The Big Question I Keep Getting Asked…

By Rodney Piercey

As an estate planning attorney with almost five decades of working with clients’ financial statements, when I sit down with clients and talk about their finances, I either see seniors with most of their nest egg invested in the stock markets, or everything invested in CDs.

The most frequently asked question that I get is, “Rodney, As a retiree, I can’t afford another market downturn, and I can’t afford to be all invested in CDs because the interest rates hardly keep up with inflation. Is there something you know about where I can have more upside without the big downside risk of the markets?“

Since I had the same question myself for my own future, I went to work and found experts to give me a reliable and straightforward answer. The answer did not come from the many fee-based financial planners with whom I work, who are focused on and experts in the stock and bond markets. 

What I discovered in 2010 was very interesting. There are private institutional contracts issued by highly rated and very strong financial companies which will provide way more upside than a CD without any downside risks of the stock and bond markets.

So, I decided to invest in one of the best of those contracts myself in 2012. Since then the contract value has almost doubled with absolutely zero downside risk.  In 2022, while the S&P was down 24%, my contract value did not shrink at all. Not only that, but the guaranteed amount I can draw out of it when I decide I need it has gone from 5% each year (if I started in 2013) to 9.5% each year, no matter how long I live.  But I plan to wait to start taking the guaranteed lifetime income stream, because each year I wait, the payout goes up by another half a percent per year.

I haven’t had to check the stock market each day, I haven’t had to think about it at all. I am really happy with my decision to diversify my holdings with the institutional contract.