Episode Transcript
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Speaker 1 (00:00):
Welcome to the hidden world of wealth, where secrets of
the affluent become accessible to you. You are listening to
Your Money Matters, the most provocative financial radio show on
the airwaves. You are about to start your educational journey
here on Your Money Matters with your host, Drew Prescott,
(00:22):
President of Prescott Private Wealth and Chartered Retirement Planning Counselor.
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powerful insights. Whether you're planning for retirement, managing in a state,
or looking to grow your wealth. Consider this your exclusive invitation.
Turn up the volume, lean in closer. Let's navigate the
(00:45):
hidden paths of prosperity together. Your financial enlightenment begins now.
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(01:06):
Four five one THO sixth Street, Troy, New York one
two one eight zero We of James, the dream of
(01:38):
Once in Love.
Speaker 2 (01:41):
Helloha and welcome back to Your Money Matters, where we
believe your wealth deserves wisdom, your future deserves protection and
your dreams deserve strategy. I'm Drew Prescott coming to you
today with a story that's a little bit different, but
one that I think that you'll feel right in your
(02:02):
very bones, and I'm hoping to connect with you here today.
It's been good to be away, it's even better to
be back. And thank you for supporting me on my
little vacation here with the family. For those of you
who listened to the show, you know that we took
(02:22):
a trip to Hawaii, and again you're listening to your
money matters. I'm the host, Drew Prescott, chartered retirement Planning
counselor and accredited wealth management advisor here at Prescott Private Wealth.
The phone numbers five one eight two zero three, nineteen
eighty three. Five one eight two zero three, nineteen eighty three.
So thank you again for your support. I appreciate it.
(02:46):
And we had a wonderful time there we went. This
time we went to the Big Island, and the last
time we went, we went to Honolulu. Now, I can't
say that I didn't like Honolulu. I really liked Honolulu too,
but the Big Island very different and very different, because
you know, this is a place that when you go,
(03:07):
you just you have to relax, and that's that's wonderful.
I was really looking forward to snorkeling. Funny story, So
wherever we go on vacation, I like to snorkel, and
I like these full mask snorkels. If you if you,
if you have any idea what I'm talking about. Basically,
it just covers your entire face and it just makes
(03:30):
it feel so much more natural and you've got a
just a much better field of vision as well. So
the night before we leave, we had our you know,
I had all the snorkels for the whole family, and
Stacey wakes up at about like four o'clock in the
morning and she's in a panic and says, ah, I
(03:51):
gotta I have to run over to Walmart and get
different masks for us. I just read this article that
there's a whole bunch of people that do this shallow
dive and they end up dying on vacation because we're
using these full face masks.
Speaker 3 (04:08):
I said, are you kidding me?
Speaker 2 (04:10):
I'm using my face mask. I don't really care what
they say here. So she was so convinced that something
terrible was going to happen so we left the face
masks at home, and then when I got there, I
just bought one anyways, because well whatever I was gonna
roll the dice, I guess. But it had just an
(04:31):
incredible time. I can say that now I've swam with
manna rays and I've swam with sea turtles, and all
the fish that you see in Finding Nemo, they were
they were all there. It was just it was it
was outstanding. And the water at this one beach that
(04:54):
we went to there was no waves and the water
was so clear you could act, we see individual grains
of sand through the water. It was just such a
beautiful thing. And I would encourage it if you ever
thought of going to Hawaii. You know, don't hesitate go.
(05:14):
I know the flight is long. What we do is
we actually go from Boston, and Boston offers a direct
flight from Hawaiian Airlines. Yeah, I think I think it
takes us like twelve hours. Every you know, it seems
like every time's different, but I think it's about twelve hours.
And it went from it goes from Boston to Oahu
(05:36):
as a direct flight. They feed your two meals. You know,
it's actually it's an experience it's not terrible, I gotta
say that. And there's plenty of bathrooms and everything, so
it's it's it's actually pretty enjoyable. But so don't hesitate
if you want to go, go all right, just you know,
we're only here for a short period of time on
(05:56):
this earth, and just go and enjoy yourself. Now, we
did have to take a little flight from o Wahoo,
of course, over to the Big Island where we land
in Kona, and my day starts and ends with a
cup of coffee. And I love coffee, and I was
really looking forward to having this coffee from ConA because
(06:17):
everything that I read said that it was a nice
blend and a great bean, and I gotta be honest
with you, it was sensational.
Speaker 3 (06:25):
It was. It lived up to the hype.
Speaker 2 (06:29):
Decided not to bring any back because we were limited
in space and it was about forty dollars for a
pound of coffee, so you know what, just back to
our own supply here Stateside. So anyhow, thank you for
tuning in today, And I wanted to share something with
(06:49):
you about while I was there trying to run my
practice to a degree. You know, everything was pretty much
shut down, but there's still stuff you always have to do.
And we were six hours behind us here in New York,
so Eastern Standard time, six hours behind where we were
(07:13):
over in Waya, Koloa. And let me tell you something,
I have no idea why anybody would have a financial
advisor that is not in the Eastern Standard time zone.
The market lives here, and it was incredibly difficult.
Speaker 3 (07:34):
While you're sitting.
Speaker 2 (07:34):
Outside and you're having a cup of coffee waiting to
watch the sunrise, knowing that the market's already been going
at it here for several hours. That's challenging. So I
couldn't imagine living there and knowing that at three o'clock
(07:58):
in the morning, it's that, you know, three point thirty
in the morning, you know the bell's going off in
Wall Street. That's That's not something I would want to
contend with. So I would encourage you if you have
an advisor that's in California, Arizona, Texas, so on, you know,
you may want to consider reevaluating that thought process and
(08:22):
get aligned with someone that's here on the East coast.
Speaker 3 (08:27):
That was one of my thoughts.
Speaker 2 (08:28):
I just thought, boy awfully challenging business as it is,
And then to tack on the challenge of trying to
do business while you're over in a different time zone. Boy,
that's nothing that I would want to contend with.
Speaker 3 (08:41):
I don't think so.
Speaker 2 (08:44):
Anyways, as you know, we have really been through quite
a bit of noise and jitters in the marketplace, and
we have seen a little bit of reprieve here and
this last week has been a nice a nice feeling
(09:06):
of kind of instilling some hope for the individual investors,
and it's been good to see. So I want to
unpack that a little bit for you and also share
with you that when we look at the market here
and we see everything that's going on, I think it's
(09:30):
very important to remember that through these times. And I
hear this all the time. Whenever the market starts to
create a little bit.
Speaker 3 (09:40):
It seems like.
Speaker 2 (09:43):
The addition of new clients always happens fast and furious.
And the question that I always get asked by these
new clients is well, do you think that this is
a good time to actually invest? And frankly, I would
say absolutely, because had we had met a month and
(10:06):
a half ago, you know, I still thought that that
was a fantastic time to invest. So so the answer
is yes, there's always a good time to invest. Now
the question is where do you invest and how do
you invest? And so we'll tap into that a little
bit today. So what I want to do is help
(10:29):
you get away from the chaos and to understand exactly
what your next move could be and potentially for you
should be, and how to do that with peace. So
let's get started today. First, what I want to do
(10:50):
is I want to reveal to you why managing your
wealth from a different time zone may not be ideal. Also,
want to dive deep into the current state of the
markets here, who's thriving, who's struggling, and why corporate guidance
(11:11):
or the lack thereof is flashing some warning lights for
the rest of twenty twenty five. And third, I want
to touch on some annuities. Again, I don't not something
that I plan on camping out on every week, but
the show that we aired over the last couple of
(11:31):
weeks here has really brought in scores and scores of
questions about annuities and I want to share with you
some insight on that and also some warnings. Okay, and
then also let's talk a little bit about interest rates,
the silent force that's really reshaping everything from stocks to
(11:56):
housing to business lending, and why your next movements more
than ever. And along the way, I'll share some practical
action steps that you can take right now to ride
these economic waves with skill, confidence and clarity, because here
on your money matters. We're not just about information, We're
(12:17):
about transformation, and that starts with your mindset. So let's
get started. I'm gonna use a kind of an outline
here and share with you why I was saying it's
so important to deal with somebody on the East Coast
(12:37):
because you know, you think about here I am. I'm
in Hawaii. You know, I'm kind of living the dream
while I'm there, and you know, let's be honest. You've
got lava flowing from volcanoes in the background and it
made the whole skyline will foggy at times, which was
(12:58):
pretty pretty amaze. And then you've got the dazzling white
sands of Hapuna Beach, and you have farmers' markets and
high low that overflow with rainbow fruits and warm smiles,
and the people that are just so they're just wonderful people.
(13:19):
But as magical as Hawaii was, time does not bend
for beauty and the market the heartbeat of your portfolio.
It still marches to the rhythm of New York and
in Hawaii that means, as I said before, that the
markets open at three point thirty am and they close
(13:42):
at ten am. And if you're sleeping in, that means
if you're waiting for your coffee to kick in, you
basically are missing key opportunities or key risks before you
even finish your breakfast. So here's what my routine looked
like while I was away to try to make these
(14:03):
things work. I had a two forty five am alarm,
and I wanted to quickly scan the overnight futures, have
a cup of coffee by three, and get my computer
opened up here, get working and reading some earnings releases,
some trade alerts, and some pre market news. And you're
(14:24):
doing this it's completely quiet in this eerie darkness, and
the island's still asleep. Well, I got to tell you
it was not sustainable and it wasn't healthy either, but
it was necessary. And once I realized that there was
a smarter way, because the truth is, you don't live
(14:48):
on wall streets schedule there, but you just need someone
else who does, and you need an advisor who operates
on Eastern Standard time, someone who can act in real
time time, absorb breaking news and execute trades and give
you insights while you live your life. So here's where
(15:09):
what most people don't realize that the markets are not
designed for anything other than Eastern Standard time. They're not
designed for Hawaii, they're not designed for the West Coast.
The markets are designed around Wall Street, and every major
(15:30):
announcement from CPI data and earnings calls, they happen during
those windows. So if you're asleep when the FED chair
speaks at eight thirty Eastern Standard time, you're already behind.
And if you're answering client calls from you know, Pacific time,
(15:52):
well you're missing out big time. And timing matters, Alignment matters.
And that's why today one of the smartest moves that
any investor, retiree, or business owner can make is to
partner with an advisor who's awake and working when the
action happens. And when I finally structured my financial team
(16:17):
with a Eastern Standard time anchor, everything changed, so you know,
I didn't have to deal with I couldn't live. I
don't know how these guys do it, but I could
not live with a three am alarm every day and
no reactive measures and missing key shifts. So if you're listening,
and I know, we have a lot of people here
(16:40):
in the Capital District.
Speaker 3 (16:42):
That float between.
Speaker 2 (16:44):
Scottsdale, San Diego, Houston, all these different places, and then
they spend time there and they think, you know something,
maybe I should have a local advisor. Well I would
tell you this, maybe not, because have someone that's local
to the market, not local to your doorstep. Okay, so
(17:06):
consider that because that's very important. And so that's something
that I just as I live through that last week,
I thought, wow, this is this is incredibly difficult and
not healthy. So I would encourage you if you're dealing
with somebody, if you're here in the Capitol District and
(17:27):
you have some relationships or you don't have a relationship,
please feel free.
Speaker 3 (17:32):
To reach out.
Speaker 2 (17:33):
But this is where you want to be anchored and
tethered is to New York. So if you're with an
advisor in another state, I would strongly encourage you to
give us a call here completely free, no pressure. Was
give you a twenty minute strategic chat to help you
identify if your money is moving in rhythm with the
(17:56):
real market, or if you're fighting a fight that you
can't win because we can't spend time because your money matters,
and so does the timing of your financial moves. So
coming up, we're going to shift gears here and we
want to find out where's the real strength in today's markets,
(18:21):
which sectors are quietly thriving amidst this chaos, and what
are CEOs not telling you in their earning squalls. So
I want you to stay tuned. You're listening to your
money matters. I'm your host, Drew Prescott, chartered retirement planning
counselor and accredited wealth management advisor. Feel free to check
out our website PRESCOTTPW dot com. If you'd like to
(18:43):
schedule a time to get together, scroll right down the
first page. There you'll see schedule of time. Also, feel
free to look at our resources that we have available there.
Keep an eye on the calendar, and if you're somebody
that's on social media, look sub Prescott Private Wealth. Give
us a like and a follow on Facebook, Instagram, Twitter, ax,
(19:08):
I should say, and YouTube. We're gonna be releasing a
lot of material here on YouTube. We're just around the
bend from doing that. So get yourself on there, get
yourself subscribed, so when it comes out, you'll see it
in real time.
Speaker 3 (19:22):
Okay, So here's where.
Speaker 2 (19:25):
We stand as of April twenty fourth. The SMP five
hundred is down year to date, and that is currently
down about six point Let me just.
Speaker 3 (19:38):
See a whole one second. I apologize.
Speaker 2 (19:40):
Yeah, it looks like we are down on the S
and P five hundred by about six point four percent.
Then the Russell two thousand is down about twelve point
two percent year to date. And lastly, an important number
here is the VIX. Now the VIX is at twenty
(20:00):
four point eighty four, but that's after a six point
one six percent decrease from the prior day's close. So
keep this in mind, and I've been sharing this with clients,
is that the market likes boring, the market likes predictable,
(20:21):
and we've had some chaos and that's okay. It presented
some great buying opportunities for a lot of clients, and
so kudos to you for those that were able to
lock in on that. For those of you that went
to cash and are on the sidelines, well my heart
goes out to you. But here we are, the VIX
(20:43):
is going down, and this goes to my point. My
point is this that if I brought chaos into your
peaceful home, that would you'd notice it right away.
Speaker 3 (20:59):
Now if it continued to pursue. Let me give you
an example.
Speaker 2 (21:05):
My son brought this dog who I've talked about in
the past, Teo.
Speaker 3 (21:10):
Great little dog, cute dog, super cute. I love him.
Speaker 2 (21:13):
But our once peaceful home became chaotic when this little
puppy came in. And now the dog lives there permanently
and he's still equally as crazy, but we've come to
peace with it. It's become the new normal. Well, it's
(21:35):
kind of the same thing as what we're dealing with
with the stock market, is that at first all of
this tariff news and trade deals really kind of rocked
the market. But it has now become our new normal,
and we're seeing as a result, the VICS is starting
(21:57):
to drop, and that's the volatility index. So the volatility,
I think, is going to continue to be dampered simply
because we become comfortable with a chaotic lifestyle. Now that
(22:19):
doesn't mean it's right, but it's just a fact of life. Right,
So what's driving this chaos? Well, we know the rising
US China tariffs have really sparked some trade war fears, right,
some news of slowing global growth forecasts, some mixed and
(22:41):
increasingly cautious corporate earning reports, and then we've got that
sticky inflation data with cooling energy prices. But amidst the noise,
there are some pockets of strength, and I want to
help you find them. Let's start off with consumer staples.
And consumer staples offer some stability and uncertainty, and when
(23:05):
fear strikes, consumers don't stop buying the essentials. And that's
why we saw Procter and Gamble was up three point
two percent year to date and Costco has gained two
point seven percent year to date. So think about it,
no matter what's happening in China, people still brush their teeth,
(23:27):
people still have to wipe after use in the bathroom,
and they still have to shave their face, right, So
you always have this. So no matter what tariffs impact
technology imports, families still stock up on bulk paper, towels
and toilet paper and everything at Costco. And remember we're
(23:50):
not that far removed from COVID. You couldn't even get
toilet paper for crying out loud. You remember that that
was like that was the weirdest thing. I feel like
the shortage there, and I remember everybody was like wondering,
am I gonna be able to get toilet paper?
Speaker 3 (24:08):
It would just flying off the shelf.
Speaker 2 (24:10):
So you know, that's another example of why consumer staples
always does well when there's some chatter here. So when
the markets shake, remember staples. They will provide an anchor
for you here. Okay, Now, healthcare shows some quiet strength
where we saw some big Pharma continued to show resilience.
(24:32):
So Eli Lilly is up one and a half percent
for the year. Mark is still kind of holding flat
for just slightly positive. But consumers they may delay buying
a new car, but they're not going to delay their heart,
you know, their heart medication. And in certain economies, healthcare
isn't luxurious, it's a necessity. And biotech has really taken
(24:56):
some hits and some smaller players are down better than
ten percent, but large cap pharma remains strong. So when
fear rises, essential outperforms luxuries. Always remember that. Now, let's
take a look at energy, because energy has really been
riding the geopolitical wavire. So with the fresh US sanctions
(25:19):
on Iranian oil exports, crude oil prices have spiked. So
we've seen Diamondback Energy has climbed about five points seven percent,
and then Halliburton is up about five point one And
increases in these oil prices tend to benefit exploration, drilling
(25:40):
and services companies very quickly. So the lesson here is
that energy is often the first sector to capitalize when
geopolitical tensions flare. Meanwhile, meanwhile, technology is struggling, and not
everything there is rosy. So these big names that you
(26:02):
were hearing not that long ago, with Nvidia down about
eighteen percent amid these export curves that we have here
and AMD and Broadcom, they're also suffering double digit losses.
So these high valuation tech it's uniquely sensitive to this uncertainty.
Speaker 3 (26:26):
And then when you add in.
Speaker 2 (26:27):
Tariff worries plus cautious guidance, then you've got a recipe
for very quick pullbacks. And when we look at the
corporate earnings, these are more than just numbers because if
you only read the top line earning reports, then you're
gonna miss the entire story. So this is something I
(26:47):
always tell people because if you're not just about These
are not just about whether companies beat or miss their expectations.
It's really more about what they're saying and what they're
not saying about the future. So I'm going to share
two examples with you here. Let's look at the April
(27:08):
seventeenth report from United Healthcare.
Speaker 3 (27:14):
So they missed.
Speaker 2 (27:15):
Both their EPs and the revenue estimates. They slashed full
your guidance significantly, and then the stock collapsed about twenty
two point four percent in a single trading day. That
was one hundred and twenty billion that was wiped out
in twenty four hours. And it wasn't just because they
missed their numbers. It was because management reduced their forward
(27:38):
vision and markets absolutely hate that more than they hate
bad news. Now let's look at snap On Tools. Now
they're in the industrial sector. They missed both sales and
earnings targets, and then they blamed rising input costs due
to tariffs, and then that stock tumbled eight percent post earnings.
(28:02):
And banks here are feeling the pressure, even banks, which
usually thrive in volatile rate environments, they're flashing some caution lights.
So when you look at JP Morgan, they beat earnings,
but they warned about slower loan growth ahead, and then
Goldman Sachs flagged weaker trading revenues amid the economic softness,
(28:26):
and the financials are down about five percent in April alone.
And when I was talking at the beginning of this part,
I was talking about the CEOs and their silence. That's
really a bigger warning than you think. And here's something
that few retail investors are talking about.
Speaker 3 (28:47):
It's this.
Speaker 2 (28:48):
It's that more and more companies are withholding guidance altogether.
So that means no forecast, no visibility, and no clear
map for investors. So these are companies like Nvidia, AMD, Tesla,
and they're either skipping guidance or they're offering very vague
(29:08):
but cautious language. And why is that Because between tariffs,
inflation risks, and volatile consumer sentiments, even the CEOs they
don't know what's coming next. And when management stops giving guidance,
it is a signal, even though they're not saying it,
it's a signal. And the signal is this uncertainty is
(29:33):
higher than usual for them, volatility risk is higher than usual,
and planning ahead becomes harder for companies and for investors.
So stocks without guidance historically experience a five to a
fifteen percent larger post earnings price swing. Translation equals no
(29:57):
map for the future equals wild swing. So what should
you do now? Well, rebalance slightly towards defensive Maybe add
some consumer staples, healthcare and energy exposure. Maybe raise some
cash levels, but strategically, okay, maybe have like ten, no
(30:21):
more than twenty percent in cash. Kind of give you
some buying power when true bargains emerge here, and be
cautious with new tech purchases unless you're willing to write
extreme volatility. You want to avoid new heavy bets in
AI and chip stocks for now. Okay, not indefinitely, but
just for now, and then focus on quality. You want
(30:44):
a strong balance sheet, a durable demand, and positive free
cash flow. And remember, if you're just tuning in, you're
listening to your money matters. I'm your host, Drew Prescott,
chartered Retirement Planning counselor and accredited wealth management advisor, and
the phone number here is five one eight two zero
three one nine eighty three five zero five one eight
(31:08):
two zero three nineteen eighty.
Speaker 3 (31:10):
Three, Or visit Prescott PW dot.
Speaker 2 (31:13):
Com and uh I'll give you a twenty minute time
slot here at no cost to you.
Speaker 3 (31:20):
Okay, so what's what's next? What should we cover next?
You know what? Yeah, let's do that.
Speaker 2 (31:30):
I said earlier I would cover some annuities here, and
so a lot of the questions that are coming in
after that most recent show where I covered annuities are
people calling sharing their experience of their advisor selling them
(31:50):
annuity and the questions that they have and and should
they have bought it, should they not have bought it?
And then there are so many options as it relates
to annuities, and no annuity is created equally, and so
(32:15):
as a fiduciary, it's my job to find exactly the
right product for you and to make sure that it
functions within the needs that you have, otherwise it's not
a good fit. So there's a lot of people out
(32:36):
there that are dealing with what we call financial representatives,
and then there are also people out there that are
called financial advisors, but they work for companies, and these
companies have products, and these companies also have bogies of
(33:03):
certain products that need to be sold and give them
a way to qualify for their fancy little trip or
to be recognized on stage amongst their peers. But over
here at Prescott Private Wealth, we have none of that. Okay,
we just have your best uh. I don't want to
(33:24):
say that. I don't even want to say your best
interest because that's an over used tagline in this industry,
and actually it's a it's a step.
Speaker 3 (33:36):
Below a fiduciary.
Speaker 2 (33:38):
So what I want to say is that whatever is
good for you is what.
Speaker 3 (33:45):
We want to accomplish.
Speaker 2 (33:47):
Okay, So we want to find the perfect fit for
you personally. So let's get started here with these annuities.
All right. So annuities are they a retirement shield or
are they a silent trap? And I want to help
(34:09):
you understand the differences here.
Speaker 3 (34:11):
Okay, So the question here is.
Speaker 2 (34:18):
Should you consider annuities to protect your portfolio? That's one
of the questions. And that's a that's a that's a
tough question.
Speaker 3 (34:34):
Now.
Speaker 2 (34:34):
I know that there's a lot of people out there.
I just had a friend of mine just the other
day he goes, Hey, I don't mean to talk business,
but I wanted to ask you a question.
Speaker 3 (34:44):
I deal with.
Speaker 2 (34:45):
A big company, a big green company, and they had
one of the junior advisors call me up and say, hey,
my my advisor who is in Texas really wanted to
meet with me, but he or she was so busy
they couldn't. So they wanted me to call you and
(35:07):
tell you about the market volatility and YadA YadA YadA,
and we think that right now you should put your
money into an annuity. Now, no financial plan was run.
This was just an opportunity to make a sale, and
(35:29):
my friend felt as though he didn't understand what he
just purchased. I asked him questions about it. He couldn't
answer them. Asked him about the income that it was
going to get kicked off of it.
Speaker 3 (35:43):
He didn't know.
Speaker 2 (35:44):
He said it was really just put in there to
protect him from market volatility. Okay, big red flag, very
big red flag for me. So when somebody comes to
you and says, hey, the market's going crazy, blah blah
(36:05):
blah blah blah, let's take some of your money, we'll
just talk it into an annuity to shelter you from this.
Speaker 3 (36:14):
Okay.
Speaker 2 (36:16):
No, No, that is not the right way to do this. Okay,
Because annuities are an insurance product, and annuities have fees
wrapped around them. I don't care what you hear on
(36:37):
the radio, and you know, hey, this is like buying
a no load mutual fund. No, no, not at all.
That's noise. It's nonsense. So if you've been told this
and this is something that you personally have, call me.
Let's dissect this thing right in front of you, and
(36:59):
I'll show you how to make heads or tails out
of this. Now, Additionally, there are some very unique annuities
out there, and I'll share with you one's there's one
out there that you could make a case for using
(37:20):
it for a shelter point. However, you know you have to.
I would want to know exactly where your other assets are. Again,
as I tell you all the time, never go headlong
in any direction because this is where people get hurt.
Speaker 3 (37:42):
So, if you have.
Speaker 2 (37:48):
The desire to shelter some of your investments from market volatility,
there's a lot of different ways to do it. Now,
if you're looking if this is non retirement money and
you're looking for a more strategic way to invest, have
a little downside protection, knowing that you're going to be
(38:09):
capped on the upside. Potentially you could use a very
unique annuity with some shielding techniques in there and really.
I think one of the benefits would have to be
to have a better growth opportunity with the deferment of taxation.
(38:36):
That would be a nice additional feature. But again, everyone's different,
so I don't think that this is something for everybody. Unfortunately.
I think that these things get mass marketed, okay. And
then you have some that are based upon the market,
which we call variable annuities, where you invest in the
(38:58):
market with risk and potential reward. And then you have
these fixed annuities, which are just steady interest, no market risk, okay.
And then you have these what we call indexed annuities,
which in New York State, very very limited, but they're
tied to benchmarks like the S and P five hundred.
(39:19):
They kind of put caps on them, they put a
floor in there. And you know, these all sound pretty
good at first look, but let's dig deeper because with annuities,
these these can work beautifully. Now when can they work beautifully?
(39:41):
They work beautifully when you need guaranteed lifetime income. So
if you're retiring soon and you fear outliving your money,
annuities can create a stable pension like stream that you
can't outlive, where if you want protection from these major
down to Like I said, there are some products out
(40:02):
there that offer these built in buffers that protect against
the first ten or twenty percent of market losses. Maybe
you're somebody that needs tax deferred growth. So let's say
if you've maxed out your IRA or your four oh
one K, Well, annuities allow continued tax deferred compounding, which
(40:24):
is ideal for a high income saver. Or maybe you're
just someone that craves that psychological safety, knowing that no
matter what happens, if the markets crash, recession happens, inflation spikes,
your paycheck will still arrive every month and it can
be a huge emotional boost in retirement. But what I
(40:48):
want to cover also is when annuities go wrong. And
here's what many agents won't tell you. So why do
I say agents, Well, because in order to ellen annuity,
you must be properly licensed with your life, Accident and
Health license. Now a lot of fellas that are on
(41:11):
the airwaves here are not licensed for that. Now here's
what you need to understand is that early you have
these early withdrawal penalties. So let's say that you are
someone that's fifty years old and somebody says to you, Hey,
(41:34):
you can use this fixed annuity and we give you
a crediting rate of X for five years. Well that's
not like a CD. So if you put this money
in at the end of the five years, you're not
going to just go back in and take it out
and say, oh, thank you very much, because you have
this early withdrawal penalty, which says that if you take
(41:55):
out money before fifty nine and a half, you're going
to face a ten percent IRS penalty plus ordinary income tax.
So let me give you an example. So let's say
that you withdraw twenty thousand dollars early. Well, you're going
to lose two thousand of that to penalties, plus forty
four hundred to taxes assuming a twenty two percent tax bracket. Okay,
(42:20):
so your twenty thousand was just reduced by sixty four
one hundred dollars, So you've got thirteen six is your net. Now,
if you're older than fifty nine and a half, you
can pull back that penalty of two thousand because that
wouldn't apply. But remember, for you younger investors out there, that's
(42:42):
something that's going to come into play. Also, there are
surrender charges and many annuities come with a five to
a ten year surrender period, meaning that you can't fully
cash out without hefty fees. And the surrender charges TIPIC
started around seven percent or more and then they gradually
(43:03):
decline each year. Now, the caveat to the surrender charge
is that if you start taking income, you don't have
to You don't have to worry about that. That's not
subject to any type of surrender charge. It would just
be if you wanted to cash in your chips and
walk away from the table. Also, remember, on some products
(43:27):
they have caps and participation limits. So these indexed annuities
they offer these what they call market link returns, but
they often cap your gains at somewhere between four to
seven percent. So even if the SMP five hundred skyrockets
up to twenty five percent, you personally may be capped
(43:48):
at four to seven percent. And then the last thing
that I want to point out to you is that
variable annuities can charge from two to three percent annually.
Once you add up writers like lifetime income guarantees and
these fees, they can eat away your return year after year.
Now with these though, you're basically paying for the insurance. Okay,
(44:15):
you're paying for these guarantees. So if you're someone that
needs a lifetime income, well and that safety of principle.
I've yet to run into a client that is really
concerned about the fees if it accomplishes what they want
to accomplish here, So let me see if I can
drive this home for you with a quick little story.
Speaker 3 (44:39):
Everybody sit down, listen carefully, everybody sit down, Sit down,
please sit Story time, Story time.
Speaker 2 (44:56):
So let me tell you about Jane, a real client,
the name here just for some privacy. And Jane came
to me back in the beginning of March, and she
was fifty six, recently retired early and really worried about
(45:17):
markets volatility, and an agent had pitched her a ten
year deferred annuity which had a big bonus up front,
but lots of hidden fees and surrender penalties, and if
she needed money some liquidity for emergencies, she'd have to
(45:37):
forfeit thousands of dollars and she was boxed out of
her money. So what we did was, instead we designed
a strategy that used some dividend paying stocks, some CDs
and bonds, and then a smaller, much smaller portion of
(46:03):
it for an annuity and the results here was that
she had higher flexibility, we reduced those early withdrawal risks,
and she had strong and steady income. And sometimes annuities
are right, but sometimes they're just not the best fit.
(46:27):
And Jane was thrilled because she stayed liquid, she diversified,
and she ended up growing even when April's market dip hit.
So the question is which annuity makes the most sense
(46:48):
and for whom. So that's the million dollar question. And
everybody is different, Okay. It's like saying that everybody should
should wear a Salcony running shoe, Well, that can't possibly
be the case. And saying that everyone should be you know,
a size ten, Well, that just doesn't work. That's why
(47:11):
they make all of these different types of shoes for
different occasions and different sizes and different feet. So if
you're sixty years old and older and you want guaranteed
monthly income, then you may want to consider a variable
annuity with what we call a guaranteed lifetime income benefit
(47:34):
a glib rider, a guaranteed lifetime income benefit.
Speaker 3 (47:40):
And if you're.
Speaker 2 (47:40):
Fifty to sixty but still flexible, maybe you may want
something that is indexed with a five to a seven
year surrender period that can be a hedge if it's
structured properly. Now, if you're under fifty and you're growing aggressively,
(48:05):
annuities are rarely ideal for you, So stick to iras, roths,
brokerage accounts first, using traditional investments.
Speaker 3 (48:15):
Okay, and you.
Speaker 2 (48:20):
Really let me see how how do I want to
package this next piece here? So I don't want to
mention any products on here. But there are some annuities
out here that have that downside buffer, like I said,
which gives you like a ten to twenty percent downside protection,
and that's ideal for somebody that's looking for growth with protection.
(48:43):
Then you've got some that have strong guaranteed income features
and are really a better fit for retirese needing lifelong
cash flow. And then you even have some that have
the ability to take a higher income and even when
it goes to zero, you still have a guaranteed lifetime income.
(49:05):
These offer a lot more customization and they could be
a good fit for somebody. Now, the bottom line and
annuities here is that they are tools. Okay, they're not solutions.
So when used wisely, they can be used to shield
some of your money from volatility. But when sold recklessly,
(49:28):
they trap you into costly inflexible contracts. And if somebody
is pushing you into a ten year surrender annuity without
understanding what your real liquidity needs are, you need to
walk away. And I just want to give one more
(49:48):
reminder here you're listening to your money matters. I'm Drew Prescott,
chartered retirement planning counselor and accredited wealth management advisor at
Prescott Private Wealth, located on Who's Ex Street in Troy,
New York. The phone over here five eight two zero three,
nineteen eighty three and PRESCOTTPW dot com. So that's that's
(50:10):
a that's a good generic overview of annuities. Okay, I'm
sure I just unpacked more questions for you. This isn't
a show that's designed to go heavily into detail on
any specific product. Additionally, one hour, you know, is not
(50:35):
enough to do such a thing. But nonetheless, here we are,
we are really kind of moving along and we have
a lot of bright spots inside of the market. Now,
what I want to encourage you to do, which I
try to do this every show, I want you to
(50:59):
get yourself.
Speaker 3 (51:00):
A financial plan. Okay.
Speaker 2 (51:04):
The financial plan is your map out at sea, and
you're gonna will help you tune in your compass to
make sure that you're dialed in, because the old adage,
which still is one of my favorites, is that when
(51:25):
you're out at sea, if you're even one degree you
off on your compass with a long period of time,
you end up so far away from where you were
looking to go. And that's the same thing as financial planning.
(51:46):
Financial planning is something that is a must have. And
I worked with a client who came from a very
wealthy family, and they didn't they pursued their passion. They
took on a career of servitude, really, and they were
(52:13):
set up with a nice a nice chunk of money
through inheritance and they had some trust fund money. And
when we first met, I said to him, tell me
a little bit about your financial picture. And he goes
(52:34):
on to say how he had inherited X numbers of dollars,
which was pretty significant, and he liked cars, so he
squandered away a ton of money. I mean, I can't
even begin to tell you how much money he blew
on cars, and which I was a little bit shocked
because when I met him, he was not driving a
(52:56):
nice car, and he was telling.
Speaker 3 (53:01):
Me how much.
Speaker 2 (53:03):
Remorse he had for making these terrible decisions. And at
the time, you know, when I started working with him,
he had a couple million dollars left, and I had
some money coming in from oil wells that were in
Texas that his grandfather had left for him. His grandfather
(53:24):
was a very successful man, very prominent owner of a
large accounting practice nationwide, and he was really set up
well as far as giving an advantage, but he did
not have a financial plan. So I pushed him to
(53:46):
do a financial plan. We put that in place, and
when we did, everything was going wonderful. And then all
of a sudden, he came across something that he thought
was going to be a fantastic investment. I encouraged him
not to get into it, but nonetheless he did and
(54:07):
he lost all that money. And then so now we're
really challenged with finding, you know, making these numbers work
for him for a lifetime. And then the oil wells
dry up. It's a true story, it's amazing. So he
loses that income. Now we would have been able to
(54:31):
make everything work with what he had had in his
investment account originally, but he cashed out so much of
it and lost it on that speculative deal that he
really put himself in a bad situation. Now at this point,
I don't even know what he has left, but I
know that financially he's not in a good spot. So
(54:51):
not only do you need a financial plan, but you
need to stick to it. And if you don't have one,
I would love to sit with you again. You're listening
to Drew Press, God of Prescott Private Wealth, and we're
gonna be tying up the show here on that note,
So thank you so much for listening, and tune back
in next Sunday eleven am w g Y. The phone
number here is five one eight two zero three nineteen
(55:13):
eighty three five one eight two zero three one nine
eight three and Prescott PW dot com. And until next week,
May God bless you and God bless your family.
Welcome to the hidden world of wealth, where secrets of
the affluent become accessible to you. You are listening to
Your Money Matters, the most provocative financial radio show on
the airwaves. You are about to start your educational journey
here on Your Money Matters with your host, Drew Prescott,
(00:22):
President of Prescott Private Wealth and Chartered Retirement Planning Counselor.
Drew will unlock the complexities of the financial landscape with straightforward,
powerful insights. Whether you're planning for retirement, managing in a state,
or looking to grow your wealth. Consider this your exclusive invitation.
Turn up the volume, lean in closer. Let's navigate the
(00:45):
hidden paths of prosperity together. Your financial enlightenment begins now.
Securities all produce a terror Financial Specialists LLC Member fen
The SIPC reservices offered through Setara Investment Advisors LLC SOTERA
firms are under separate ownership from any other named entity.
(01:06):
Four five one THO sixth Street, Troy, New York one
two one eight zero We of James, the dream of
(01:38):
Once in Love.
Speaker 2 (01:41):
Helloha and welcome back to Your Money Matters, where we
believe your wealth deserves wisdom, your future deserves protection and
your dreams deserve strategy. I'm Drew Prescott coming to you
today with a story that's a little bit different, but
one that I think that you'll feel right in your
(02:02):
very bones, and I'm hoping to connect with you here today.
It's been good to be away, it's even better to
be back. And thank you for supporting me on my
little vacation here with the family. For those of you
who listened to the show, you know that we took
(02:22):
a trip to Hawaii, and again you're listening to your
money matters. I'm the host, Drew Prescott, chartered retirement Planning
counselor and accredited wealth management advisor here at Prescott Private Wealth.
The phone numbers five one eight two zero three, nineteen
eighty three. Five one eight two zero three, nineteen eighty three.
So thank you again for your support. I appreciate it.
(02:46):
And we had a wonderful time there we went. This
time we went to the Big Island, and the last
time we went, we went to Honolulu. Now, I can't
say that I didn't like Honolulu. I really liked Honolulu too,
but the Big Island very different and very different, because
you know, this is a place that when you go,
(03:07):
you just you have to relax, and that's that's wonderful.
I was really looking forward to snorkeling. Funny story, So
wherever we go on vacation, I like to snorkel, and
I like these full mask snorkels. If you if you,
if you have any idea what I'm talking about. Basically,
it just covers your entire face and it just makes
(03:30):
it feel so much more natural and you've got a
just a much better field of vision as well. So
the night before we leave, we had our you know,
I had all the snorkels for the whole family, and
Stacey wakes up at about like four o'clock in the
morning and she's in a panic and says, ah, I
(03:51):
gotta I have to run over to Walmart and get
different masks for us. I just read this article that
there's a whole bunch of people that do this shallow
dive and they end up dying on vacation because we're
using these full face masks.
Speaker 3 (04:08):
I said, are you kidding me?
Speaker 2 (04:10):
I'm using my face mask. I don't really care what
they say here. So she was so convinced that something
terrible was going to happen so we left the face
masks at home, and then when I got there, I
just bought one anyways, because well whatever I was gonna
roll the dice, I guess. But it had just an
(04:31):
incredible time. I can say that now I've swam with
manna rays and I've swam with sea turtles, and all
the fish that you see in Finding Nemo, they were
they were all there. It was just it was it
was outstanding. And the water at this one beach that
(04:54):
we went to there was no waves and the water
was so clear you could act, we see individual grains
of sand through the water. It was just such a
beautiful thing. And I would encourage it if you ever
thought of going to Hawaii. You know, don't hesitate go.
(05:14):
I know the flight is long. What we do is
we actually go from Boston, and Boston offers a direct
flight from Hawaiian Airlines. Yeah, I think I think it
takes us like twelve hours. Every you know, it seems
like every time's different, but I think it's about twelve hours.
And it went from it goes from Boston to Oahu
(05:36):
as a direct flight. They feed your two meals. You know,
it's actually it's an experience it's not terrible, I gotta
say that. And there's plenty of bathrooms and everything, so
it's it's it's actually pretty enjoyable. But so don't hesitate
if you want to go, go all right, just you know,
we're only here for a short period of time on
(05:56):
this earth, and just go and enjoy yourself. Now, we
did have to take a little flight from o Wahoo,
of course, over to the Big Island where we land
in Kona, and my day starts and ends with a
cup of coffee. And I love coffee, and I was
really looking forward to having this coffee from ConA because
(06:17):
everything that I read said that it was a nice
blend and a great bean, and I gotta be honest
with you, it was sensational.
Speaker 3 (06:25):
It was. It lived up to the hype.
Speaker 2 (06:29):
Decided not to bring any back because we were limited
in space and it was about forty dollars for a
pound of coffee, so you know what, just back to
our own supply here Stateside. So anyhow, thank you for
tuning in today, And I wanted to share something with
(06:49):
you about while I was there trying to run my
practice to a degree. You know, everything was pretty much
shut down, but there's still stuff you always have to do.
And we were six hours behind us here in New York,
so Eastern Standard time, six hours behind where we were
(07:13):
over in Waya, Koloa. And let me tell you something,
I have no idea why anybody would have a financial
advisor that is not in the Eastern Standard time zone.
The market lives here, and it was incredibly difficult.
Speaker 3 (07:34):
While you're sitting.
Speaker 2 (07:34):
Outside and you're having a cup of coffee waiting to
watch the sunrise, knowing that the market's already been going
at it here for several hours. That's challenging. So I
couldn't imagine living there and knowing that at three o'clock
(07:58):
in the morning, it's that, you know, three point thirty
in the morning, you know the bell's going off in
Wall Street. That's That's not something I would want to
contend with. So I would encourage you if you have
an advisor that's in California, Arizona, Texas, so on, you know,
you may want to consider reevaluating that thought process and
(08:22):
get aligned with someone that's here on the East coast.
Speaker 3 (08:27):
That was one of my thoughts.
Speaker 2 (08:28):
I just thought, boy awfully challenging business as it is,
And then to tack on the challenge of trying to
do business while you're over in a different time zone. Boy,
that's nothing that I would want to contend with.
Speaker 3 (08:41):
I don't think so.
Speaker 2 (08:44):
Anyways, as you know, we have really been through quite
a bit of noise and jitters in the marketplace, and
we have seen a little bit of reprieve here and
this last week has been a nice a nice feeling
(09:06):
of kind of instilling some hope for the individual investors,
and it's been good to see. So I want to
unpack that a little bit for you and also share
with you that when we look at the market here
and we see everything that's going on, I think it's
(09:30):
very important to remember that through these times. And I
hear this all the time. Whenever the market starts to
create a little bit.
Speaker 3 (09:40):
It seems like.
Speaker 2 (09:43):
The addition of new clients always happens fast and furious.
And the question that I always get asked by these
new clients is well, do you think that this is
a good time to actually invest? And frankly, I would
say absolutely, because had we had met a month and
(10:06):
a half ago, you know, I still thought that that
was a fantastic time to invest. So so the answer
is yes, there's always a good time to invest. Now
the question is where do you invest and how do
you invest? And so we'll tap into that a little
bit today. So what I want to do is help
(10:29):
you get away from the chaos and to understand exactly
what your next move could be and potentially for you
should be, and how to do that with peace. So
let's get started today. First, what I want to do
(10:50):
is I want to reveal to you why managing your
wealth from a different time zone may not be ideal. Also,
want to dive deep into the current state of the
markets here, who's thriving, who's struggling, and why corporate guidance
(11:11):
or the lack thereof is flashing some warning lights for
the rest of twenty twenty five. And third, I want
to touch on some annuities. Again, I don't not something
that I plan on camping out on every week, but
the show that we aired over the last couple of
(11:31):
weeks here has really brought in scores and scores of
questions about annuities and I want to share with you
some insight on that and also some warnings. Okay, and
then also let's talk a little bit about interest rates,
the silent force that's really reshaping everything from stocks to
(11:56):
housing to business lending, and why your next movements more
than ever. And along the way, I'll share some practical
action steps that you can take right now to ride
these economic waves with skill, confidence and clarity, because here
on your money matters. We're not just about information, We're
(12:17):
about transformation, and that starts with your mindset. So let's
get started. I'm gonna use a kind of an outline
here and share with you why I was saying it's
so important to deal with somebody on the East Coast
(12:37):
because you know, you think about here I am. I'm
in Hawaii. You know, I'm kind of living the dream
while I'm there, and you know, let's be honest. You've
got lava flowing from volcanoes in the background and it
made the whole skyline will foggy at times, which was
(12:58):
pretty pretty amaze. And then you've got the dazzling white
sands of Hapuna Beach, and you have farmers' markets and
high low that overflow with rainbow fruits and warm smiles,
and the people that are just so they're just wonderful people.
(13:19):
But as magical as Hawaii was, time does not bend
for beauty and the market the heartbeat of your portfolio.
It still marches to the rhythm of New York and
in Hawaii that means, as I said before, that the
markets open at three point thirty am and they close
(13:42):
at ten am. And if you're sleeping in, that means
if you're waiting for your coffee to kick in, you
basically are missing key opportunities or key risks before you
even finish your breakfast. So here's what my routine looked
like while I was away to try to make these
(14:03):
things work. I had a two forty five am alarm,
and I wanted to quickly scan the overnight futures, have
a cup of coffee by three, and get my computer
opened up here, get working and reading some earnings releases,
some trade alerts, and some pre market news. And you're
(14:24):
doing this it's completely quiet in this eerie darkness, and
the island's still asleep. Well, I got to tell you
it was not sustainable and it wasn't healthy either, but
it was necessary. And once I realized that there was
a smarter way, because the truth is, you don't live
(14:48):
on wall streets schedule there, but you just need someone
else who does, and you need an advisor who operates
on Eastern Standard time, someone who can act in real
time time, absorb breaking news and execute trades and give
you insights while you live your life. So here's where
(15:09):
what most people don't realize that the markets are not
designed for anything other than Eastern Standard time. They're not
designed for Hawaii, they're not designed for the West Coast.
The markets are designed around Wall Street, and every major
(15:30):
announcement from CPI data and earnings calls, they happen during
those windows. So if you're asleep when the FED chair
speaks at eight thirty Eastern Standard time, you're already behind.
And if you're answering client calls from you know, Pacific time,
(15:52):
well you're missing out big time. And timing matters, Alignment matters.
And that's why today one of the smartest moves that
any investor, retiree, or business owner can make is to
partner with an advisor who's awake and working when the
action happens. And when I finally structured my financial team
(16:17):
with a Eastern Standard time anchor, everything changed, so you know,
I didn't have to deal with I couldn't live. I
don't know how these guys do it, but I could
not live with a three am alarm every day and
no reactive measures and missing key shifts. So if you're listening,
and I know, we have a lot of people here
(16:40):
in the Capital District.
Speaker 3 (16:42):
That float between.
Speaker 2 (16:44):
Scottsdale, San Diego, Houston, all these different places, and then
they spend time there and they think, you know something,
maybe I should have a local advisor. Well I would
tell you this, maybe not, because have someone that's local
to the market, not local to your doorstep. Okay, so
(17:06):
consider that because that's very important. And so that's something
that I just as I live through that last week,
I thought, wow, this is this is incredibly difficult and
not healthy. So I would encourage you if you're dealing
with somebody, if you're here in the Capitol District and
(17:27):
you have some relationships or you don't have a relationship,
please feel free.
Speaker 3 (17:32):
To reach out.
Speaker 2 (17:33):
But this is where you want to be anchored and
tethered is to New York. So if you're with an
advisor in another state, I would strongly encourage you to
give us a call here completely free, no pressure. Was
give you a twenty minute strategic chat to help you
identify if your money is moving in rhythm with the
(17:56):
real market, or if you're fighting a fight that you
can't win because we can't spend time because your money matters,
and so does the timing of your financial moves. So
coming up, we're going to shift gears here and we
want to find out where's the real strength in today's markets,
(18:21):
which sectors are quietly thriving amidst this chaos, and what
are CEOs not telling you in their earning squalls. So
I want you to stay tuned. You're listening to your
money matters. I'm your host, Drew Prescott, chartered retirement planning
counselor and accredited wealth management advisor. Feel free to check
out our website PRESCOTTPW dot com. If you'd like to
(18:43):
schedule a time to get together, scroll right down the
first page. There you'll see schedule of time. Also, feel
free to look at our resources that we have available there.
Keep an eye on the calendar, and if you're somebody
that's on social media, look sub Prescott Private Wealth. Give
us a like and a follow on Facebook, Instagram, Twitter, ax,
(19:08):
I should say, and YouTube. We're gonna be releasing a
lot of material here on YouTube. We're just around the
bend from doing that. So get yourself on there, get
yourself subscribed, so when it comes out, you'll see it
in real time.
Speaker 3 (19:22):
Okay, So here's where.
Speaker 2 (19:25):
We stand as of April twenty fourth. The SMP five
hundred is down year to date, and that is currently
down about six point Let me just.
Speaker 3 (19:38):
See a whole one second. I apologize.
Speaker 2 (19:40):
Yeah, it looks like we are down on the S
and P five hundred by about six point four percent.
Then the Russell two thousand is down about twelve point
two percent year to date. And lastly, an important number
here is the VIX. Now the VIX is at twenty
(20:00):
four point eighty four, but that's after a six point
one six percent decrease from the prior day's close. So
keep this in mind, and I've been sharing this with clients,
is that the market likes boring, the market likes predictable,
(20:21):
and we've had some chaos and that's okay. It presented
some great buying opportunities for a lot of clients, and
so kudos to you for those that were able to
lock in on that. For those of you that went
to cash and are on the sidelines, well my heart
goes out to you. But here we are, the VIX
(20:43):
is going down, and this goes to my point. My
point is this that if I brought chaos into your
peaceful home, that would you'd notice it right away.
Speaker 3 (20:59):
Now if it continued to pursue. Let me give you
an example.
Speaker 2 (21:05):
My son brought this dog who I've talked about in
the past, Teo.
Speaker 3 (21:10):
Great little dog, cute dog, super cute. I love him.
Speaker 2 (21:13):
But our once peaceful home became chaotic when this little
puppy came in. And now the dog lives there permanently
and he's still equally as crazy, but we've come to
peace with it. It's become the new normal. Well, it's
(21:35):
kind of the same thing as what we're dealing with
with the stock market, is that at first all of
this tariff news and trade deals really kind of rocked
the market. But it has now become our new normal,
and we're seeing as a result, the VICS is starting
(21:57):
to drop, and that's the volatility index. So the volatility,
I think, is going to continue to be dampered simply
because we become comfortable with a chaotic lifestyle. Now that
(22:19):
doesn't mean it's right, but it's just a fact of life. Right,
So what's driving this chaos? Well, we know the rising
US China tariffs have really sparked some trade war fears, right,
some news of slowing global growth forecasts, some mixed and
(22:41):
increasingly cautious corporate earning reports, and then we've got that
sticky inflation data with cooling energy prices. But amidst the noise,
there are some pockets of strength, and I want to
help you find them. Let's start off with consumer staples.
And consumer staples offer some stability and uncertainty, and when
(23:05):
fear strikes, consumers don't stop buying the essentials. And that's
why we saw Procter and Gamble was up three point
two percent year to date and Costco has gained two
point seven percent year to date. So think about it,
no matter what's happening in China, people still brush their teeth,
(23:27):
people still have to wipe after use in the bathroom,
and they still have to shave their face, right, So
you always have this. So no matter what tariffs impact
technology imports, families still stock up on bulk paper, towels
and toilet paper and everything at Costco. And remember we're
(23:50):
not that far removed from COVID. You couldn't even get
toilet paper for crying out loud. You remember that that
was like that was the weirdest thing. I feel like
the shortage there, and I remember everybody was like wondering,
am I gonna be able to get toilet paper?
Speaker 3 (24:08):
It would just flying off the shelf.
Speaker 2 (24:10):
So you know, that's another example of why consumer staples
always does well when there's some chatter here. So when
the markets shake, remember staples. They will provide an anchor
for you here. Okay, Now, healthcare shows some quiet strength
where we saw some big Pharma continued to show resilience.
(24:32):
So Eli Lilly is up one and a half percent
for the year. Mark is still kind of holding flat
for just slightly positive. But consumers they may delay buying
a new car, but they're not going to delay their heart,
you know, their heart medication. And in certain economies, healthcare
isn't luxurious, it's a necessity. And biotech has really taken
(24:56):
some hits and some smaller players are down better than
ten percent, but large cap pharma remains strong. So when
fear rises, essential outperforms luxuries. Always remember that. Now, let's
take a look at energy, because energy has really been
riding the geopolitical wavire. So with the fresh US sanctions
(25:19):
on Iranian oil exports, crude oil prices have spiked. So
we've seen Diamondback Energy has climbed about five points seven percent,
and then Halliburton is up about five point one And
increases in these oil prices tend to benefit exploration, drilling
(25:40):
and services companies very quickly. So the lesson here is
that energy is often the first sector to capitalize when
geopolitical tensions flare. Meanwhile, meanwhile, technology is struggling, and not
everything there is rosy. So these big names that you
(26:02):
were hearing not that long ago, with Nvidia down about
eighteen percent amid these export curves that we have here
and AMD and Broadcom, they're also suffering double digit losses.
So these high valuation tech it's uniquely sensitive to this uncertainty.
Speaker 3 (26:26):
And then when you add in.
Speaker 2 (26:27):
Tariff worries plus cautious guidance, then you've got a recipe
for very quick pullbacks. And when we look at the
corporate earnings, these are more than just numbers because if
you only read the top line earning reports, then you're
gonna miss the entire story. So this is something I
(26:47):
always tell people because if you're not just about These
are not just about whether companies beat or miss their expectations.
It's really more about what they're saying and what they're
not saying about the future. So I'm going to share
two examples with you here. Let's look at the April
(27:08):
seventeenth report from United Healthcare.
Speaker 3 (27:14):
So they missed.
Speaker 2 (27:15):
Both their EPs and the revenue estimates. They slashed full
your guidance significantly, and then the stock collapsed about twenty
two point four percent in a single trading day. That
was one hundred and twenty billion that was wiped out
in twenty four hours. And it wasn't just because they
missed their numbers. It was because management reduced their forward
(27:38):
vision and markets absolutely hate that more than they hate
bad news. Now let's look at snap On Tools. Now
they're in the industrial sector. They missed both sales and
earnings targets, and then they blamed rising input costs due
to tariffs, and then that stock tumbled eight percent post earnings.
(28:02):
And banks here are feeling the pressure, even banks, which
usually thrive in volatile rate environments, they're flashing some caution lights.
So when you look at JP Morgan, they beat earnings,
but they warned about slower loan growth ahead, and then
Goldman Sachs flagged weaker trading revenues amid the economic softness,
(28:26):
and the financials are down about five percent in April alone.
And when I was talking at the beginning of this part,
I was talking about the CEOs and their silence. That's
really a bigger warning than you think. And here's something
that few retail investors are talking about.
Speaker 3 (28:47):
It's this.
Speaker 2 (28:48):
It's that more and more companies are withholding guidance altogether.
So that means no forecast, no visibility, and no clear
map for investors. So these are companies like Nvidia, AMD, Tesla,
and they're either skipping guidance or they're offering very vague
(29:08):
but cautious language. And why is that Because between tariffs,
inflation risks, and volatile consumer sentiments, even the CEOs they
don't know what's coming next. And when management stops giving guidance,
it is a signal, even though they're not saying it,
it's a signal. And the signal is this uncertainty is
(29:33):
higher than usual for them, volatility risk is higher than usual,
and planning ahead becomes harder for companies and for investors.
So stocks without guidance historically experience a five to a
fifteen percent larger post earnings price swing. Translation equals no
(29:57):
map for the future equals wild swing. So what should
you do now? Well, rebalance slightly towards defensive Maybe add
some consumer staples, healthcare and energy exposure. Maybe raise some
cash levels, but strategically, okay, maybe have like ten, no
(30:21):
more than twenty percent in cash. Kind of give you
some buying power when true bargains emerge here, and be
cautious with new tech purchases unless you're willing to write
extreme volatility. You want to avoid new heavy bets in
AI and chip stocks for now. Okay, not indefinitely, but
just for now, and then focus on quality. You want
(30:44):
a strong balance sheet, a durable demand, and positive free
cash flow. And remember, if you're just tuning in, you're
listening to your money matters. I'm your host, Drew Prescott,
chartered Retirement Planning counselor and accredited wealth management advisor, and
the phone number here is five one eight two zero
three one nine eighty three five zero five one eight
(31:08):
two zero three nineteen eighty.
Speaker 3 (31:10):
Three, Or visit Prescott PW dot.
Speaker 2 (31:13):
Com and uh I'll give you a twenty minute time
slot here at no cost to you.
Speaker 3 (31:20):
Okay, so what's what's next? What should we cover next?
You know what? Yeah, let's do that.
Speaker 2 (31:30):
I said earlier I would cover some annuities here, and
so a lot of the questions that are coming in
after that most recent show where I covered annuities are
people calling sharing their experience of their advisor selling them
(31:50):
annuity and the questions that they have and and should
they have bought it, should they not have bought it?
And then there are so many options as it relates
to annuities, and no annuity is created equally, and so
(32:15):
as a fiduciary, it's my job to find exactly the
right product for you and to make sure that it
functions within the needs that you have, otherwise it's not
a good fit. So there's a lot of people out
(32:36):
there that are dealing with what we call financial representatives,
and then there are also people out there that are
called financial advisors, but they work for companies, and these
companies have products, and these companies also have bogies of
(33:03):
certain products that need to be sold and give them
a way to qualify for their fancy little trip or
to be recognized on stage amongst their peers. But over
here at Prescott Private Wealth, we have none of that. Okay,
we just have your best uh. I don't want to
(33:24):
say that. I don't even want to say your best
interest because that's an over used tagline in this industry,
and actually it's a it's a step.
Speaker 3 (33:36):
Below a fiduciary.
Speaker 2 (33:38):
So what I want to say is that whatever is
good for you is what.
Speaker 3 (33:45):
We want to accomplish.
Speaker 2 (33:47):
Okay, So we want to find the perfect fit for
you personally. So let's get started here with these annuities.
All right. So annuities are they a retirement shield or
are they a silent trap? And I want to help
(34:09):
you understand the differences here.
Speaker 3 (34:11):
Okay, So the question here is.
Speaker 2 (34:18):
Should you consider annuities to protect your portfolio? That's one
of the questions. And that's a that's a that's a
tough question.
Speaker 3 (34:34):
Now.
Speaker 2 (34:34):
I know that there's a lot of people out there.
I just had a friend of mine just the other
day he goes, Hey, I don't mean to talk business,
but I wanted to ask you a question.
Speaker 3 (34:44):
I deal with.
Speaker 2 (34:45):
A big company, a big green company, and they had
one of the junior advisors call me up and say, hey,
my my advisor who is in Texas really wanted to
meet with me, but he or she was so busy
they couldn't. So they wanted me to call you and
(35:07):
tell you about the market volatility and YadA YadA YadA,
and we think that right now you should put your
money into an annuity. Now, no financial plan was run.
This was just an opportunity to make a sale, and
(35:29):
my friend felt as though he didn't understand what he
just purchased. I asked him questions about it. He couldn't
answer them. Asked him about the income that it was
going to get kicked off of it.
Speaker 3 (35:43):
He didn't know.
Speaker 2 (35:44):
He said it was really just put in there to
protect him from market volatility. Okay, big red flag, very
big red flag for me. So when somebody comes to
you and says, hey, the market's going crazy, blah blah
(36:05):
blah blah blah, let's take some of your money, we'll
just talk it into an annuity to shelter you from this.
Speaker 3 (36:14):
Okay.
Speaker 2 (36:16):
No, No, that is not the right way to do this. Okay,
Because annuities are an insurance product, and annuities have fees
wrapped around them. I don't care what you hear on
(36:37):
the radio, and you know, hey, this is like buying
a no load mutual fund. No, no, not at all.
That's noise. It's nonsense. So if you've been told this
and this is something that you personally have, call me.
Let's dissect this thing right in front of you, and
(36:59):
I'll show you how to make heads or tails out
of this. Now, Additionally, there are some very unique annuities
out there, and I'll share with you one's there's one
out there that you could make a case for using
(37:20):
it for a shelter point. However, you know you have to.
I would want to know exactly where your other assets are. Again,
as I tell you all the time, never go headlong
in any direction because this is where people get hurt.
Speaker 3 (37:42):
So, if you have.
Speaker 2 (37:48):
The desire to shelter some of your investments from market volatility,
there's a lot of different ways to do it. Now,
if you're looking if this is non retirement money and
you're looking for a more strategic way to invest, have
a little downside protection, knowing that you're going to be
(38:09):
capped on the upside. Potentially you could use a very
unique annuity with some shielding techniques in there and really.
I think one of the benefits would have to be
to have a better growth opportunity with the deferment of taxation.
(38:36):
That would be a nice additional feature. But again, everyone's different,
so I don't think that this is something for everybody. Unfortunately.
I think that these things get mass marketed, okay. And
then you have some that are based upon the market,
which we call variable annuities, where you invest in the
(38:58):
market with risk and potential reward. And then you have
these fixed annuities, which are just steady interest, no market risk, okay.
And then you have these what we call indexed annuities,
which in New York State, very very limited, but they're
tied to benchmarks like the S and P five hundred.
(39:19):
They kind of put caps on them, they put a
floor in there. And you know, these all sound pretty
good at first look, but let's dig deeper because with annuities,
these these can work beautifully. Now when can they work beautifully?
(39:41):
They work beautifully when you need guaranteed lifetime income. So
if you're retiring soon and you fear outliving your money,
annuities can create a stable pension like stream that you
can't outlive, where if you want protection from these major
down to Like I said, there are some products out
(40:02):
there that offer these built in buffers that protect against
the first ten or twenty percent of market losses. Maybe
you're somebody that needs tax deferred growth. So let's say
if you've maxed out your IRA or your four oh
one K, Well, annuities allow continued tax deferred compounding, which
(40:24):
is ideal for a high income saver. Or maybe you're
just someone that craves that psychological safety, knowing that no
matter what happens, if the markets crash, recession happens, inflation spikes,
your paycheck will still arrive every month and it can
be a huge emotional boost in retirement. But what I
(40:48):
want to cover also is when annuities go wrong. And
here's what many agents won't tell you. So why do
I say agents, Well, because in order to ellen annuity,
you must be properly licensed with your life, Accident and
Health license. Now a lot of fellas that are on
(41:11):
the airwaves here are not licensed for that. Now here's
what you need to understand is that early you have
these early withdrawal penalties. So let's say that you are
someone that's fifty years old and somebody says to you, Hey,
(41:34):
you can use this fixed annuity and we give you
a crediting rate of X for five years. Well that's
not like a CD. So if you put this money
in at the end of the five years, you're not
going to just go back in and take it out
and say, oh, thank you very much, because you have
this early withdrawal penalty, which says that if you take
(41:55):
out money before fifty nine and a half, you're going
to face a ten percent IRS penalty plus ordinary income tax.
So let me give you an example. So let's say
that you withdraw twenty thousand dollars early. Well, you're going
to lose two thousand of that to penalties, plus forty
four hundred to taxes assuming a twenty two percent tax bracket. Okay,
(42:20):
so your twenty thousand was just reduced by sixty four
one hundred dollars, So you've got thirteen six is your net. Now,
if you're older than fifty nine and a half, you
can pull back that penalty of two thousand because that
wouldn't apply. But remember, for you younger investors out there, that's
(42:42):
something that's going to come into play. Also, there are
surrender charges and many annuities come with a five to
a ten year surrender period, meaning that you can't fully
cash out without hefty fees. And the surrender charges TIPIC
started around seven percent or more and then they gradually
(43:03):
decline each year. Now, the caveat to the surrender charge
is that if you start taking income, you don't have
to You don't have to worry about that. That's not
subject to any type of surrender charge. It would just
be if you wanted to cash in your chips and
walk away from the table. Also, remember, on some products
(43:27):
they have caps and participation limits. So these indexed annuities
they offer these what they call market link returns, but
they often cap your gains at somewhere between four to
seven percent. So even if the SMP five hundred skyrockets
up to twenty five percent, you personally may be capped
(43:48):
at four to seven percent. And then the last thing
that I want to point out to you is that
variable annuities can charge from two to three percent annually.
Once you add up writers like lifetime income guarantees and
these fees, they can eat away your return year after year.
Now with these though, you're basically paying for the insurance. Okay,
(44:15):
you're paying for these guarantees. So if you're someone that
needs a lifetime income, well and that safety of principle.
I've yet to run into a client that is really
concerned about the fees if it accomplishes what they want
to accomplish here, So let me see if I can
drive this home for you with a quick little story.
Speaker 3 (44:39):
Everybody sit down, listen carefully, everybody sit down, Sit down,
please sit Story time, Story time.
Speaker 2 (44:56):
So let me tell you about Jane, a real client,
the name here just for some privacy. And Jane came
to me back in the beginning of March, and she
was fifty six, recently retired early and really worried about
(45:17):
markets volatility, and an agent had pitched her a ten
year deferred annuity which had a big bonus up front,
but lots of hidden fees and surrender penalties, and if
she needed money some liquidity for emergencies, she'd have to
(45:37):
forfeit thousands of dollars and she was boxed out of
her money. So what we did was, instead we designed
a strategy that used some dividend paying stocks, some CDs
and bonds, and then a smaller, much smaller portion of
(46:03):
it for an annuity and the results here was that
she had higher flexibility, we reduced those early withdrawal risks,
and she had strong and steady income. And sometimes annuities
are right, but sometimes they're just not the best fit.
(46:27):
And Jane was thrilled because she stayed liquid, she diversified,
and she ended up growing even when April's market dip hit.
So the question is which annuity makes the most sense
(46:48):
and for whom. So that's the million dollar question. And
everybody is different, Okay. It's like saying that everybody should
should wear a Salcony running shoe, Well, that can't possibly
be the case. And saying that everyone should be you know,
a size ten, Well, that just doesn't work. That's why
(47:11):
they make all of these different types of shoes for
different occasions and different sizes and different feet. So if
you're sixty years old and older and you want guaranteed
monthly income, then you may want to consider a variable
annuity with what we call a guaranteed lifetime income benefit
(47:34):
a glib rider, a guaranteed lifetime income benefit.
Speaker 3 (47:40):
And if you're.
Speaker 2 (47:40):
Fifty to sixty but still flexible, maybe you may want
something that is indexed with a five to a seven
year surrender period that can be a hedge if it's
structured properly. Now, if you're under fifty and you're growing aggressively,
(48:05):
annuities are rarely ideal for you, So stick to iras, roths,
brokerage accounts first, using traditional investments.
Speaker 3 (48:15):
Okay, and you.
Speaker 2 (48:20):
Really let me see how how do I want to
package this next piece here? So I don't want to
mention any products on here. But there are some annuities
out here that have that downside buffer, like I said,
which gives you like a ten to twenty percent downside protection,
and that's ideal for somebody that's looking for growth with protection.
(48:43):
Then you've got some that have strong guaranteed income features
and are really a better fit for retirese needing lifelong
cash flow. And then you even have some that have
the ability to take a higher income and even when
it goes to zero, you still have a guaranteed lifetime income.
(49:05):
These offer a lot more customization and they could be
a good fit for somebody. Now, the bottom line and
annuities here is that they are tools. Okay, they're not solutions.
So when used wisely, they can be used to shield
some of your money from volatility. But when sold recklessly,
(49:28):
they trap you into costly inflexible contracts. And if somebody
is pushing you into a ten year surrender annuity without
understanding what your real liquidity needs are, you need to
walk away. And I just want to give one more
(49:48):
reminder here you're listening to your money matters. I'm Drew Prescott,
chartered retirement planning counselor and accredited wealth management advisor at
Prescott Private Wealth, located on Who's Ex Street in Troy,
New York. The phone over here five eight two zero three,
nineteen eighty three and PRESCOTTPW dot com. So that's that's
(50:10):
a that's a good generic overview of annuities. Okay, I'm
sure I just unpacked more questions for you. This isn't
a show that's designed to go heavily into detail on
any specific product. Additionally, one hour, you know, is not
(50:35):
enough to do such a thing. But nonetheless, here we are,
we are really kind of moving along and we have
a lot of bright spots inside of the market. Now,
what I want to encourage you to do, which I
try to do this every show, I want you to
(50:59):
get yourself.
Speaker 3 (51:00):
A financial plan. Okay.
Speaker 2 (51:04):
The financial plan is your map out at sea, and
you're gonna will help you tune in your compass to
make sure that you're dialed in, because the old adage,
which still is one of my favorites, is that when
(51:25):
you're out at sea, if you're even one degree you
off on your compass with a long period of time,
you end up so far away from where you were
looking to go. And that's the same thing as financial planning.
(51:46):
Financial planning is something that is a must have. And
I worked with a client who came from a very
wealthy family, and they didn't they pursued their passion. They
took on a career of servitude, really, and they were
(52:13):
set up with a nice a nice chunk of money
through inheritance and they had some trust fund money. And
when we first met, I said to him, tell me
a little bit about your financial picture. And he goes
(52:34):
on to say how he had inherited X numbers of dollars,
which was pretty significant, and he liked cars, so he
squandered away a ton of money. I mean, I can't
even begin to tell you how much money he blew
on cars, and which I was a little bit shocked
because when I met him, he was not driving a
(52:56):
nice car, and he was telling.
Speaker 3 (53:01):
Me how much.
Speaker 2 (53:03):
Remorse he had for making these terrible decisions. And at
the time, you know, when I started working with him,
he had a couple million dollars left, and I had
some money coming in from oil wells that were in
Texas that his grandfather had left for him. His grandfather
(53:24):
was a very successful man, very prominent owner of a
large accounting practice nationwide, and he was really set up
well as far as giving an advantage, but he did
not have a financial plan. So I pushed him to
(53:46):
do a financial plan. We put that in place, and
when we did, everything was going wonderful. And then all
of a sudden, he came across something that he thought
was going to be a fantastic investment. I encouraged him
not to get into it, but nonetheless he did and
(54:07):
he lost all that money. And then so now we're
really challenged with finding, you know, making these numbers work
for him for a lifetime. And then the oil wells
dry up. It's a true story, it's amazing. So he
loses that income. Now we would have been able to
(54:31):
make everything work with what he had had in his
investment account originally, but he cashed out so much of
it and lost it on that speculative deal that he
really put himself in a bad situation. Now at this point,
I don't even know what he has left, but I
know that financially he's not in a good spot. So
(54:51):
not only do you need a financial plan, but you
need to stick to it. And if you don't have one,
I would love to sit with you again. You're listening
to Drew Press, God of Prescott Private Wealth, and we're
gonna be tying up the show here on that note,
So thank you so much for listening, and tune back
in next Sunday eleven am w g Y. The phone
number here is five one eight two zero three nineteen
(55:13):
eighty three five one eight two zero three one nine
eight three and Prescott PW dot com. And until next week,
May God bless you and God bless your family.
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