Michael Sams Multiplies His Clients' Returns by Over 5x with an Annuity
If you're looking for a way to grow your money without taking on any risks, it might be time to consider an annuity.
The right annuity can offer a fantastic opportunity for your money to grow at a higher interest rate while enjoying 100% safety, zero fees, and no risks.
We sat down with Michael Sams for a Q&A to discuss two recent real-life cases that perfectly demonstrate the benefits of annuities.
Q: Who could benefit from an annuity?
A: There are plenty of financial situations where an annuity can make a significant difference. Let me give you two common scenarios that we see.
First up, we've got individuals who have their hard-earned money invested in the market, but unfortunately, they're actually losing money. And then we've got another group who has their money sitting in the bank, but they are hardly earning any interest.
In both of these cases, an annuity could be the solution to turn things around.
Q: Was either of these the case for your clients?
A: Yes, we can start with the female client. She is retired, and she had her money sitting in a local bank that was earning her just 1% per year in interest.
Q: What plan did you end up recommending and why?
A: I recommended a 3-year annuity with SILAC Insurance Company, which offers a 3-year 5.34%* guaranteed interest rate. I recommended this plan to her for a few reasons, but it is mainly rate driven. SILAC offers one of the strongest interest rates right now.
By investing $100k, she would be earning $5,340 per year in interest, without any risks, and with no fees. That's much better than the $1,000 per year in interest she was making with her money sitting in the bank.
It's also worth mentioning that SILAC has excellent customer service. And while that won't necessarily sway my recommendation, it is always nice to work with a company that takes care of its customers.
*Rates are subject to change
Q: Annuities can be complicated! How did you explain your recommendation to her in a way she could understand?
A: I like to say that at Sams/Hockaday, we talk plain vanilla. We don't need to throw any fancy insurance jargon out there; we just keep things simple so that everyone can understand.
In this case, I told her you can take your money and deposit it in this annuity, and you are guaranteed to earn the 5.34% interest rate each year for the next 3 years, and it's as simple as that.
You can pull out your iPhone and calculate exactly how much you are going to have in your account each year, and that won't change.
At the end of the 3 years, you can take all your money out and buy something nice, reinvest it in the same annuity, or move it to whatever has the best interest rate at that time.
Q: What happens if she needs to pull her money out early?
A: Depending on the plan you choose, there may be penalties or surrender charges if you need to withdrawal your money early.
One more reason I recommended the SILAC 3-year annuity is it has what they call a withdrawal feature. That means once she gets past her first 12 months, she can start taking out up to 5% per year without any penalty if needed.
So if their AC goes out, and a new air conditioner is going to cost $5,000, she'll have access to pull out $5,000 as a free withdrawal – no penalties, and no surrender charges.
Q: Did she have any objections or concerns about your recommendation?
A: Not in this particular case; however, a question that I get quite often is, "What are the broker fees?"
To answer that, you don't have to pay us any broker fees. The insurance companies know they are going to pay a broker for finding the business so the money that we make is always built into the pricing of the product.
100% of the customer's deposit goes toward earning that guaranteed interest rate.
Q: What did she end up getting?
A: She went with my recommendation of the SILAC 3-year annuity at a 5.34% interest rate.
So instead of earning the 1% interest that she was earning with her money in the bank, now she’s earning 5.34% each year, and she still has no risk of losing her principal, and no fees.
That's close to 5 times the return she was previously getting.
Q: What would you say to others in a similar situation?
A: It's very difficult to recommend the same thing for everyone, so I always ask two questions: "When do you plan to use this money?" and "How much do you plan to use at a time?"
Knowing those two things will allow me to match them with a plan that's going to meet their individual goals and needs.
Q: Was the male half in a similar situation?
A: The husband actually fell into the other category I mentioned earlier. He had his money invested in the market through a brokerage account with Raymond James, which had his money in stocks, bonds, and mutual funds.
But that account was actually losing money, so he also wanted to benefit from the safety of a guaranteed interest rate.
Q: Did you recommend the same plan to him?
A: Yes, and he also went with the 3-year SILAC annuity with the guaranteed 5.34% interest rate.
Now, instead of losing money, by investing $100k in this annuity, he will earn $5,340 per year in interest.
Based on the two cases Michael shared, it's clear that whether your money is sitting in a bank not making much money or taking a hit in the market, the guaranteed growth of an annuity may put you in a better position.
If you're curious to see if an annuity could make you more money without any risk, give us a call at Sams/Hockaday today.
Schedule an appointment with Michael or any of our highly qualified agents, to review your individual financial situation. We'll take the time to better understand your needs and match you with a plan that aligns with your investment goals.