemic, but several other ones have kind of just really honed in on that space to be able to video conference and do all the bells and whistles. People have gotten used to staying at home and they no longer want to go back to work. Well, what is that doing for all the commercial real estate that we're, you know, that people have invested in from an office building standpoint. There are buildings now that I was reading an article earlier this week that that most people say they should simply be torn down because they're not going to get back to the occupancy rates that once were before the pandemic hit. And so because those buildings are just not set up to be lived in, they can't just be converted, It would be almost be easier in this particular author's opinion to to just tear them down and building them back up.

Producer:
Yeah, it's kind of wild. You know, I keep hearing I'm here in Atlanta and I keep getting alerts from one of the local business publications here, Atlanta Business Chronicle, where, you know, they'll say, well, you know, so and such company has called off plans to move into this big office tower because either A, their business just isn't doing well right now, or B, they're going to continue like a work from home model because their employees don't want to really come in and and, you know, to a certain extent like, okay, from a convenience standpoint as an employee, great. I mean, you know, you save money on gas, you don't have to come in and all that and deal with, you know, have to deal with co-workers stealing your stuff out of the fridge. And, you know, that that kind of thing don't have to put my name on my stuff before I put it in the fridge. But at the same time, it's it's such a shock to the system when workplaces have been built on operating a certain way and now it just completely changes for so many companies. Yeah, this is probably the the next shoe to drop a lot of folks are saying is is in the commercial real estate space.

Mike Zaino:
Yeah because I mean office buildings and REITs they're a huge part of the United States economy. And over the next five years more than 2.5 trillion with a T in commercial real estate debt is set to mature. And that's more than in any five year period in history. And meanwhile, those rates have more than doubled and the commercial real estate is only 60 to 70% occupied. So, you know, refinancing those loans are going to be extremely expensive and likely need to. The next major real estate and banking crisis.

Producer:
Wow. And that is not music to the ears of a lot of landlords or a lot of businesses out there because it's just not it's not a good it's not a good thing. And then you have also a lot of bankruptcy fears as a result of that on behalf of a lot of those those landlords, because, you know, they're saying, okay, if we can't have our obligations met, we can't obviously stay in business.

Producer:
True. True.

Mike Zaino:
I mean, if you think about one of New York's largest and we're talking about New York. All right. So I'm not sure if you're listening in New York because we air in the Carolinas and, you know, kind of native down here to the southeastern United States. But one of their biggest office landlords, RXR, recently announced that it was preparing to stop their debt payments on some of the properties as it tries to negotiate. And what that's going to end up doing, because currently commercial properties, they contribute between 20 and 40% of all the state and local tax revenues. So if those revenues decline, then governments are going to have to either cut services, they're going to have to raise taxes or do both.

Producer:
Yeah, And that's that's also not fun for, you know, people, you know, you and I and anybody else who lives in a in a particular area that has to that has to deal with that. And it's also not good for these businesses that then not only can't make ends meet, aren't getting the revenue from from leasing that they used to. It just compounds again, compounds the problem. It's like, you know, the bad kind of compounding interest here again but in the form of higher taxes, higher fees and all of that to try and make up on one end for for a loss that, you know, can't really be made up for. It's just it's I think the technical term for it is is a mess.

Mike Zaino:
Yes, it is very technical in that terminology. But you want to talk about a mess. A recent JP Morgan report said that they actually expect 21% of commercial mortgage backed securities that are outstanding to default on their on those office loans. Okay. And so that bottom line is that even though the Fed is going to continue to bail out bank depositors just to stop those runs on the banks, they are not going to bail out the banks for bad real estate loan decisions. Okay. And if that becomes a crisis, it could definitely be the catalyst for a severe market drop.

Producer:
Yeah, and which is a scary thing, right? And here's here's the good news, though, folks, is that there is it's not a situation where all hope is lost. All right. So you've got help out there. Mike Zaino can help you. We're going to talk about possible solution. That could be something for you to look into here in just a moment. But I want to remind you, you can go to MoneyMattersWithMike.com, get a free full financial consultation that it's absolutely and when I say free, I mean free free of any cost free of any obligation. You can talk to Mike Zaino about what's happening in your own particular situation, not just the economy as a whole, but how that might be affecting you and how you can shield yourself against what could be around the corner. But, you know, when you say that those words severe market drop, a lot of people who have investments, maybe maybe all their money is in the stock market that they have invested. Maybe it's all in stocks and bonds. They have that 60 over 40 portfolio that has been, you know, historically popular over the last several decades here. But that's got to be a cause for concern for them. But at the same time, there are vehicles out there for your investments where you can take part in the gains of the stock market. But when there is a severe stock market drop, you don't lose a penny. And I think that a lot of people don't necessarily even realize that that's out there, that that's an option. But it is It's a very real thing, right, Matt?

Mike Zaino:
And the goal of this show, folks, is not to just, you know, make you feel terrible on a Saturday morning while you're listening to this live or whenever you happen to be listening to it on podcasts. But it is just to arm you with the information so that you can better prepare yourself for economical climates such as the one that we face right now. I believe, Matt what you are alluding to is the use of the fixed indexed annuity. And we talk about this a lot on on our show because we are firm believers that if you are able to put your money into a vehicle that guarantees you 100% protection from any market volatility, but still allows you to get a reasonable rate of. Return when the markets turn around and do okay. Well, combine that with the fact that there are those out there that have no fees whatsoever, they can be set up for growth. They can be set up for income, they can be set up for a combination of growth and income. They still allow you access from a liquidity standpoint. They allow you to name beneficiaries when you pass away so that you can control who gets your money. The insurance companies don't get to keep the money anymore from all the companies that we deal with. And, you know, when I look at ten year averages, I look at the worst case scenario. I was just preparing a report for one of my clients this morning who was just curious and say, you know, hey, what's the worst this has ever done? And the one that I had put her in it, the worst it has done is was over 8%.

Mike Zaino:
Well, that's what the stock market is, has averaged right at 8% over time. But that's all time. And so that doesn't mean it's going to average that over, you know, downturn eras like the one that we currently see ourselves in. And most Wall Street analysts are preparing for the United States stock market to hit new lows this year amid those concerns over the weak and negative corporate earnings. Okay. And so Morgan Stanley's chief US equity strategist, a guy named Mike Wilson, he reiterated his call that the S&P had yet to see a bottom. So that means that there is a lot more that the market can drop. So if you don't want to participate in any of that downturn, then a fixed indexed annuity could just be the saving vehicle of choice for you and that portion of your money that you might otherwise allocate to bonds for the safe portion of your portfolio. Okay. Bonds last year had their worst year in history and you should never pay for an underperforming asset. So if you are at all interested in looking at how you can protect what you have worked so hard for, just give me a call and I'll break it down to you in plain English.

Producer:
And that number is 704 5601573704560. 1573. You can also go to the website Money Matters with mic.com high inflation.

Producer:
Got you down. This is your weekend pick me up. You're listening to Money Matters with Mike.

Producer:
To. You. Do you have a vision for what you want your retirement to look like? I'm Matt McClure with the Retirement.Radio Network Powered by AmeriLife. Planning for retirement can be overwhelming. A survey from Gobankingrates shows that one third of Americans don't think they know enough about retirement. And they're probably right. So if you fall into that category, how do you know where to begin? Well, you've got to know where you want to go before you start planning how to get there. That's where having a smart vision for your retirement comes in. Whether you want to be a jet setter during your retirement years, want to take it easy in a quiet cabin in the woods, or start a new adventure by opening your own business. You should set that goal and keep it in mind throughout your working years, retirement expert Dean Waguespack said during a recent Ted Talk. I want.

Dean Waguespack:
To challenge all of us to redefine retirement away from depart, remove withdrawal to a new definition, a blending of pay, passion and purpose.

Producer:
Until retirement looks different for everyone. Sit down with your spouse and talk about your retirement goals That will make it easier to determine how fiscally responsible you need to be now and how much income you'll need to make it happen after you retire. That's right, I said income. More and more retirees are finding that cash flow is more important than one big nest egg number.

Lee Baker:
That's when you want to say, hey, listen, I want to start thinking about all of this accumulation that I've done through these decades of working. How do I begin to think about turning what I've saved and what I've accumulated into paychecks after I retire?

Producer:
That's Lee Baker, president of Apex Financial Services, speaking to CNBC. He says annuities are a great option for most retirees to generate an income you can never outlive. That's especially important since life expectancy has grown over the years. So you'll need to plan for a longer period of time than you may think. So do you have a smart vision for your retirement years? That's a key question to consider as you start planning how to get there with the Retirement.Radio Network Powered By AmeriLife, I'm Matt McClure. Another thing too, to talk about there with with a fixed indexed annuity, Mike, is is the fact that when you do get ready to retire, you can then flip that switch and turn on income in that fixed indexed annuity. And it really is you know, you're building your own personal pension. It's not just this this lump sum because that's what people generally seem to think of. I want to build my nest egg. I want to build this one particular amount of money, this goal of a big lump sum that I have in mind. But this is about building your own personal pension. So that's monthly income for the rest of your life, no matter how long you live. Yeah.

Mike Zaino:
And whether that's 85, 95, 105, 120. Okay. Think about getting an extra check. An extra check every single month like clockwork coming in that you can depend on, that you can never outlive. And then when you pass whatever is left in the account that goes to your named beneficiaries, I mean, I tell people, look, punch holes in it if you can. I will go up against any money manager out there who is going to number one, charge you fees. Number two cannot guarantee the safety of your money. Number three, expose it to the market volatility and I'll shoot holes in that all day long.

Producer:
There you go. Well, and it's, you know, very when you've got, you know, a situation where you've got all this market volatility out there, something like a fixed indexed annuity looks a lot more, you know, attractive to to people because they're craving safety. That's what I think so many people today I know myself as far as looking at my future with with all the volatility that we're seeing on Wall Street, I really want some safety in my own personal retirement plan. And because I you know, when I go in and I open up my 401. K account balance, that's that hasn't been a fun thing for a while. And so so I know that having a fixed indexed annuity, that would probably be a lot easier on the blood pressure if I were to open up that account.

Mike Zaino:
I was reviewing a client's statement from last year. She didn't have the quarterly statement, but she brought in the annual statement from 2022 and she lost 31.87%, 31.87%. That's how much she lost out of her 401. K last year alone. She is going to have to make over 44% just to get back to even. And she's trying to do that in a time when the markets are are in this in this flux situation where all the economists are calling for the bubble to burst and the market to drop somewhere, you know, around 20%. So think about that. If she experiences another 20% loss, she will have lost over half of her life's savings. Okay. Or her life savings, half of it gone. And we all know that if you lose 50%, Matt, you actually have to gain 100% of your money just to get back. Back to even. And that unfortunately takes time, which most folks, especially those that are nearing retirement or who are already retired, simply cannot afford to risk at this point in their in their lives.

Producer:
Yeah, I mean, you know, you mentioned this earlier, but it's a good illustration here, too. When you look back at 2008 and the losses that we saw there in the markets and we didn't get back to just, you know, even to where we are until years and years and years and years later down the road. It took a long time to build back up. And a lot of people saw that be very true in their own investment portfolios as well. I mean, you can can imagine being someone who was you know, I've been working for 40 years. I'm going to retire. It's 2008. I'm going to retire. Oh, no. What in the world do I do? You know, when the bottom just falls out, it's like, do you then keep working for another ten years? A lot of people had to make those tough decisions and, you know, just hope and pray that a lot of people aren't going to have to make those tough decisions here pretty soon. But as we know, hoping is not a strategy for your retirement.

Mike Zaino:
It's definitely not. And Matt, you know, my mother actually lost 42% of her 401. K and she wanted to retire in 2009. And I was not managing her money back then. I am now. And when we took a look at her income and her expenses, given the fact that she had lost 42%, I was like, Ma, there's no way that you can actually afford to retire. And so she ended up having to work nine more years just to get back to what she had when she was, you know, at 100%. So think about that. She had to work nine more years for it just to get back to even. And so I think a lot of the problem is, you know, when it comes to safety, there are people out there that run for the hills and they run for gold. Right. And precious metals. But the problem with with gold and precious metals is that you have to use cash to buy it. Okay. And it's not it's not very liquid. It's not like we're bartering back in the way, way, way back. Okay. We are having to trade money for goods and services. And so if you want safety as opposed to gold, the ability to put your money into a product that offers inflation protection as well, There are several different strategies where we can adjust the payouts and count and I guess consider inflation the future cost of inflation along the way. That way, the amount that you're getting out of your annuity is at least keeping pace, if not outpacing the rising cost of living in the future.

Producer:
Yeah, and as you have seen, as we've all seen over these past couple of years, inflation will rear its ugly head. It's not always going to be right around that. You know, the Federal Reserve wants it to be right around 2%. That's always their target. We have been well above that over, you know, in the in the official, you know, consumer price index, the official way that they measure inflation think real inflation has been higher than that because of energy prices, which a lot of times are excluded from that final number, that that is like sort of the baseline inflation number because energy prices seen, you know, are volatile historically. They don't like to count that because it could be a misleading thing. So to even it out from month to month they won't count that. But then if you do include that boy, has inflation been higher over these past couple of years than what it looked like just on the surface? If you just look at those numbers and we've been feeling it in the pocketbook, I will say one thing that I am extremely glad is the case. I was at the grocery store the other day and I have been like very weary of like the dairy section and the eggs and everything. I will say eggs were 2.99 at the grocery store. They had been like 6 or 7 bucks for for a dozen. They were back down to at least 2.99. So at least the egg prices seem to be coming back down just from my personal experience. But there's a lot of stuff out there that's still really high and too high for people. Yeah, so.

Mike Zaino:
So, madam, you know, I like ice cream sandwiches. And the other night I was craving an ice cream sandwiches. And we have a a Walmart like supermarket center right down the road. It's like 30s from, from my house. And so I decided at 941 night to just ride down there and get some ice cream sandwiches and. And I remember when you could buy a box of ice cream sandwiches for, I don't know, two, three bucks. Okay. And there were almost $8 or $7.87 for 12 ice cream sandwiches. So while eggs may be coming down, the price of the things that are used to make these other dairy products, they are still up there or even higher than than where they used to. Be for.

Producer:
Sure. Yeah. Yeah. And actually have it's funny, I've got a friend who has a has a daughter, a young daughter, and they're just finding out that she's got an egg allergy. And she says, well, I don't have to buy eggs anymore. At least that's one good thing, you know? But it's it's funny. It's like that's that's one thing that one positive takeaway guess that she's she's taken from her daughter having an allergy to eggs. She's like, oh well I just don't have to buy them anymore. So there you go. And you know, like that's the reason all of these rising costs anyway, that the Fed has been raising interest rates. You know, I mean, to bring all of these costs back down, to bring rising inflation back down. And even now, the Federal Reserve's own economists, they don't have the rosiest of outlooks going forward here.

Mike Zaino:
No, they don't, Matt. In fact, they themselves are predicting a recession this year. The recent minutes from their March meeting said that they believe that stocks and real estate prices are so aggressively valued right now and could absolutely plummet. And they also said that that painfully high inflation could persist well into 2024 and that depressed housing spending, household spending, I should say, and higher borrowing costs could cause the US economy to contract. And so even the Fed chair, Jerome Powell, he reiterated several times that the Fed would not be lowering rates in 2023 and expects two more rate hikes this year. So that is going to bring the economy to a screaming halt in those leading economic indicators continue to drop. The good news is, is that if you are somebody that wants to get ahead of all of that because it hasn't yet happened, when it's going to happen, my crystal ball is been broken for quite some time, but with so many people all saying the same thing, the hammer has eventually got to fall. You don't want to be caught by that falling hammer and that bullet that's exploding from the end of the muzzle. And so if you're somebody that falls into that scenario and you're looking at ways to protect your money, give me a call. (704) 560-1573. Reach out through us to us rather on MoneyMattersWithMike.com fill out a contact us page form ask me any questions that you have I'm bringing me okay What you get is what you listen to every single week. I'm not going to try to convince you one way or another, but I'll educate you. Okay? And those who know better end up doing better. Because again, the information informed decision making is what makes the best money matters. You end up better for you in your portfolio over time. You just don't want to wing your retirement planning. Okay, let's put a plan together that actually makes sense and can weather the storm.

Producer:
Yeah. You know, the one thing that I like that you'll always say, Mike, is, is about, you know, knowledge is power, but you got to put that knowledge to to work, right? You don't just like if you know something and you don't act on it, that's not doing you any good. You got to put that into action. So now, you know, you've listened to the show. We're giving you the giving you knowledge. Hopefully you're taking it in, you're soaking it in. But now it's all about action. It's going to be acting on it from here on out. Right. And that's where the rubber meets the road.

Mike Zaino:
It is. And when people call me Matt, you know, a complimentary consultation, the first call we're going to have is is just a discovery meeting. We're going to get to know each other. I'll tell you a little bit about me and my background. I'll want to know about you and what you've been doing and how you've made the money that you've made so that we can then decide whether or not we're going to move forward. Well, in an actual consultation, that is a deep dive into your current financial situation. We're going to look at everything. I'm going to look at statements. I don't care if you've got IRAs. I don't care if you've got 401 K's, if you've especially if they're old and sitting at an old employer. I always use the analogy that if you move, you don't leave your car parked in the old house's garage. Right? So why in the world would you leave your old 401. K at an old employer where nobody is looking out for it? So we'll take that deep dive into your current financial situation. I'll try to identify any fees that you may be paying unnecessarily, whether they're in your IRAs, whether they're in mutual funds that you have, like whether they're in management fees. And I'll I'll show you the true cost of what you're paying for, what you're getting. And then I'll also offer you alternatives, right, as far as what you. Could look at putting some of your money into that will be protected and that gives you the peace of mind so that you don't have to worry about what's going on in the news, whether it's locally, regionally, nationally or internationally. Okay. You cannot put a price on peace of mind, and anything that costs you that peace of mind is not worth it.

Producer:
Absolutely not. And once again, folks, the website MoneyMattersWithMike.com. You can go there reach out to Mike schedule that free consultation or give him a call at 7045601573704560 1573. Also look us up on Facebook. We're there as well. Feel free to reach out on Facebook. Just search Money matters with Mike. Same deal on YouTube. Watch highlights of the show and get information on past episodes and everything there as well. So just a few more minutes here, Mike, to spend in the show. And I wanted to share with you know, we've been talking a lot about volatility. We've been talking a lot about risk and we've been talking some about mitigating that risk with the use of something like a fixed indexed annuity. Other particular types of annuities might be right for someone situation as well. We we know a guy who literally wrote the book on annuities here. His name is Ford Stokes. He's a good friend of ours, good guy. And he wrote the book Annuity 360. It's all you need to know about annuities. Mike has his copy right there and always sits right by him. I got my copy right here as well. It always sits by me. And sometimes I'll just. I'll just hold it like this and learn by osmosis. No, but I will read it and or listen to Ford himself reading part of this book, I think a very appropriate chapter of the book to share with our listeners today. Mike has to do exactly with what we've been talking about is Chapter 16. It's reduce, reduce risk in your portfolio with annuities. Everybody's thinking about it right now. Let's let's share a little bit of the book just a couple of minutes here and we'll talk about it and close things out coming up here on the other side.

Ford Stokes:
Chapter 16 Reduce risk in your portfolio with annuities. Big idea. An annuity can protect against several risks that can affect retirees and pre-retirees and offer a better financial safety net than other investment types. One of the biggest benefits of investing in annuities is reducing risk in your portfolio. With current market volatility, pre-retirees and retirees are more concerned than ever about their retirement funds and protecting their hard earned wealth. We believe that annuities can be the answer to risks in your portfolio. Longevity risk. Retirees and pre-retirees are concerned about outliving their wealth. We have offered some strategies in this book that will stretch your retirement funds, such as following the 4% rule. But annuities can offer even more protection against this fear. We are living longer, so it is important to plan for at least three decades of retirement. An annuity can help create an income you can never outlive your money will last for your entire retirement by utilizing monthly, quarterly or yearly distributions from your annuity account after your money grows during the accumulation phase. Market Risk Fixed index annuities can protect you from market risk. These annuities are not actually invested in the market. They are only tied to a specific market index. This means that you enjoy all the benefits of your market index when it performs well, but you are not exposed to any of the market risks. Should your index perform poorly. You will either make money or remain flat. You will never lose any money. Zero is your hero. Inflation risk annuities can offer riders that can help you adjust for inflation, even though a rider might reduce your payout.

Ford Stokes:
Protecting yourself from inflation will ensure that your money lasts and is not exposed to any unnecessary risk. It is important to have an annuity with a payout linked to the Consumer Price Index or CPI instead of one that increases at a fixed rate each year to ensure you are protected against inflation risk. An annuity that increases at a flat rate each year does not offer sufficient protection against inflation. Sequence of return risk. An annuity with a lifetime withdrawal benefit can counteract the effects of a down market at the start of your retirement. Research conducted by Retire One has shown that you can flip 15 years of returns from retiring during a recession to retiring during a market that is up and completely change your retirement outlook. The positive returns would offset your withdrawals and grow your assets before your account felt the effects of a negative return. Consider a smart, safe plan with a smart, safe plan. Your money is invested not in the market. The characteristics of investing not in the market include growth with safety market upside limited to no downside principal and gains protection low cost 0 to 1% Annual fee. Time horizon of 7 to 14 years. Can earn 5 to 7% annually. Options are available for guaranteed income. Here are some examples of not in the market investing bank CDs. The annual percentage yield APY is about 1 to 2%. Your time horizon is typically 1 to 3 years and you cannot access the funds until the contract is up.

Ford Stokes:
Treasuries. The APY is about 3%. Your time horizon is ten years and you cannot access the funds until the ten years is up. Fixed annuities. The annual percentage yield is between 3 and 4%. Your time horizon is typically 4 to 7 years. You are able to access the funds during the contract period. Multi year guaranteed annuities or omegas. You get between 2 and 4% growth on your principal depending on the duration of your policy. This is less growth than a fixed indexed annuity, but it is guaranteed. The annuity company is required to pay you the rate they promise for the duration of your policy. Fixed indexed annuities you receive between 5 and 7% growth on your principal. The time horizon is 7 to 14 years and you do have access to the funds in your account if you need them. A smart, safe plan does not invest your money directly in the market. Your investment is tied to an index without being invested directly in it. This means that you get a portion of the market gains without the market risk. You may want to consider investing in a fixed indexed annuity over other not in the market options. If you invest in treasuries or CDs, you will lose ground in your investment due to inflation. Investing in a fixed indexed annuity will likely cut down on your inflation risk. We prefer accumulation annuities because they minimize your risk in several areas and they lock in your gains through the use of point to point protection periods, meaning you won't lose money.

Producer:
And that is an excerpt from the book Annuity 360. Actually Chapter 16 of the book Reduce Risk in Your portfolio with. Nowadays. There's a lot of risk out there always, but especially right now with all the volatility in the market. So something that hopefully will be bringing you some peace of mind potentially there. You can really learn all you need to know about annuities with that book, Annuity 360 and Mike will be glad to send you a free copy of it. Just go to Money Matters with Mic.com and request your free copy there on the Contact Us page or give Mike a call. (704) 560-1573. Well, Mike, it is just about time for us to wrap things up here. The show has come and gone. I know it was a lot of doom and gloom earlier on, but I feel like we've given the folks hope, too, because, you know, all hope is not lost, even with the craziness in the economy. So thank you for bringing that hope and that reassurance to people. I know. I appreciate it. And and my doctor does, too. Well.

Producer:
Hope I hope.

Mike Zaino:
The listeners appreciate it. And I thank you for your time because, you know, you do an incredible job with the production of this show. And most importantly, I think our listeners each and every week, because I recognize the fact that without you guys, we don't have a show. So if you know anybody out there that is starving for some information, maybe not where they thought they would be at this point in their lives or could just use a little boost, then make sure you send them my way. Share the information, get them listening, subscribing to the podcast, and I'd love to be able to help them out as well. So thank you for all you do. No matter what you're doing this weekend, I hope you enjoy it to its fullest extent and as always, make it a great day.

Producer:
Thanks for listening to Money Matters With Mike. You deserve to work with a financial and insurance expert who can offer strategies for protecting and growing your hard earned money. To schedule your free no obligation consultation visit MoneyMattersWithMike.com or pick up the phone and call 704 560 1573

Producer:
Not affiliated with the United States government Mike Zaino does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. Amara Life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis, with no guarantees of completeness, accuracy, usefulness, timeliness or the results obtained from the use of this information.

Producer:
Good cutting back on cable television. Lower your monthly expenses. I'm Jim Trabka with the Retirement.Radio Network Powered by Amara Life, an April 2023 survey done by CNBC shows 70% of Americans are feeling financially anxious. Cnbc's senior personal finance correspondent Sharon Epperson explains.

Sharon Epperson:
A vast majority of respondents, 70%, say they are stressed about their personal finances, and that includes 57% of people earning $100,000 or more. 58% say they're living paycheck to paycheck. And while a.

Producer:
Large majority of Americans are looking for ways to cut back on their expenses, doing away with high cable bills could provide some additional relief. Generation Z and millennials know all about that, having ushered in the streaming era. But with streaming services expanding their menu of options, thus pushing up their monthly prices, streaming may actually do more financial harm than good. In fact, in January of last year, streaming giant Netflix added a $1.50 to their monthly rate, while Hulu is now charging $14.99 a month for their ad free streaming platform up from the previous 12.99 price point. With streaming becoming inevitably more expensive, is it possible to keep traditional cable while lowering the monthly bill? Some cable companies now offer a channel a la carte option. Maybe try cutting back on premium channels, pare down cable boxes, or downsize your plan to eliminate channels you don't watch and save 15 to $25 a month. Cutting back on cable television, part of our 23 cost cutters for 2023 for the retirement at Radio Network Powered by AmeriLife. I'm Jim T. Call Mike today at (704) 560-1573 or visit. MoneyMattersWithMike.com to get your free copy of 23 retirement cost cutters for 2023.

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