July 5, 2023 • 39 mins
Sometimes investment decisions (like saving for retirement) are black and white. No nuance or downsides.
But when it comes to annuities, there are shades of grey that The Retirement Equals Freedom Podcast is here to help you understand.
On this second of two parts, Host Josh Bretl shares FSR Wealth Strategies’ take on when, how and why certain annuities can make the perfect fit for clients whose portfolios need rounding out.
You’ll learn about various types of vehicles to consider, what makes them appealing and potential pitfalls to avoid.
Get to know the difference between immediate and deferred annuities and what distinguishes “protected income” buckets from “growth” buckets (from buckets of “fried chicken,” if – like Co-Host Dave Schmidt – you choose to go there!).
You’ll also find out why Fixed Index Annuities have a lot to offer as a steady stream of low-risk income.
If you’ve ever been intimidated (or put off) by the world of annuities, this is your invitation to take stock (on your own or with the help of a financial adviser) to determine whether they might make a good addition to your growing retirement nest egg.
If you missed Part I of this series, click this link to listen to Episode 40, “What’s Annuities Got to Do With It?”
If you haven’t already, please sign up for all the news you can use (+ lots of fun) at this link for the Retirement Equals Freedom podcast newsletter. You might also want to join the conversation at our private Facebook group, which you’ll find here.
Click here to explore the services that FSR Wealth Strategies offers and schedule a discovery call with one of the team’s CPAs. When it comes to living your best life, it’s never too early to get started!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Josh Bretl (00:03):
The one that we use most in our office is something
called a fixed indexed annuity.
And they have the guarantees,the reason they call it fixed
is because it can't lose money.
But it can earn money, and it'susually tied to a stock index.
These fixed index annuitieshave been a godsend for a lot
of clients in their portfolios,but you have to think about
(00:23):
them a little differently.
It's not a mutual fund, it'snot a stock market tool.
It is designed for your lowrisk, your bond alternative,
things along those lines.
But if you already know thatthe asset that you're spending,
like an annuity that can'tlose money, then you have
this permission slip to letthe rest of your money grow.
Dave Schmidt (00:41):
Sometimes investment decisions
are black and white.
No nuance, no downsides.
But when it comes to annuities,there are several shades
of gray that we are hereto help you understand.
On the second of two parts,Josh shares his take on when,
how, and why certain annuitiescan make the perfect fit
for clients whose portfoliosneed a little rounding out.
(01:05):
You'll learn about varioustypes of vehicles to consider,
what makes them appealing, andpotential pitfalls to avoid.
Get to know the differencebetween deferred and
immediate annuities, and whatdistinguishes protected income
buckets from growth bucketsfrom buckets of chicken?
Yeah, I went there.
(01:25):
You'll also find out whyfixed index annuities have
a lot to offer as a steadystream of low risk income.
If you've ever been intimidatedor put off by the world of
annuities, we encourage youto give this episode a listen.
It's your personal invitationto take stock to determine
whether or not annuities mightmake a good addition to your
(01:46):
growing retirement nest egg
Because hey, this isthe Retirement Equals
Freedom Podcast.
Your host, Josh Bretl, is theowner of FSR, Wealth Strategies.
And for the last 20 plusyears, Josh has been helping
fine folks like you gain theconfidence to make retirement
the best part of your life.
(02:08):
Me?
Who am I?
Thanks for asking.
I'm Dave.
Josh's longtime friend,co-host of the show, and
huge fan of Stan's Donuts,chocolate Dipped Donuts.
Oh yeah.
Alright, enough of my voice.
Let me let you let meend my introduction so we
can get on with the show.
(02:47):
Josh, barrel aged coldbrew from Stan's Donuts.
What do you think?
Josh Bretl (02:52):
I think it's delicious.
And I also think I'ma little giddy today.
I've had too muchcoffee already.
It's really good, though.
Dave Schmidt (03:00):
A giddy Josh makes for a far more
entertaining podcast.
Josh Bretl (03:03):
I hope so.
Some mornings we're up forthese, some mornings we're like,
eh, I got to record a podcast.
But today I'm like, come on,let's go, let's go, let's go.
Dave Schmidt (03:10):
Yeah.
Landon's got hischampionship game tonight.
Josh Bretl (03:12):
Ooh, is tonight the big championship game?
Dave Schmidt (03:14):
Yep, so we are stoked.
Trying to keep him nice and calmthough, because he's pitching.
It's a big game.
Josh Bretl (03:19):
How many innings are they allowed to pitch?
Dave Schmidt (03:21):
One, right now still?
And then we're pretty muchgearing up for Colorado
on Tuesday, so it'san exciting time here.
Josh Bretl (03:27):
Now, I catch a lot of grief in my house.
Because when we go forvacation, Missy says that I
don't really do anything, andI just show up and off we go.
But I think I'man integral part.
All of the behind the scenesorganization to make sure that
we have a taxi to get us to theairport, all the reservations.
Once we go, I got it all.
(03:51):
I know how to do everything.
And I will gladly help pack, butshe doesn't trust my packing.
If I pack the kids, she'dre-check it 10 times.
Dave Schmidt (04:01):
I don't blame her.
Josh Bretl (04:01):
No, I don't either.
I'd re-check my work tooif it was packing the kids.
But I've taken the kidsto Michigan randomly to go
see my parents, I have awhole different mindset.
Because she won't look atthat, she won't check that.
And I just go.
And if we forget something,we forget something.
We'll figure it out,it's not a big deal.
Dave Schmidt (04:16):
Yeah.
You go to Walmart therein New Buffalo, Michigan,
and buy some new undies.
Josh Bretl (04:20):
Yeah.
We're gone for two days.
They'll be fine.
Dave Schmidt (04:23):
I don't know why I spoke with
my heavy south accent.
We're talking about Michigan,which is not south of us.
Josh Bretl (04:29):
No, it's not.
The other day werecorded a live show.
It was a video show,Java with Josh.
It was our second one.
And it kind of had apodcast feel, but it was
much more current event-y.
These podcasts are a lotof overarching topics that
are kind of evergreen.
And we had it live.
(04:50):
For me it's interesting,because these podcasts
are edited by you.
So we can make a mistake, youcan adjust the microphone,
you can do stuff, andit just gets edited out.
Our listeners never hear that.
But you've been pushingme to make these live,
make these podcasts live.
We're going to try and dothis as much as we can today,
(05:10):
without editing anything.
Dave Schmidt (05:12):
Okay.
That's fair.
Josh Bretl (05:13):
Is that all right?
Dave Schmidt (05:14):
Yeah.
Are you committing toepisode 42 being live?
Josh Bretl (05:16):
I can do it, if you can.
Dave Schmidt (05:18):
I've been pushing for it from day one.
I think we shouldabsolutely do it.
Josh Bretl (05:21):
Okay.
We'll see what we can do there.
We'll start sending it out, andsee if people watch it live.
And it makes your lifea little bit easier from
the editing standpoint.
We can get more stuff done.
Dave Schmidt (05:30):
Josh, I'm a proud papa right now.
Josh Bretl (05:33):
Why?
Dave Schmidt (05:34):
Not anything my kid did or anything.
You've noticed my sporadicwork schedules of late?
Josh Bretl (05:38):
Yeah.
Dave Schmidt (05:39):
Okay.
You may not have known whereI've been going off to lately.
Josh Bretl (05:44):
I don't even ask.
Dave Schmidt (05:44):
No, you don't want to know.
Well, we are approachingthe 25th anniversary of
a very monumental momentin American history.
And I led a group of protestors.
And for the last few yearsactually, we have been posting
ourselves outside of Hasbroheadquarters, demanding for
(06:07):
a re-release of something.
And just this past weekend,I actually dressed up as
one of these aforementionedcharacters, and tied myself
to a tree, and demanded are-release of the Furby.
And Josh, today onAmazon, you can go and
buy a brand new Furby.
Thank you, Hasbro.
(06:28):
Your welcome, world.
You can thank me for it.
Josh Bretl (06:32):
The Furby is not something I'm familiar
with, other than it's aterm that I feel like it
gets referenced back to popculture of our generation.
Dave Schmidt (06:39):
Okay, that's fair.
Josh Bretl (06:40):
And you brought it up today on a team meeting
that our whole team attended.
And I have a surprise for you.
Dave Schmidt (06:48):
What's that?
Josh Bretl (06:50):
There's one coming here Monday for you.
Dave Schmidt (06:52):
What?
Josh Bretl (06:53):
I wanted to say thank you for all of the
hard work that you do, and Ithought, what better way than
to buy you your own Furby?
And I wanted to share itwith you live, but Amazon
is delivering it Monday.
Dave Schmidt (07:06):
Oh, this is the greatest day of my life.
You will not regret this.
You won't let me bringa dog in here, but this
is the next best thing.
Josh Bretl (07:13):
I know nothing about this, but I'm sure
it will be entertaining.
Dave Schmidt (07:17):
It's going to revolutionize
the podcast industry.
Well, thank you, Josh.
I am humbled.
And you're going to love it, Ipromise you're going to love it.
Josh Bretl (07:24):
It'll be entertaining.
It will be.
We've been going for a littlebit here, and I have one
quick story, because this is afollowup from our last episode.
At the beginning we weretalking about my son,
Zach, and his glasses.
And your son, Landon, goesto the same eye doctor.
And you saw a picture ofZach there, and you sent
it to Missy and I, of hisgraduation from this therapy
(07:47):
that he's doing there.
And we talked in the lastepisode how we bought Zach
a new pair of glasses.
And how he deserved it so much,because he went four years and
never broke a pair, never losta pair, never scratched a pair.
He is so carefulwith these glasses.
And we got these new pair ofglasses from that eye doctor.
Guess what happened yesterday?
Dave Schmidt (08:05):
No.
Josh Bretl (08:06):
Lens popped out.
He wasn't even doing anything.
He was just standing there.
All of a sudden he goes,"Mama, my lens popped out."
Missy goes, "Icouldn't yell at him.
He wasn't doing anything."
They're back at the eye doctortoday getting the lens fixed.
Dave Schmidt (08:24):
That is too funny.
Josh Bretl (08:25):
Yeah, so I thought I'd follow that up
after I was talking about...
four years, we spend somemoney on a nice pair of
glasses for the kid, and,"Mama, my lens popped out."
Dave Schmidt: That's how it works. (08:34):
undefined
Is that your sister outthere in the parking lot?
Josh Bretl (08:36):
Yeah, my sister uses our dumpster.
Her husband, he repsdifferent products.
And one of his products that hesells to small stores, is shoes.
When you rep shoes, youhave to take these samples
into the stores, so theywill send him one shoe,
so he gets the left pair.
(08:58):
That way they candouble up, they can send
another rep the right.
So, they have a lotof shoes that they
can't do anything with.
And so, when they're no longerselling that version, they
have to get rid of these shoes.
Dave Schmidt (09:10):
Oh man, what a waste.
Josh Bretl (09:11):
Yeah, it is.
They hate it.
And they're like, "Well, justtell us who has the other shoe,
and we'll donate them, we'llgive them away to people."
And nope, they won't do it.
We will, a couple times a yearin our office, have a dumpster
full of shoes, which is reallyconfusing to a lot of people.
Dave Schmidt (09:27):
It's just like annuities, man.
If you really get down intoit, it's just like annuities.
Josh Bretl (09:33):
That was an amazing segue.
Dave Schmidt (09:36):
I've been working on it.
Thank you.
Josh Bretl (09:41):
We promised part two, and today is part
two of annuities, baby.
And last week, or lastepisode, I spent some time
talking about all of theissues that people have with
them, and rightfully so.
There's a lot of reasonsyou shouldn't do them.
But as you actually ledthe show with last time,
(10:03):
there is no such thing as aninherently good or inherently
bad investment vehicle.
Dave Schmidt (10:08):
I led the show with that?
Josh Bretl (10:09):
Well, yeah.
Well, you did when, you editedit together and the very
first thing people hear is,"There's no inherently good or
inherently bad place to put yourmoney," coming from my voice.
That sounded like mypolitical voice, apparently.
Um, but, um...
Dave Schmidt (10:26):
These all things, these things, these um, but,
um, you're going to have towork on that for the live stuff.
That is going to be, it'sgoing to drive people crazy.
Josh Bretl (10:34):
It drives you crazy.
Dave Schmidt (10:35):
It takes hours to get that out of the show.
Josh Bretl (10:37):
I'm sorry.
Dave Schmidt (10:37):
That's all right.
Josh Bretl (10:38):
All right.
I'm going to work on it.
Dave Schmidt (10:39):
I went straight into an um.
Josh Bretl (10:40):
You did, you did.
Dave Schmidt (10:45):
I went straight into an um.
Josh Bretl (10:47):
How do I start a sentence without um?
It shouldn't be that hard.
Dave Schmidt (10:52):
It shouldn't be.
Josh Bretl (10:53):
I mean, I talk all day long.
Dave Schmidt (10:55):
All day.
Josh Bretl (10:56):
But it's like, I can't form a
thought without sayingum, then it's the thought.
I'm going to work on thatreally hard here today.
Dave Schmidt (11:05):
I don't have the answer for you.
I do tell you that I'mgoing to have to trim out
like three minutes of this,but we'll figure it out.
It's at 10 minutes already.
Josh Bretl (11:11):
People love us.
Dave Schmidt (11:12):
Oh, that's true.
Okay.
All right, so we're talking,last week we talked about kind
of why people hate annuities.
And Erin spent a bunch oftime coming up with, I'm
guessing not why peoplelove annuities, but why
annuities are good for people?
What are you talking about here?
Josh Bretl (11:26):
Well, last week we talked about a lot of the
downsides, or the things thatget the really bad press.
And what I wanted to spend sometime talking about today is
because nothing's inherentlygood or inherently bad, I want
to spend time on as to why,if we use them for a client,
because not all clients needthem, but if we use them for
a client, why do we use them?
And I wanted you to understandsome backgrounds behind them.
(11:48):
Bear with me as I get nerdyhere for a few minutes,
because this is one of myfavorite things to talk about.
You okay with that?
Dave Schmidt (11:56):
Yeah.
Josh Bretl (11:57):
I'm going to stop saying um, and I'm going to stop
asking, does that make sense?
Dave Schmidt (12:01):
I do like the, does that make sense?
That's a nice little segue.
Josh Bretl (12:03):
All right.
I'm glad I can keep that one.
I think the ums mightbe easier to get rid of.
The word annuity, whenyou look at the definition
of the word annuity, thedefinition of annuity is
just a stream of payments.
Anything can be an annuity.
Um...
um, I'm just going topoint it out every time.
(12:24):
We need a button to hit.
But if you look at a pension,a pension is an annuity.
It's a stream of payments.
Social Security is an annuity.
It's a stream of payments.
So the first annuity thatwas ever created, was
what they called a, um...
I can't.
It's going to drive me nuts.
Dave Schmidt (12:42):
You're fine.
Yeah, don't fight it.
Just do it.
We'll work on it later.
Josh Bretl (12:47):
Stop talking about it, is what you're telling me?
Dave Schmidt (12:49):
Yeah.
Just don't think about it.
Josh Bretl (12:50):
All right.
If you don't hear any ums forthe rest of the show, it's
because Dave just edited themout from this point forward.
But an immediate annuitywas the first thing that
ever came into existence.
An immediate annuity was ifyou gave an insurance company
money, so let's say you gavethem a hundred thousand dollars,
they would promise you like apension, a stream of payments
for the rest of your life.
And that was an annuity, thatwas what people thought of.
(13:11):
There was good and bad to that.
The good was, you werepromised a stream of payments
for the rest of your life.
The bad was, you gave upcomplete control of that money.
And so, it was good if you liveda long time, it was short if
you only lived a short time.
Because you gave them yourmoney, let's say you gave
them a hundred thousanddollars, and they were going
to pay you $10,000 a yearfor the rest of your life,
and you lived two years.
Well, you justlost 80,000 bucks.
(13:32):
Well, if you live 20 years,you just made a lot of money.
So it had its good, itsbad, its pros and cons.
That was the firstoriginal type of annuity.
And then they came up with whatthey called deferred annuities.
Deferred annuities, whereyou could stick money into it
and it would grow over time.
Does that make sense?
Dave Schmidt (13:52):
Mm-hmm.
Josh Bretl (13:53):
And then after you let it grow, you have
the ability to turn it intothat stream of payments.
Every annuity has theability to turn it into
that stream of payments,but you didn't have to.
You could take it out ifyou wanted to, you could
do something else with it.
Deferred annuity is you putmoney in and it can grow.
And at some point in thefuture, you can turn it
(14:13):
into a stream of payments,or you can take it out.
So, there's two types, A and B.
Immediate, deferred.
Dave Schmidt (14:19):
And terms can vary?
Josh Bretl (14:20):
Terms can vary.
You can have deferredannuities for a year.
You can have deferredannuities for 20 years.
You can even have a deferredannuity that's a year long,
that you just leave it in therefor the rest of your life,
and it just continues to grow.
But that's the difference.
That's the two big types.
Now, inside of deferredannuities, there's
multiple different typesof deferred annuities.
(14:43):
And this is wherepeople get hung up.
Make sense so far?
Dave Schmidt: Makes sense so far. (14:47):
undefined
Josh Bretl (14:48):
That's what I want to beat down a little bit.
The very first onewas a fixed annuity.
A fixed annuity was theinsurance company, it's
essentially a CD withan insurance company.
We all know what a CD is.
You go to the bank, yougive them your money,
and they're going topromise you a percentage.
They promise you 5% for ninemonths, or whatever it might be.
(15:11):
A fixed annuityis the same thing.
It's just instead of goingto a bank, you're going
to an insurance company.
Now, why would you do this?
Well, usually the insurancecompany has less liquidity
needs, so they canusually offer a little
bit higher rate of return.
It's not always the case,but they usually can.
And the second is,annuities have a tax
deferral available to them.
(15:32):
On a CD, the interest as youearn it is taxable to you.
You're going to seeinterest on your tax return.
In an annuity, youdon't see that interest.
It just gets addedto the account.
And then when you takeit out, that's when the
taxable event occurs.
That allows you theability to time your taxes.
Dave Schmidt (15:54):
I see.
Josh Bretl (15:54):
See, I didn't even ask you if you understand.
That makes sense.
That's one of the benefitsof deferred annuities.
The fixed annuityis the first type.
Then they got into thevariable annuities.
The very first variable annuitywas offered by TIAA-CREF, and
that was offered to teachers.
And what they did was instead ofbeing a fixed rate in like a CD,
(16:19):
they made it a variable rate.
And that variable rate is tiedto usually a stock market index.
Essentially what they didis they took mutual funds,
and they put them insideof a variable annuity.
Now, the big thing they alwaystest you on when you get your
insurance test is, in a fixedannuity the risk is with the
insurance company, becausethe insurance company has
to earn that interest rate.
(16:39):
With the variable annuity,the risk is with the person
who put their money into it.
Because it depends upon whatquote unquote, underlying
mutual fund that you choose.
if you have heard badthings about annuities, this
is where it's come from.
Because there are a lot ofpeople that loved these variable
annuities, because they wouldpay a higher commission then
(17:00):
just using mutual funds.
And so people would say,"Hey, this client wants mutual
funds, but I can put them ina variable annuity, and have a
few other bells and whistles,and they'll get paid more."
And that's where thestart of the really shady
sales processes came from.
That's the variable annuity.
Now, with technology nowadays,we very rarely see a lot
(17:22):
of uses in our practicefor variable annuities.
There are different uses, justnot a lot for our clients.
And I actually haven'tused a variable annuity
since I was first in thebusiness 25 years ago.
Dave Schmidt (17:35):
You're old.
Josh Bretl (17:36):
Yeah, actually it sounds really freaking old.
It's been a long time sincewe've actually used one.
Dave Schmidt (17:42):
It reminds me of a 401k, where the employees
would be able to choose theirinvestments within their 401k,
similar to a variable annuity.
Josh Bretl (17:53):
Yeah, it's very similar.
Now, the reason it's alittle bit different, the
reason it got the bad wrap isbecause it has higher fees.
Because you have the normalmutual fund fees, but then
you also have the additionalfees that the annuity
charges on top of it there.
Does that make sense?
Dave Schmidt (18:08):
Yeah, makes sense.
Josh Bretl (18:09):
Back to fees.
With the fixed annuitythough, there are no
additional fees to it.
The interest rate thatthey pay you is how they
calculate out their fees, soit's very similar to a bank.
When you get a CD, there's nota fee that goes against your CD.
You know the bank'searning more money.
A fixed annuity is the same way.
Dave Schmidt (18:29):
Got it.
It's just the mutual fundfees, not an additional
fee on top of it.
Josh Bretl (18:32):
Yeah.
Now, because the risk is notwith the insurance company on
the variable annuity, they addfees to that, so that is why the
variable annuity have the higherfees, as that comes into play.
Now the The one that we usemost in our office is something
called a fixed indexed annuity.
And a fixed indexed annuityis a little different.
(18:54):
It has the fixed component,but it does take some of the
interest rate sensitivity andapplies it to the customer.
So instead of a set rate,instead of a set earnings,
like a CD or a fixedannuity has, what this
one does, is the earningsare tied to a stock index.
They have the guarantees, thereason they call it fixed is
because it can't lose money.
(19:16):
But it can earn money, and it'susually tied to a stock index.
The most common one beingthe S&P 500, but there's
a lot of different onesthat are available to it.
In a year the S&P does welland goes up, you'll participate
in those gains and you'llget a percentage of it.
In years that it goesdown, you'll just stay
even and stay flat.
We do use that a lot.
(19:37):
It allows us the abilityto have some decent growth,
not have the risk associatedwith different investments,
and different downsides.
There is the timeperiod issue with it.
It has the 10 year, a lotof them are eight, 10, 12
year surrender charges.
But if you can work aroundthat, and you tie it into
(19:59):
your plan and your overallsituation, it can provide
some really nice downsideprotection, some decent growth.
Especially in the interestrate environments we've been
having recently, where up untilthe last year, there have not
been decent interest rateson CDs and things like that.
These fixed index annuitieshave been a godsend for a lot
of clients in their portfolios,but you have to think about
(20:20):
them a little differently.
It's not a mutual fund, it'snot a stock market tool.
It is designed for your lowrisk, your bond alternative,
things along those lines.
Dave Schmidt (20:29):
I can relate to this, because I just
bought 800 Furbies in hopesthat they grow in value.
Josh Bretl (20:35):
I would call your Furby purchase more of
a stock purchase, I think.
Dave Schmidt (20:38):
Well, right.
But I'm saying, but I havean annuity on the backend to
protect myself in case I loseall my Furby investments.
Josh Bretl (20:44):
I thought her name was Carla.
Dave Schmidt (20:45):
Oh, wow.
Oh boy, oh boy.
It's funny, thisis a good pause.
You need to work on your umsand your clicks, I need to
work on, and you fell prey tothis during our Java with Josh.
I keep looking at the computerinstead of our cameras,
because this is so new to us.
Josh Bretl (21:04):
We'll get there.
We'll get there.
Well, I also feel likeI should look at you.
We're the only twopeople here talking.
I feel like I should lookat you, but whatever.
Dave Schmidt (21:10):
Yeah.
That creepy guy thatlives in our closet.
We don't even know his name.
Let's call him Herb.
Josh Bretl (21:15):
Herb?
Dave Schmidt (21:16):
Yeah.
Josh Bretl (21:16):
I though it was...
no, Steve's the otherside of the wall.
Dave Schmidt (21:18):
Oh yeah, Steven.
Josh Bretl (21:19):
Well, I want to talk a little bit
about how we use them.
In theory, we're usingfixed annuities or fixed
indexed annuities inour clients' portfolios.
And again, they're notfor everybody, but for
certain people, they servea really nice purpose.
Let's talk about what someof those purposes are.
The first one, we'll use itwhen we talk about having
(21:40):
a protected income bucket.
There's certain dollarsthat in retirement, you're
going to have to spend.
And it's really nice to have alow volatility asset, an asset
that doesn't have a lot of risk.
And if you want to spenddown that annuity money, it's
a great ability to do it.
Now, you have tounderstand liquidity.
You have to make sure youhave an advisor who can
factor liquidity into it.
(22:01):
But that protected incomebucket is also your
permission slip to let yourother assets sit and grow.
Because people, when they'reworking, we're really used to...
I don't really carewhat the market does.
I got time.
It was that whole retirement,hey, I'm going to spend my
money, so they get nervousand things like that.
But if you already know thatthe asset that you're spending,
like an annuity that can'tlose money, then you have
(22:23):
this permission slip to letthe rest of your money grow.
That's one that comes into play.
Dave Schmidt (22:28):
What about the third bucket?
I see protected income bucket,versus growth bucket, versus
bucket of fried chicken.
Josh Bretl (22:35):
Bucket of fried chicken.
That is just for people likeyou, who need that incentive
to keep going forward there.
Fried chicken worksfor most people.
No one doesn'tlike fried chicken.
Dave Schmidt (22:48):
No, it's un-American to not
like fried chicken.
Josh Bretl (22:52):
What about the third bucket?
The second reason we'll usethem, is as a bond alternative.
Dave Schmidt (23:02):
James Bond.
Josh Bretl (23:03):
Bond, James Bond.
Your Bond impersonationis much better than mine.
Dave Schmidt (23:07):
Most things I do is better than
Josh Bretl (23:11):
Right now, it still serves true.
But we had a whole episodeon bonds before, and it's
actually still relevant.
But back when interest rateswere so low and the market
was so high, the bonds weresupposed to provide downside
protection, and pay you adecent interest rate, and
they just weren't doing that.
And we were using the fixedannuities, and the fixed
(23:33):
index annuities to do that,to provide downside protection
and pay a decent interest rate.
And they stillhave, they still do.
And it's still a great bondalternative, if you think about
what the purpose of the bond is.
And we'll use that a lot oftimes inside our different
clients' portfolios there.
We have principal protection.
It's a great safe investment.
It hopefully will out earn cashover the long term it's there.
(23:57):
One we have on there is, there'scertain annuities that have some
different tools built into it.
They will have eitherguaranteed income tools,
and it's a little differentthan the immediate annuity
I first talked about whereyou give up complete control.
Now, you actually have control.
If you die early, your lovedones and your heirs can still
get whatever's left over.
(24:17):
But they also can havesome different long-term
care features built in.
For a lot of people, long-termcare becomes really important.
And if you can have a stream ofincome that also has a benefit
for long-term care, that canmean a lot to a lot of people.
That gets to be taken intoconsideration as well.
Dave Schmidt (24:34):
That was actually a question I had earlier,
is upon death, does it actlike a pension or something
that just continues to payout to your beneficiary?
But you're telling me-
Josh Bretl (24:45):
it can.
There's a lot more flexibility,and you have that ability
to have it keep payingout, or maybe a lump sum.
If there's a husband orwife, you can do it over
both of their lives.
There's a lot more flexibilityand control, because you
own it, and that's there.
Now, this gets me tothe the overarching
thought process here.
And that is that, backto the original thing I
(25:06):
said, it's never inherentlygood or inherently bad.
But it does have to applyto your specific situation.
Before you use them or beforeyou deny them, make sure that
you understand exactly whatthe purpose is, and you have
a plan in place so that itworks for your situation and
what you're trying to do.
They can be a great tool, andthey can do harm, depending
(25:28):
upon how you use them.
The annuities that we talkabout, and that we use in our
clients' scenario, yeah, they'rethe same annuities that there's
people out there screaming, "Ihate annuities," but they're
trying to sell something too.
And so, when we work it in andwe work it into our clients'
situation, it can serve a hugepurpose and a huge benefit.
(25:49):
Now, when we make thatrecommendation, we always
say we're only doing itbecause we think it's
of your best interest.
If you don't agree with it, ifyou are so anti-annuity that
you can never get over it, okay,we'll do something different.
It's just in our thoughtprocess, it probably won't be
as good as what we have here.
That is our thought process onhow we think about annuities
(26:12):
in our clients' portfolios.
Dave Schmidt (26:13):
There's always investing in Furbies.
Josh Bretl (26:16):
Your first one's coming on Monday, buddy.
Dave Schmidt (26:18):
You have no idea.
I'm so pumped.
Josh Bretl (26:20):
I forget what color I ordered you though.
Dave Schmidt (26:22):
The purple or the coral, I'm thrilled with either.
It's going to be great.
Josh Bretl (26:27):
Are you here Monday, before your trip on Tuesday?
Dave Schmidt (26:30):
I am going to be here Monday.
Josh Bretl (26:31):
Oh, I hope it shows up early.
Dave Schmidt (26:33):
I hope so too.
You know, can addlittle charms to them.
I think it comeswith a pizza charm.
You can add additional charms,and I will be adding charms.
Josh Bretl (26:40):
Is it going to stay here in the office, or are
you taking it home with you?
Dave Schmidt (26:43):
Oh, it's going to be an an office mascot, I think.
Josh Bretl (26:45):
Oh, great.
I look forward to it.
Dave Schmidt (26:47):
I may buy Landon his own.
But he's going to be withus whenever we're recording.
We'll have to name him.
Josh Bretl (26:55):
Well Dave, we've been talking here for a
while, and I think it's time.
Dave Schmidt (27:16):
[singing].
Josh Bretl (27:29):
For people that don't know us, we come up
with these little tiny thingswe spend a lot of effort
trying to put in place,and they don't always pay
off, but that one worked.
Did you hear it?
Dave Schmidt (27:40):
That was amazing.
I was worried about thesong being too loud.
And that's why I'm like,which one is the sound
effects, is it the first one?
Josh Bretl (27:47):
That's sound effects, or this is the
pad, that's the Bluetooth.
Dave Schmidt (27:50):
Okay, so turn it down.
Go ahead, play it again.
Can you play it again?
Josh Bretl (27:53):
Yeah, I can play it again.
Dave Schmidt (27:54):
Just in case people didn't pick up on it.
Josh Bretl (27:59):
That, folks, is a blue jay.
And this comes from a YouTubethat I found, that is a
guy that teaches you howto make common bird calls.
Dave Schmidt (28:09):
Oh, he's my hero.
For context, last episode, Iessentially accosted you for
not having original bird sounds.
And you stepped up and said, "Icannot let my buddy down today."
Josh Bretl (28:23):
Yeah, so now I am no longer making bird sounds.
I am going to let this guy...
that was a morning dove man.
And he's going to come in andplay with us, as times go on.
Dave Schmidt (28:38):
You have no idea what this has done to our
street cred for our podcast.
Official bird sounds.
Josh Bretl (28:45):
So, get to know Josh and Dave.
Dave, you leave forvacation next week.
You're going to Colorado, andthen I take my vacation at
the end of July with the kids.
What is one thing that youare super excited to do
with Landon on vacation?
Dave Schmidt (29:04):
We have three things planned,
and they're all awesome.
Josh Bretl (29:07):
Now, I'm worried this is gonna be like the
dogs game, and all of asudden you just can't...
you're going to sayyou're so excited for
it, and you can't do it.
Dave Schmidt (29:13):
I know.
We've been watchingthe forecast.
I think we're clear.
I want to say two.
Josh Bretl (29:19):
Okay, go ahead.
Go ahead.
Dave Schmidt (29:20):
We're going to a Colorado Rockies game, which
Josh Bretl (29:23):
he been to a Major League Baseball game before?
Dave Schmidt (29:25):
He's been to a couple Sox games.
We're going to the CubsSox game in August.
Josh Bretl (29:29):
Oh, nice.
Dave Schmidt (29:31):
But this will be his first
non-Illinois sports team.
He's been playing a lot ofMLB The Show on Switch, so
he's seen what differentstadiums look like.
I think it's going to becool for him to walk into a
totally different environment.
I think that'll be a lot of fun.
The whole family'sgoing, we got like 20
tickets or something, so.
Josh Bretl (29:49):
Oh, that would be awesome.
Dave Schmidt (29:49):
Yeah, it's going to be great.
And then I think I mentionedbefore, we rented boats.
We're going to go intoLake Dillon, which is just
the most gorgeous lake.
It looks like you're in a fjord.
You're in between hugefoothills, with mansions on
the top, and you're driving aboat through there, and it's
maybe an hour from Breckenridge.
We'll do that afterwards.
(30:09):
That was one of my favoritedays last time I went out there.
I got a migraine, and I stillloved that day last time.
We're pumped, man.
Josh Bretl (30:17):
That's really cool.
That's really cool.
Dave Schmidt (30:18):
Yeah, thanks Josh.
How about your trip toThe Bahamas coming up?
What are you looking forward to?
Josh Bretl (30:22):
Well, this one is...
we did The Bahamas a coupleyears ago with the kids, and
we did the whole kiss a dolphinthing, where you get in this
pool with the dolphins, andthe trainers bring them up, and
you get to pet them and feedthem fish, and stuff like that.
And we were excited, thekids were so excited.
Well, Alex freaked out.
He wanted nothing to do with it.
(30:43):
Wouldn't get near thepool, wouldn't do anything.
We have pictures of me, withZach and Maggie holding them
in the pool, and the dolphinscome up and Maggie's kissing it.
And I have a picture of thembehind me, Alex just moping.
Missy's like, oh myGod, I want to be in the
pool with the dolphins.
And so, this time I'mlooking forward to Alex
being able to do that.
(31:05):
Because I think heregrets it, even from that
young age at this point.
And I hope he canovercome that fear.
And I get it.
It's a weird thought, but-
Dave Schmidt (31:13):
Yeah, that's cool.
And you guys are activelytalking about it now,
so he's ready to do it?
Josh Bretl (31:17):
He's ready.
He's talking about it.
He's excited for it.
I think he's comfortable inthe water now, and it'll be...
I'm sure he'll still bea little bit nervous.
Dave Schmidt (31:26):
Sure.
Just be like, look atvacation Zach right here.
He's got Sean theduck-billed platypus.
Josh Bretl (31:35):
He does.
Dave Schmidt (31:36):
The duck-billed platypus will
get you through the day.
Josh Bretl (31:38):
You know, I'm going to...
we have the Alex-
Alex (31:42):
hashtag tax nerd.
Josh Bretl (31:43):
That we drop in here.
I'll see if I can get Zachto have Sean talk for me, and
record it, because Sean talks.
Dave Schmidt (31:51):
Yeah, of course.
Josh Bretl (31:53):
And it's kind of like one of those characters
that everyone pretendsthey know what they're
saying, but no one has anyidea what they're saying.
And Zach translatesfor us, it's fantastic.
So I'll see if I can't get that.
Dave Schmidt (32:05):
Kind of like ordering [Drive
thru shenanigans].
Josh Bretl (32:08):
Yes.
Kevin Collins isvery much that way.
Dave Schmidt (32:11):
Dave relates to retirees, yeah.
Speaking of Kevin Collins, thisis going to be back to back
episodes talking about my boy.
Back in high school basketballwe sometimes needed a way
to blow off some steam.
Josh Bretl (32:28):
When you say we, are we talking about,
am I included in this?
Is this the mutualwe, or is this not me?
Dave Schmidt (32:33):
I don't know if you were there.
When I tell this story,you may remember.
But it was definitelyme, Kevin and Vince.
The three amigos thatoften got into shenanigans.
The three main characters inthe drive-through shenanigans,
were also responsible forwhat I'm about to tell you.
After a tough basketballloss, we would sometimes
just need to blow off steam.
And we weren't aggressiveindividuals, we're not going
(32:55):
to go smash stuff or anything.
But we had to find somethingthat served us well, served our
purpose of blowing off steam,and didn't really care about
how it affected other people.
So we put our mindstogether, we first branded
ourselves as the TPC.
Do you rememberwhat the TPC was?
Josh Bretl (33:16):
Kind of, it's starting to come back to me.
Dave Schmidt (33:18):
Well, the very first victim of the
TPC was Jonathan Flatley.
And we drove by openedthe doors, and we jumped
out, and TP'd the crap outof John Flatley's house.
Jumped in the car,and sped away.
The TPC was theToilet Paper Clan.
That's just who we were.
That was our way ofblowing off steam.
(33:39):
It served us extremely well.
It did not necessarilyserve others, AKA people's
houses, who we TP'd, as well.
That is why it is likean annuity, my friend.
It served a very specificpurpose in our emotional
portfolio of 17-year-oldminds, back in the day.
(34:01):
Now, I'll let you fester on howto relate that to what we're
talking about today, whileI tell you other houses that
we TP'd during our tenure.
Cops eventually found us,locked us up for a few days.
No, just kidding.
We just stoppedbecause we got bored.
But we hit up Coach Prunty.
Josh Bretl (34:18):
You TPC'd Coach Prunty?
Dave Schmidt (34:19):
We drove out to his house and TPC'd him.
Yep.
He was not thrilled, because Ibelieve it rained that night.
Josh Bretl (34:26):
He lived on the south side of Chicago.
Dave Schmidt (34:27):
Yeah.
But again, we were dedicatedto our organization.
And I can't rememberanybody else that we TP'd,
but we did at least five,because we spent most of
our money on toilet paper.
So Josh, right now, Ibroke a pen, but the Full
House music is starting.
(34:48):
I hope you've had enough timeto put the pieces together.
Josh Bretl (34:53):
You gave me a hard time when I couldn't come up
with bird noises for that song.
And I think there's somedefinite reaching that's been
going on here with this DR2R.
Because the TPC doesapply to you, and it's
very specific to you.
And you probablyangered a few people.
(35:13):
And I will actually tell you,my father, who you know well, I
believe you TPC'd our house atone point in time, and I don't
think he appreciated it either.
And I think as a teenageboy, I knew that he
wouldn't enjoy it so much.
(35:33):
I probably also was like,oh no, Dad's not going to
be happy about this one.
But probably still enjoyedsome laughs with you over
it, and I hope you gotto blow off some steam.
But I would like to thinkthat annuities serve a broader
purpose for more people,than just the three people
who lost a basketball game.
Dave Schmidt (35:55):
You're not connecting this at all to-
Josh Bretl (35:57):
no, I'm really having a hard
time with this one.
Dave Schmidt (35:59):
I did it for you.
I said, it served us well, butmay not have served others well.
Josh Bretl (36:05):
Yeah, I could see that.
I could see that.
You know what?
That makes sense.
It served you well.
I would not have beencomfortable doing that.
Dave Schmidt (36:13):
That's my point.
We never asked goody-two-shoeslike you to join us.
Josh Bretl (36:16):
No, that's true.
I would not have beencomfortable doing that,
but it did serve you well.
And I guess we know what isright for our own situation.
I don't know if you had anadvisor that was trying to
tell you to blow off steamthat way, or something along
those lines, but that was...
Dave Schmidt (36:35):
When we filed our articles of incorporation.
I was the-
Josh Bretl (36:38):
for TPC?
Dave Schmidt (36:39):
Yeah, I was the president of TPC, so I
really answered to no one.
Josh Bretl (36:46):
You've continued that thought
the rest of your life.
Dave Schmidt (36:48):
In fact, when we did TP John Flatley's
house, he literally chased us.
And we were in my twodoor Chevy Cavalier.
And I clearly remember, youremember where John lived?
Josh Bretl (37:01):
Oh yeah.
I know right where John lived.
Dave Schmidt (37:02):
Yeah.
And racing through theback streets of, really
kind of uptown Elmhurst,trying to get away from him.
And I finally pulled into adriveway, and one of those
scenarios where he droveright past us, because I
turned off the lights, andit was a deep driveway, and
I was able to pull way in.
Who knows who's houseI was hiding out in?
He eventually claimshe saw my car.
(37:23):
We never admitted guilt to it.
But yeah, I remember therewas a high speed car chase
through my Chevy Cavalier.
We would even go as far asto spell out TPC in toilet
paper on the sidewalk.
I don't know if we just wettedit down so it would stay there.
But we had our signatureand everything, man.
Josh Bretl (37:42):
I still can't believe you drove down to
the south side of the cityto TP Coach Prunty's house.
Dave Schmidt (37:46):
You know what?
We may have done it.
We did a team dinner athis house, so we may have
planned it ahead of timeto do it right afterwards.
That kind of soundsfamiliar now.
Josh Bretl (37:59):
Oh, man.
Oh gosh, the good old days.
Dave Schmidt (38:03):
We got to wait for Kevin and Vince to start
listening to these, man,because they're going to
be coming up more and more.
Josh Bretl (38:08):
Our listeners are so excited.
They love reliving ourhigh school glory days.
Well Dave, again, I'm enteringa point here where I'm not
going to see you for a littlebit of time, so I hope you
have a wonderful trip out toColorado, and you get to spend
some time with your family.
And I know you're going tosee Cowboy Mike out there.
Dave Schmidt (38:29):
Sure will.
Josh Bretl (38:30):
And I hope he behaves himself.
Dave Schmidt (38:33):
I hope so too.
He can get wild.
Josh Bretl (38:35):
He can get wild.
And tell your sisters Isaid hi, and I miss hanging
out and laughing with them.
Dave Schmidt (38:43):
I'll do that, Josh.
Maybe we'll FaceTime youwhen we're all together.
Perfect.
Cool.
All right, Josh.
Well, we'll see you inabout a week and a half.
And to everybody out there, bye.
Josh Bretl (38:54):
Bye.
Dave Schmidt (38:54):
TPC is coming for you.
What are you going to do?
Josh Bretl (38:57):
That one really was a stretch for me.
Dave Schmidt (39:00):
I thought it was one of my better
ones, but apparently not.
Alex (39:04):
Hashtag tax nerd.
Dave Schmidt (39:32):
FSR Wealth Management is a registered
investment advisor locatedin Elmhurst, Illinois.
Information and opinionscontained in this audio
have been arrived atby FSR Wealth advisors.
All information herein isfor informational purposes
and should not be construedas investment advice.
It does not constitute an offer,a solicitation or recommendation
to purchase any security.
FSR is not providing legal,tax, accounting, or financial
planning advice in this audio.
These views are as of thedate of this publication
and are subject to change.
The one that we use most in our office is something
called a fixed indexed annuity.
And they have the guarantees,the reason they call it fixed
is because it can't lose money.
But it can earn money, and it'susually tied to a stock index.
These fixed index annuitieshave been a godsend for a lot
of clients in their portfolios,but you have to think about
(00:23):
them a little differently.
It's not a mutual fund, it'snot a stock market tool.
It is designed for your lowrisk, your bond alternative,
things along those lines.
But if you already know thatthe asset that you're spending,
like an annuity that can'tlose money, then you have
this permission slip to letthe rest of your money grow.
Dave Schmidt (00:41):
Sometimes investment decisions
are black and white.
No nuance, no downsides.
But when it comes to annuities,there are several shades
of gray that we are hereto help you understand.
On the second of two parts,Josh shares his take on when,
how, and why certain annuitiescan make the perfect fit
for clients whose portfoliosneed a little rounding out.
(01:05):
You'll learn about varioustypes of vehicles to consider,
what makes them appealing, andpotential pitfalls to avoid.
Get to know the differencebetween deferred and
immediate annuities, and whatdistinguishes protected income
buckets from growth bucketsfrom buckets of chicken?
Yeah, I went there.
(01:25):
You'll also find out whyfixed index annuities have
a lot to offer as a steadystream of low risk income.
If you've ever been intimidatedor put off by the world of
annuities, we encourage youto give this episode a listen.
It's your personal invitationto take stock to determine
whether or not annuities mightmake a good addition to your
(01:46):
growing retirement nest egg
Because hey, this isthe Retirement Equals
Freedom Podcast.
Your host, Josh Bretl, is theowner of FSR, Wealth Strategies.
And for the last 20 plusyears, Josh has been helping
fine folks like you gain theconfidence to make retirement
the best part of your life.
(02:08):
Me?
Who am I?
Thanks for asking.
I'm Dave.
Josh's longtime friend,co-host of the show, and
huge fan of Stan's Donuts,chocolate Dipped Donuts.
Oh yeah.
Alright, enough of my voice.
Let me let you let meend my introduction so we
can get on with the show.
(02:47):
Josh, barrel aged coldbrew from Stan's Donuts.
What do you think?
Josh Bretl (02:52):
I think it's delicious.
And I also think I'ma little giddy today.
I've had too muchcoffee already.
It's really good, though.
Dave Schmidt (03:00):
A giddy Josh makes for a far more
entertaining podcast.
Josh Bretl (03:03):
I hope so.
Some mornings we're up forthese, some mornings we're like,
eh, I got to record a podcast.
But today I'm like, come on,let's go, let's go, let's go.
Dave Schmidt (03:10):
Yeah.
Landon's got hischampionship game tonight.
Josh Bretl (03:12):
Ooh, is tonight the big championship game?
Dave Schmidt (03:14):
Yep, so we are stoked.
Trying to keep him nice and calmthough, because he's pitching.
It's a big game.
Josh Bretl (03:19):
How many innings are they allowed to pitch?
Dave Schmidt (03:21):
One, right now still?
And then we're pretty muchgearing up for Colorado
on Tuesday, so it'san exciting time here.
Josh Bretl (03:27):
Now, I catch a lot of grief in my house.
Because when we go forvacation, Missy says that I
don't really do anything, andI just show up and off we go.
But I think I'man integral part.
All of the behind the scenesorganization to make sure that
we have a taxi to get us to theairport, all the reservations.
Once we go, I got it all.
(03:51):
I know how to do everything.
And I will gladly help pack, butshe doesn't trust my packing.
If I pack the kids, she'dre-check it 10 times.
Dave Schmidt (04:01):
I don't blame her.
Josh Bretl (04:01):
No, I don't either.
I'd re-check my work tooif it was packing the kids.
But I've taken the kidsto Michigan randomly to go
see my parents, I have awhole different mindset.
Because she won't look atthat, she won't check that.
And I just go.
And if we forget something,we forget something.
We'll figure it out,it's not a big deal.
Dave Schmidt (04:16):
Yeah.
You go to Walmart therein New Buffalo, Michigan,
and buy some new undies.
Josh Bretl (04:20):
Yeah.
We're gone for two days.
They'll be fine.
Dave Schmidt (04:23):
I don't know why I spoke with
my heavy south accent.
We're talking about Michigan,which is not south of us.
Josh Bretl (04:29):
No, it's not.
The other day werecorded a live show.
It was a video show,Java with Josh.
It was our second one.
And it kind of had apodcast feel, but it was
much more current event-y.
These podcasts are a lotof overarching topics that
are kind of evergreen.
And we had it live.
(04:50):
For me it's interesting,because these podcasts
are edited by you.
So we can make a mistake, youcan adjust the microphone,
you can do stuff, andit just gets edited out.
Our listeners never hear that.
But you've been pushingme to make these live,
make these podcasts live.
We're going to try and dothis as much as we can today,
(05:10):
without editing anything.
Dave Schmidt (05:12):
Okay.
That's fair.
Josh Bretl (05:13):
Is that all right?
Dave Schmidt (05:14):
Yeah.
Are you committing toepisode 42 being live?
Josh Bretl (05:16):
I can do it, if you can.
Dave Schmidt (05:18):
I've been pushing for it from day one.
I think we shouldabsolutely do it.
Josh Bretl (05:21):
Okay.
We'll see what we can do there.
We'll start sending it out, andsee if people watch it live.
And it makes your lifea little bit easier from
the editing standpoint.
We can get more stuff done.
Dave Schmidt (05:30):
Josh, I'm a proud papa right now.
Josh Bretl (05:33):
Why?
Dave Schmidt (05:34):
Not anything my kid did or anything.
You've noticed my sporadicwork schedules of late?
Josh Bretl (05:38):
Yeah.
Dave Schmidt (05:39):
Okay.
You may not have known whereI've been going off to lately.
Josh Bretl (05:44):
I don't even ask.
Dave Schmidt (05:44):
No, you don't want to know.
Well, we are approachingthe 25th anniversary of
a very monumental momentin American history.
And I led a group of protestors.
And for the last few yearsactually, we have been posting
ourselves outside of Hasbroheadquarters, demanding for
(06:07):
a re-release of something.
And just this past weekend,I actually dressed up as
one of these aforementionedcharacters, and tied myself
to a tree, and demanded are-release of the Furby.
And Josh, today onAmazon, you can go and
buy a brand new Furby.
Thank you, Hasbro.
(06:28):
Your welcome, world.
You can thank me for it.
Josh Bretl (06:32):
The Furby is not something I'm familiar
with, other than it's aterm that I feel like it
gets referenced back to popculture of our generation.
Dave Schmidt (06:39):
Okay, that's fair.
Josh Bretl (06:40):
And you brought it up today on a team meeting
that our whole team attended.
And I have a surprise for you.
Dave Schmidt (06:48):
What's that?
Josh Bretl (06:50):
There's one coming here Monday for you.
Dave Schmidt (06:52):
What?
Josh Bretl (06:53):
I wanted to say thank you for all of the
hard work that you do, and Ithought, what better way than
to buy you your own Furby?
And I wanted to share itwith you live, but Amazon
is delivering it Monday.
Dave Schmidt (07:06):
Oh, this is the greatest day of my life.
You will not regret this.
You won't let me bringa dog in here, but this
is the next best thing.
Josh Bretl (07:13):
I know nothing about this, but I'm sure
it will be entertaining.
Dave Schmidt (07:17):
It's going to revolutionize
the podcast industry.
Well, thank you, Josh.
I am humbled.
And you're going to love it, Ipromise you're going to love it.
Josh Bretl (07:24):
It'll be entertaining.
It will be.
We've been going for a littlebit here, and I have one
quick story, because this is afollowup from our last episode.
At the beginning we weretalking about my son,
Zach, and his glasses.
And your son, Landon, goesto the same eye doctor.
And you saw a picture ofZach there, and you sent
it to Missy and I, of hisgraduation from this therapy
(07:47):
that he's doing there.
And we talked in the lastepisode how we bought Zach
a new pair of glasses.
And how he deserved it so much,because he went four years and
never broke a pair, never losta pair, never scratched a pair.
He is so carefulwith these glasses.
And we got these new pair ofglasses from that eye doctor.
Guess what happened yesterday?
Dave Schmidt (08:05):
No.
Josh Bretl (08:06):
Lens popped out.
He wasn't even doing anything.
He was just standing there.
All of a sudden he goes,"Mama, my lens popped out."
Missy goes, "Icouldn't yell at him.
He wasn't doing anything."
They're back at the eye doctortoday getting the lens fixed.
Dave Schmidt (08:24):
That is too funny.
Josh Bretl (08:25):
Yeah, so I thought I'd follow that up
after I was talking about...
four years, we spend somemoney on a nice pair of
glasses for the kid, and,"Mama, my lens popped out."
Dave Schmidt: That's how it works. (08:34):
undefined
Is that your sister outthere in the parking lot?
Josh Bretl (08:36):
Yeah, my sister uses our dumpster.
Her husband, he repsdifferent products.
And one of his products that hesells to small stores, is shoes.
When you rep shoes, youhave to take these samples
into the stores, so theywill send him one shoe,
so he gets the left pair.
(08:58):
That way they candouble up, they can send
another rep the right.
So, they have a lotof shoes that they
can't do anything with.
And so, when they're no longerselling that version, they
have to get rid of these shoes.
Dave Schmidt (09:10):
Oh man, what a waste.
Josh Bretl (09:11):
Yeah, it is.
They hate it.
And they're like, "Well, justtell us who has the other shoe,
and we'll donate them, we'llgive them away to people."
And nope, they won't do it.
We will, a couple times a yearin our office, have a dumpster
full of shoes, which is reallyconfusing to a lot of people.
Dave Schmidt (09:27):
It's just like annuities, man.
If you really get down intoit, it's just like annuities.
Josh Bretl (09:33):
That was an amazing segue.
Dave Schmidt (09:36):
I've been working on it.
Thank you.
Josh Bretl (09:41):
We promised part two, and today is part
two of annuities, baby.
And last week, or lastepisode, I spent some time
talking about all of theissues that people have with
them, and rightfully so.
There's a lot of reasonsyou shouldn't do them.
But as you actually ledthe show with last time,
(10:03):
there is no such thing as aninherently good or inherently
bad investment vehicle.
Dave Schmidt (10:08):
I led the show with that?
Josh Bretl (10:09):
Well, yeah.
Well, you did when, you editedit together and the very
first thing people hear is,"There's no inherently good or
inherently bad place to put yourmoney," coming from my voice.
That sounded like mypolitical voice, apparently.
Um, but, um...
Dave Schmidt (10:26):
These all things, these things, these um, but,
um, you're going to have towork on that for the live stuff.
That is going to be, it'sgoing to drive people crazy.
Josh Bretl (10:34):
It drives you crazy.
Dave Schmidt (10:35):
It takes hours to get that out of the show.
Josh Bretl (10:37):
I'm sorry.
Dave Schmidt (10:37):
That's all right.
Josh Bretl (10:38):
All right.
I'm going to work on it.
Dave Schmidt (10:39):
I went straight into an um.
Josh Bretl (10:40):
You did, you did.
Dave Schmidt (10:45):
I went straight into an um.
Josh Bretl (10:47):
How do I start a sentence without um?
It shouldn't be that hard.
Dave Schmidt (10:52):
It shouldn't be.
Josh Bretl (10:53):
I mean, I talk all day long.
Dave Schmidt (10:55):
All day.
Josh Bretl (10:56):
But it's like, I can't form a
thought without sayingum, then it's the thought.
I'm going to work on thatreally hard here today.
Dave Schmidt (11:05):
I don't have the answer for you.
I do tell you that I'mgoing to have to trim out
like three minutes of this,but we'll figure it out.
It's at 10 minutes already.
Josh Bretl (11:11):
People love us.
Dave Schmidt (11:12):
Oh, that's true.
Okay.
All right, so we're talking,last week we talked about kind
of why people hate annuities.
And Erin spent a bunch oftime coming up with, I'm
guessing not why peoplelove annuities, but why
annuities are good for people?
What are you talking about here?
Josh Bretl (11:26):
Well, last week we talked about a lot of the
downsides, or the things thatget the really bad press.
And what I wanted to spend sometime talking about today is
because nothing's inherentlygood or inherently bad, I want
to spend time on as to why,if we use them for a client,
because not all clients needthem, but if we use them for
a client, why do we use them?
And I wanted you to understandsome backgrounds behind them.
(11:48):
Bear with me as I get nerdyhere for a few minutes,
because this is one of myfavorite things to talk about.
You okay with that?
Dave Schmidt (11:56):
Yeah.
Josh Bretl (11:57):
I'm going to stop saying um, and I'm going to stop
asking, does that make sense?
Dave Schmidt (12:01):
I do like the, does that make sense?
That's a nice little segue.
Josh Bretl (12:03):
All right.
I'm glad I can keep that one.
I think the ums mightbe easier to get rid of.
The word annuity, whenyou look at the definition
of the word annuity, thedefinition of annuity is
just a stream of payments.
Anything can be an annuity.
Um...
um, I'm just going topoint it out every time.
(12:24):
We need a button to hit.
But if you look at a pension,a pension is an annuity.
It's a stream of payments.
Social Security is an annuity.
It's a stream of payments.
So the first annuity thatwas ever created, was
what they called a, um...
I can't.
It's going to drive me nuts.
Dave Schmidt (12:42):
You're fine.
Yeah, don't fight it.
Just do it.
We'll work on it later.
Josh Bretl (12:47):
Stop talking about it, is what you're telling me?
Dave Schmidt (12:49):
Yeah.
Just don't think about it.
Josh Bretl (12:50):
All right.
If you don't hear any ums forthe rest of the show, it's
because Dave just edited themout from this point forward.
But an immediate annuitywas the first thing that
ever came into existence.
An immediate annuity was ifyou gave an insurance company
money, so let's say you gavethem a hundred thousand dollars,
they would promise you like apension, a stream of payments
for the rest of your life.
And that was an annuity, thatwas what people thought of.
(13:11):
There was good and bad to that.
The good was, you werepromised a stream of payments
for the rest of your life.
The bad was, you gave upcomplete control of that money.
And so, it was good if you liveda long time, it was short if
you only lived a short time.
Because you gave them yourmoney, let's say you gave
them a hundred thousanddollars, and they were going
to pay you $10,000 a yearfor the rest of your life,
and you lived two years.
Well, you justlost 80,000 bucks.
(13:32):
Well, if you live 20 years,you just made a lot of money.
So it had its good, itsbad, its pros and cons.
That was the firstoriginal type of annuity.
And then they came up with whatthey called deferred annuities.
Deferred annuities, whereyou could stick money into it
and it would grow over time.
Does that make sense?
Dave Schmidt (13:52):
Mm-hmm.
Josh Bretl (13:53):
And then after you let it grow, you have
the ability to turn it intothat stream of payments.
Every annuity has theability to turn it into
that stream of payments,but you didn't have to.
You could take it out ifyou wanted to, you could
do something else with it.
Deferred annuity is you putmoney in and it can grow.
And at some point in thefuture, you can turn it
(14:13):
into a stream of payments,or you can take it out.
So, there's two types, A and B.
Immediate, deferred.
Dave Schmidt (14:19):
And terms can vary?
Josh Bretl (14:20):
Terms can vary.
You can have deferredannuities for a year.
You can have deferredannuities for 20 years.
You can even have a deferredannuity that's a year long,
that you just leave it in therefor the rest of your life,
and it just continues to grow.
But that's the difference.
That's the two big types.
Now, inside of deferredannuities, there's
multiple different typesof deferred annuities.
(14:43):
And this is wherepeople get hung up.
Make sense so far?
Dave Schmidt: Makes sense so far. (14:47):
undefined
Josh Bretl (14:48):
That's what I want to beat down a little bit.
The very first onewas a fixed annuity.
A fixed annuity was theinsurance company, it's
essentially a CD withan insurance company.
We all know what a CD is.
You go to the bank, yougive them your money,
and they're going topromise you a percentage.
They promise you 5% for ninemonths, or whatever it might be.
(15:11):
A fixed annuityis the same thing.
It's just instead of goingto a bank, you're going
to an insurance company.
Now, why would you do this?
Well, usually the insurancecompany has less liquidity
needs, so they canusually offer a little
bit higher rate of return.
It's not always the case,but they usually can.
And the second is,annuities have a tax
deferral available to them.
(15:32):
On a CD, the interest as youearn it is taxable to you.
You're going to seeinterest on your tax return.
In an annuity, youdon't see that interest.
It just gets addedto the account.
And then when you takeit out, that's when the
taxable event occurs.
That allows you theability to time your taxes.
Dave Schmidt (15:54):
I see.
Josh Bretl (15:54):
See, I didn't even ask you if you understand.
That makes sense.
That's one of the benefitsof deferred annuities.
The fixed annuityis the first type.
Then they got into thevariable annuities.
The very first variable annuitywas offered by TIAA-CREF, and
that was offered to teachers.
And what they did was instead ofbeing a fixed rate in like a CD,
(16:19):
they made it a variable rate.
And that variable rate is tiedto usually a stock market index.
Essentially what they didis they took mutual funds,
and they put them insideof a variable annuity.
Now, the big thing they alwaystest you on when you get your
insurance test is, in a fixedannuity the risk is with the
insurance company, becausethe insurance company has
to earn that interest rate.
(16:39):
With the variable annuity,the risk is with the person
who put their money into it.
Because it depends upon whatquote unquote, underlying
mutual fund that you choose.
if you have heard badthings about annuities, this
is where it's come from.
Because there are a lot ofpeople that loved these variable
annuities, because they wouldpay a higher commission then
(17:00):
just using mutual funds.
And so people would say,"Hey, this client wants mutual
funds, but I can put them ina variable annuity, and have a
few other bells and whistles,and they'll get paid more."
And that's where thestart of the really shady
sales processes came from.
That's the variable annuity.
Now, with technology nowadays,we very rarely see a lot
(17:22):
of uses in our practicefor variable annuities.
There are different uses, justnot a lot for our clients.
And I actually haven'tused a variable annuity
since I was first in thebusiness 25 years ago.
Dave Schmidt (17:35):
You're old.
Josh Bretl (17:36):
Yeah, actually it sounds really freaking old.
It's been a long time sincewe've actually used one.
Dave Schmidt (17:42):
It reminds me of a 401k, where the employees
would be able to choose theirinvestments within their 401k,
similar to a variable annuity.
Josh Bretl (17:53):
Yeah, it's very similar.
Now, the reason it's alittle bit different, the
reason it got the bad wrap isbecause it has higher fees.
Because you have the normalmutual fund fees, but then
you also have the additionalfees that the annuity
charges on top of it there.
Does that make sense?
Dave Schmidt (18:08):
Yeah, makes sense.
Josh Bretl (18:09):
Back to fees.
With the fixed annuitythough, there are no
additional fees to it.
The interest rate thatthey pay you is how they
calculate out their fees, soit's very similar to a bank.
When you get a CD, there's nota fee that goes against your CD.
You know the bank'searning more money.
A fixed annuity is the same way.
Dave Schmidt (18:29):
Got it.
It's just the mutual fundfees, not an additional
fee on top of it.
Josh Bretl (18:32):
Yeah.
Now, because the risk is notwith the insurance company on
the variable annuity, they addfees to that, so that is why the
variable annuity have the higherfees, as that comes into play.
Now the The one that we usemost in our office is something
called a fixed indexed annuity.
And a fixed indexed annuityis a little different.
(18:54):
It has the fixed component,but it does take some of the
interest rate sensitivity andapplies it to the customer.
So instead of a set rate,instead of a set earnings,
like a CD or a fixedannuity has, what this
one does, is the earningsare tied to a stock index.
They have the guarantees, thereason they call it fixed is
because it can't lose money.
(19:16):
But it can earn money, and it'susually tied to a stock index.
The most common one beingthe S&P 500, but there's
a lot of different onesthat are available to it.
In a year the S&P does welland goes up, you'll participate
in those gains and you'llget a percentage of it.
In years that it goesdown, you'll just stay
even and stay flat.
We do use that a lot.
(19:37):
It allows us the abilityto have some decent growth,
not have the risk associatedwith different investments,
and different downsides.
There is the timeperiod issue with it.
It has the 10 year, a lotof them are eight, 10, 12
year surrender charges.
But if you can work aroundthat, and you tie it into
(19:59):
your plan and your overallsituation, it can provide
some really nice downsideprotection, some decent growth.
Especially in the interestrate environments we've been
having recently, where up untilthe last year, there have not
been decent interest rateson CDs and things like that.
These fixed index annuitieshave been a godsend for a lot
of clients in their portfolios,but you have to think about
(20:20):
them a little differently.
It's not a mutual fund, it'snot a stock market tool.
It is designed for your lowrisk, your bond alternative,
things along those lines.
Dave Schmidt (20:29):
I can relate to this, because I just
bought 800 Furbies in hopesthat they grow in value.
Josh Bretl (20:35):
I would call your Furby purchase more of
a stock purchase, I think.
Dave Schmidt (20:38):
Well, right.
But I'm saying, but I havean annuity on the backend to
protect myself in case I loseall my Furby investments.
Josh Bretl (20:44):
I thought her name was Carla.
Dave Schmidt (20:45):
Oh, wow.
Oh boy, oh boy.
It's funny, thisis a good pause.
You need to work on your umsand your clicks, I need to
work on, and you fell prey tothis during our Java with Josh.
I keep looking at the computerinstead of our cameras,
because this is so new to us.
Josh Bretl (21:04):
We'll get there.
We'll get there.
Well, I also feel likeI should look at you.
We're the only twopeople here talking.
I feel like I should lookat you, but whatever.
Dave Schmidt (21:10):
Yeah.
That creepy guy thatlives in our closet.
We don't even know his name.
Let's call him Herb.
Josh Bretl (21:15):
Herb?
Dave Schmidt (21:16):
Yeah.
Josh Bretl (21:16):
I though it was...
no, Steve's the otherside of the wall.
Dave Schmidt (21:18):
Oh yeah, Steven.
Josh Bretl (21:19):
Well, I want to talk a little bit
about how we use them.
In theory, we're usingfixed annuities or fixed
indexed annuities inour clients' portfolios.
And again, they're notfor everybody, but for
certain people, they servea really nice purpose.
Let's talk about what someof those purposes are.
The first one, we'll use itwhen we talk about having
(21:40):
a protected income bucket.
There's certain dollarsthat in retirement, you're
going to have to spend.
And it's really nice to have alow volatility asset, an asset
that doesn't have a lot of risk.
And if you want to spenddown that annuity money, it's
a great ability to do it.
Now, you have tounderstand liquidity.
You have to make sure youhave an advisor who can
factor liquidity into it.
(22:01):
But that protected incomebucket is also your
permission slip to let yourother assets sit and grow.
Because people, when they'reworking, we're really used to...
I don't really carewhat the market does.
I got time.
It was that whole retirement,hey, I'm going to spend my
money, so they get nervousand things like that.
But if you already know thatthe asset that you're spending,
like an annuity that can'tlose money, then you have
(22:23):
this permission slip to letthe rest of your money grow.
That's one that comes into play.
Dave Schmidt (22:28):
What about the third bucket?
I see protected income bucket,versus growth bucket, versus
bucket of fried chicken.
Josh Bretl (22:35):
Bucket of fried chicken.
That is just for people likeyou, who need that incentive
to keep going forward there.
Fried chicken worksfor most people.
No one doesn'tlike fried chicken.
Dave Schmidt (22:48):
No, it's un-American to not
like fried chicken.
Josh Bretl (22:52):
What about the third bucket?
The second reason we'll usethem, is as a bond alternative.
Dave Schmidt (23:02):
James Bond.
Josh Bretl (23:03):
Bond, James Bond.
Your Bond impersonationis much better than mine.
Dave Schmidt (23:07):
Most things I do is better than
Josh Bretl (23:11):
Right now, it still serves true.
But we had a whole episodeon bonds before, and it's
actually still relevant.
But back when interest rateswere so low and the market
was so high, the bonds weresupposed to provide downside
protection, and pay you adecent interest rate, and
they just weren't doing that.
And we were using the fixedannuities, and the fixed
(23:33):
index annuities to do that,to provide downside protection
and pay a decent interest rate.
And they stillhave, they still do.
And it's still a great bondalternative, if you think about
what the purpose of the bond is.
And we'll use that a lot oftimes inside our different
clients' portfolios there.
We have principal protection.
It's a great safe investment.
It hopefully will out earn cashover the long term it's there.
(23:57):
One we have on there is, there'scertain annuities that have some
different tools built into it.
They will have eitherguaranteed income tools,
and it's a little differentthan the immediate annuity
I first talked about whereyou give up complete control.
Now, you actually have control.
If you die early, your lovedones and your heirs can still
get whatever's left over.
(24:17):
But they also can havesome different long-term
care features built in.
For a lot of people, long-termcare becomes really important.
And if you can have a stream ofincome that also has a benefit
for long-term care, that canmean a lot to a lot of people.
That gets to be taken intoconsideration as well.
Dave Schmidt (24:34):
That was actually a question I had earlier,
is upon death, does it actlike a pension or something
that just continues to payout to your beneficiary?
But you're telling me-
Josh Bretl (24:45):
it can.
There's a lot more flexibility,and you have that ability
to have it keep payingout, or maybe a lump sum.
If there's a husband orwife, you can do it over
both of their lives.
There's a lot more flexibilityand control, because you
own it, and that's there.
Now, this gets me tothe the overarching
thought process here.
And that is that, backto the original thing I
(25:06):
said, it's never inherentlygood or inherently bad.
But it does have to applyto your specific situation.
Before you use them or beforeyou deny them, make sure that
you understand exactly whatthe purpose is, and you have
a plan in place so that itworks for your situation and
what you're trying to do.
They can be a great tool, andthey can do harm, depending
(25:28):
upon how you use them.
The annuities that we talkabout, and that we use in our
clients' scenario, yeah, they'rethe same annuities that there's
people out there screaming, "Ihate annuities," but they're
trying to sell something too.
And so, when we work it in andwe work it into our clients'
situation, it can serve a hugepurpose and a huge benefit.
(25:49):
Now, when we make thatrecommendation, we always
say we're only doing itbecause we think it's
of your best interest.
If you don't agree with it, ifyou are so anti-annuity that
you can never get over it, okay,we'll do something different.
It's just in our thoughtprocess, it probably won't be
as good as what we have here.
That is our thought process onhow we think about annuities
(26:12):
in our clients' portfolios.
Dave Schmidt (26:13):
There's always investing in Furbies.
Josh Bretl (26:16):
Your first one's coming on Monday, buddy.
Dave Schmidt (26:18):
You have no idea.
I'm so pumped.
Josh Bretl (26:20):
I forget what color I ordered you though.
Dave Schmidt (26:22):
The purple or the coral, I'm thrilled with either.
It's going to be great.
Josh Bretl (26:27):
Are you here Monday, before your trip on Tuesday?
Dave Schmidt (26:30):
I am going to be here Monday.
Josh Bretl (26:31):
Oh, I hope it shows up early.
Dave Schmidt (26:33):
I hope so too.
You know, can addlittle charms to them.
I think it comeswith a pizza charm.
You can add additional charms,and I will be adding charms.
Josh Bretl (26:40):
Is it going to stay here in the office, or are
you taking it home with you?
Dave Schmidt (26:43):
Oh, it's going to be an an office mascot, I think.
Josh Bretl (26:45):
Oh, great.
I look forward to it.
Dave Schmidt (26:47):
I may buy Landon his own.
But he's going to be withus whenever we're recording.
We'll have to name him.
Josh Bretl (26:55):
Well Dave, we've been talking here for a
while, and I think it's time.
Dave Schmidt (27:16):
[singing].
Josh Bretl (27:29):
For people that don't know us, we come up
with these little tiny thingswe spend a lot of effort
trying to put in place,and they don't always pay
off, but that one worked.
Did you hear it?
Dave Schmidt (27:40):
That was amazing.
I was worried about thesong being too loud.
And that's why I'm like,which one is the sound
effects, is it the first one?
Josh Bretl (27:47):
That's sound effects, or this is the
pad, that's the Bluetooth.
Dave Schmidt (27:50):
Okay, so turn it down.
Go ahead, play it again.
Can you play it again?
Josh Bretl (27:53):
Yeah, I can play it again.
Dave Schmidt (27:54):
Just in case people didn't pick up on it.
Josh Bretl (27:59):
That, folks, is a blue jay.
And this comes from a YouTubethat I found, that is a
guy that teaches you howto make common bird calls.
Dave Schmidt (28:09):
Oh, he's my hero.
For context, last episode, Iessentially accosted you for
not having original bird sounds.
And you stepped up and said, "Icannot let my buddy down today."
Josh Bretl (28:23):
Yeah, so now I am no longer making bird sounds.
I am going to let this guy...
that was a morning dove man.
And he's going to come in andplay with us, as times go on.
Dave Schmidt (28:38):
You have no idea what this has done to our
street cred for our podcast.
Official bird sounds.
Josh Bretl (28:45):
So, get to know Josh and Dave.
Dave, you leave forvacation next week.
You're going to Colorado, andthen I take my vacation at
the end of July with the kids.
What is one thing that youare super excited to do
with Landon on vacation?
Dave Schmidt (29:04):
We have three things planned,
and they're all awesome.
Josh Bretl (29:07):
Now, I'm worried this is gonna be like the
dogs game, and all of asudden you just can't...
you're going to sayyou're so excited for
it, and you can't do it.
Dave Schmidt (29:13):
I know.
We've been watchingthe forecast.
I think we're clear.
I want to say two.
Josh Bretl (29:19):
Okay, go ahead.
Go ahead.
Dave Schmidt (29:20):
We're going to a Colorado Rockies game, which
Josh Bretl (29:23):
he been to a Major League Baseball game before?
Dave Schmidt (29:25):
He's been to a couple Sox games.
We're going to the CubsSox game in August.
Josh Bretl (29:29):
Oh, nice.
Dave Schmidt (29:31):
But this will be his first
non-Illinois sports team.
He's been playing a lot ofMLB The Show on Switch, so
he's seen what differentstadiums look like.
I think it's going to becool for him to walk into a
totally different environment.
I think that'll be a lot of fun.
The whole family'sgoing, we got like 20
tickets or something, so.
Josh Bretl (29:49):
Oh, that would be awesome.
Dave Schmidt (29:49):
Yeah, it's going to be great.
And then I think I mentionedbefore, we rented boats.
We're going to go intoLake Dillon, which is just
the most gorgeous lake.
It looks like you're in a fjord.
You're in between hugefoothills, with mansions on
the top, and you're driving aboat through there, and it's
maybe an hour from Breckenridge.
We'll do that afterwards.
(30:09):
That was one of my favoritedays last time I went out there.
I got a migraine, and I stillloved that day last time.
We're pumped, man.
Josh Bretl (30:17):
That's really cool.
That's really cool.
Dave Schmidt (30:18):
Yeah, thanks Josh.
How about your trip toThe Bahamas coming up?
What are you looking forward to?
Josh Bretl (30:22):
Well, this one is...
we did The Bahamas a coupleyears ago with the kids, and
we did the whole kiss a dolphinthing, where you get in this
pool with the dolphins, andthe trainers bring them up, and
you get to pet them and feedthem fish, and stuff like that.
And we were excited, thekids were so excited.
Well, Alex freaked out.
He wanted nothing to do with it.
(30:43):
Wouldn't get near thepool, wouldn't do anything.
We have pictures of me, withZach and Maggie holding them
in the pool, and the dolphinscome up and Maggie's kissing it.
And I have a picture of thembehind me, Alex just moping.
Missy's like, oh myGod, I want to be in the
pool with the dolphins.
And so, this time I'mlooking forward to Alex
being able to do that.
(31:05):
Because I think heregrets it, even from that
young age at this point.
And I hope he canovercome that fear.
And I get it.
It's a weird thought, but-
Dave Schmidt (31:13):
Yeah, that's cool.
And you guys are activelytalking about it now,
so he's ready to do it?
Josh Bretl (31:17):
He's ready.
He's talking about it.
He's excited for it.
I think he's comfortable inthe water now, and it'll be...
I'm sure he'll still bea little bit nervous.
Dave Schmidt (31:26):
Sure.
Just be like, look atvacation Zach right here.
He's got Sean theduck-billed platypus.
Josh Bretl (31:35):
He does.
Dave Schmidt (31:36):
The duck-billed platypus will
get you through the day.
Josh Bretl (31:38):
You know, I'm going to...
we have the Alex-
Alex (31:42):
hashtag tax nerd.
Josh Bretl (31:43):
That we drop in here.
I'll see if I can get Zachto have Sean talk for me, and
record it, because Sean talks.
Dave Schmidt (31:51):
Yeah, of course.
Josh Bretl (31:53):
And it's kind of like one of those characters
that everyone pretendsthey know what they're
saying, but no one has anyidea what they're saying.
And Zach translatesfor us, it's fantastic.
So I'll see if I can't get that.
Dave Schmidt (32:05):
Kind of like ordering [Drive
thru shenanigans].
Josh Bretl (32:08):
Yes.
Kevin Collins isvery much that way.
Dave Schmidt (32:11):
Dave relates to retirees, yeah.
Speaking of Kevin Collins, thisis going to be back to back
episodes talking about my boy.
Back in high school basketballwe sometimes needed a way
to blow off some steam.
Josh Bretl (32:28):
When you say we, are we talking about,
am I included in this?
Is this the mutualwe, or is this not me?
Dave Schmidt (32:33):
I don't know if you were there.
When I tell this story,you may remember.
But it was definitelyme, Kevin and Vince.
The three amigos thatoften got into shenanigans.
The three main characters inthe drive-through shenanigans,
were also responsible forwhat I'm about to tell you.
After a tough basketballloss, we would sometimes
just need to blow off steam.
And we weren't aggressiveindividuals, we're not going
(32:55):
to go smash stuff or anything.
But we had to find somethingthat served us well, served our
purpose of blowing off steam,and didn't really care about
how it affected other people.
So we put our mindstogether, we first branded
ourselves as the TPC.
Do you rememberwhat the TPC was?
Josh Bretl (33:16):
Kind of, it's starting to come back to me.
Dave Schmidt (33:18):
Well, the very first victim of the
TPC was Jonathan Flatley.
And we drove by openedthe doors, and we jumped
out, and TP'd the crap outof John Flatley's house.
Jumped in the car,and sped away.
The TPC was theToilet Paper Clan.
That's just who we were.
That was our way ofblowing off steam.
(33:39):
It served us extremely well.
It did not necessarilyserve others, AKA people's
houses, who we TP'd, as well.
That is why it is likean annuity, my friend.
It served a very specificpurpose in our emotional
portfolio of 17-year-oldminds, back in the day.
(34:01):
Now, I'll let you fester on howto relate that to what we're
talking about today, whileI tell you other houses that
we TP'd during our tenure.
Cops eventually found us,locked us up for a few days.
No, just kidding.
We just stoppedbecause we got bored.
But we hit up Coach Prunty.
Josh Bretl (34:18):
You TPC'd Coach Prunty?
Dave Schmidt (34:19):
We drove out to his house and TPC'd him.
Yep.
He was not thrilled, because Ibelieve it rained that night.
Josh Bretl (34:26):
He lived on the south side of Chicago.
Dave Schmidt (34:27):
Yeah.
But again, we were dedicatedto our organization.
And I can't rememberanybody else that we TP'd,
but we did at least five,because we spent most of
our money on toilet paper.
So Josh, right now, Ibroke a pen, but the Full
House music is starting.
(34:48):
I hope you've had enough timeto put the pieces together.
Josh Bretl (34:53):
You gave me a hard time when I couldn't come up
with bird noises for that song.
And I think there's somedefinite reaching that's been
going on here with this DR2R.
Because the TPC doesapply to you, and it's
very specific to you.
And you probablyangered a few people.
(35:13):
And I will actually tell you,my father, who you know well, I
believe you TPC'd our house atone point in time, and I don't
think he appreciated it either.
And I think as a teenageboy, I knew that he
wouldn't enjoy it so much.
(35:33):
I probably also was like,oh no, Dad's not going to
be happy about this one.
But probably still enjoyedsome laughs with you over
it, and I hope you gotto blow off some steam.
But I would like to thinkthat annuities serve a broader
purpose for more people,than just the three people
who lost a basketball game.
Dave Schmidt (35:55):
You're not connecting this at all to-
Josh Bretl (35:57):
no, I'm really having a hard
time with this one.
Dave Schmidt (35:59):
I did it for you.
I said, it served us well, butmay not have served others well.
Josh Bretl (36:05):
Yeah, I could see that.
I could see that.
You know what?
That makes sense.
It served you well.
I would not have beencomfortable doing that.
Dave Schmidt (36:13):
That's my point.
We never asked goody-two-shoeslike you to join us.
Josh Bretl (36:16):
No, that's true.
I would not have beencomfortable doing that,
but it did serve you well.
And I guess we know what isright for our own situation.
I don't know if you had anadvisor that was trying to
tell you to blow off steamthat way, or something along
those lines, but that was...
Dave Schmidt (36:35):
When we filed our articles of incorporation.
I was the-
Josh Bretl (36:38):
for TPC?
Dave Schmidt (36:39):
Yeah, I was the president of TPC, so I
really answered to no one.
Josh Bretl (36:46):
You've continued that thought
the rest of your life.
Dave Schmidt (36:48):
In fact, when we did TP John Flatley's
house, he literally chased us.
And we were in my twodoor Chevy Cavalier.
And I clearly remember, youremember where John lived?
Josh Bretl (37:01):
Oh yeah.
I know right where John lived.
Dave Schmidt (37:02):
Yeah.
And racing through theback streets of, really
kind of uptown Elmhurst,trying to get away from him.
And I finally pulled into adriveway, and one of those
scenarios where he droveright past us, because I
turned off the lights, andit was a deep driveway, and
I was able to pull way in.
Who knows who's houseI was hiding out in?
He eventually claimshe saw my car.
(37:23):
We never admitted guilt to it.
But yeah, I remember therewas a high speed car chase
through my Chevy Cavalier.
We would even go as far asto spell out TPC in toilet
paper on the sidewalk.
I don't know if we just wettedit down so it would stay there.
But we had our signatureand everything, man.
Josh Bretl (37:42):
I still can't believe you drove down to
the south side of the cityto TP Coach Prunty's house.
Dave Schmidt (37:46):
You know what?
We may have done it.
We did a team dinner athis house, so we may have
planned it ahead of timeto do it right afterwards.
That kind of soundsfamiliar now.
Josh Bretl (37:59):
Oh, man.
Oh gosh, the good old days.
Dave Schmidt (38:03):
We got to wait for Kevin and Vince to start
listening to these, man,because they're going to
be coming up more and more.
Josh Bretl (38:08):
Our listeners are so excited.
They love reliving ourhigh school glory days.
Well Dave, again, I'm enteringa point here where I'm not
going to see you for a littlebit of time, so I hope you
have a wonderful trip out toColorado, and you get to spend
some time with your family.
And I know you're going tosee Cowboy Mike out there.
Dave Schmidt (38:29):
Sure will.
Josh Bretl (38:30):
And I hope he behaves himself.
Dave Schmidt (38:33):
I hope so too.
He can get wild.
Josh Bretl (38:35):
He can get wild.
And tell your sisters Isaid hi, and I miss hanging
out and laughing with them.
Dave Schmidt (38:43):
I'll do that, Josh.
Maybe we'll FaceTime youwhen we're all together.
Perfect.
Cool.
All right, Josh.
Well, we'll see you inabout a week and a half.
And to everybody out there, bye.
Josh Bretl (38:54):
Bye.
Dave Schmidt (38:54):
TPC is coming for you.
What are you going to do?
Josh Bretl (38:57):
That one really was a stretch for me.
Dave Schmidt (39:00):
I thought it was one of my better
ones, but apparently not.
Alex (39:04):
Hashtag tax nerd.
Dave Schmidt (39:32):
FSR Wealth Management is a registered
investment advisor locatedin Elmhurst, Illinois.
Information and opinionscontained in this audio
have been arrived atby FSR Wealth advisors.
All information herein isfor informational purposes
and should not be construedas investment advice.
It does not constitute an offer,a solicitation or recommendation
to purchase any security.
FSR is not providing legal,tax, accounting, or financial
planning advice in this audio.
These views are as of thedate of this publication
and are subject to change.
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