Wednesday, September 30, 2009

More Are Seeing the Light

Thank you for all the emails I received following my last email titled “Lump Sums vs. Income Streams”. It tells me that mindsets are truly beginning to change, mostly due to personal experiences and recent losses.

Just a few situations presented were people getting hit with a large tax bill after the installment sale note they were carrying was terminated due to the buyer selling the property part way into the note term, a person falling prey to a Ponzi scheme and losing a large sum of money, several people who opted for a lump sum after taxes to reinvest and seeing their proceeds further diminish, a person losing most of his life savings after trusting an advisor his attorney recommended, several more who were promised double digit returns and who now have much less than they started with.

It will be difficult to overcome these unfortunate losses.

There is something to be said for a protected and fixed income stream which at least covers your basic expenses. This is the principle pensions and social security benefits were based on.

As you are approaching or are in retirement stages this should be your first priority. This means no matter what else happens, you have money to live on and money you cannot outlive. You need a reasonable (5-7%) annual return (not found in CDs) but this is not money you gamble with. This means not investing in anything that can go down or is subject to changing market conditions.

Once you have the basics covered, you can consider more risky investments if you need a little excitement. Excitement is not all it is cracked up to be when you run out of money!

This is not a new concept, it’s just that we have strayed from the basic rules of protecting ourselves from the very disasters many of us are facing now and in the foreseeable future.

So, if you are selling your appreciated assets, it is prudent to minimize your taxes, protect your principle and provide yourself with a steady income. I am here to help guide you to the best plan for you and your family. Call or email me.

Paula Straub