• Our allocation method called Portfolio Allocation Plus encompasses the benefits of the “Efficient Market Hypothesis”, “Modern Portfolio Theory” and the Three Factor Model. In addition, using a cyclical asset allocation theory, it may utilize both active and passively managed mutual funds and exchange traded funds. By using exchange traded funds we can add tax efficiency to our portfolio. Exchange traded funds track indexes in an effort to obtain market rates of return and therefore have lower turnover percentages. Lower turnover percentages lead to lower short/term capital gains and therefore lower taxes.

    Mutual funds, exchange traded funds and stocks are a part of the equity side of our portfolio. As such, they will also assume the major portion of the portfolio risk.

    The fixed income portion of our portfolio may be made up of bonds, bond mutual funds and/or exchange traded funds, treasuries, money market funds and possibly fixed index annuities. The use of a fixed index annuity may facilitate a reduction in the overall standard deviation (volatility) of the portfolio. In addition, it is possible the portfolio as a whole may see an increase in return as a result of the lower risk. An additional benefit of such a strategy is that the fixed income annuity by its very nature has the benefit of principal protection in the event of adverse market conditions.
  • A Fixed Index Annuity is a type of tax deferred annuity whose credited interest is linked to an equity index typically the S&P 500 or an international index. It guarantees a minimum interest rate (typically between 1 to 3%) if held to the end of the surrender term and protects against loss of principal. A fixed index annuity is a contract with a life insurance company. The return may be higher than fixed instruments and or CDs, money market funds and bonds but not as high as market returns. Fixed index annuities are insured by the State Guarantee Fund which is similar to the insurance provided by the FDIC.

    The guarantees in the contract are backed by the relative strength of the issurer.

    The contract may be suitable for a portion of the asset portfolio for those who want to avoid risk and are in retirement or saving for retirement. The objective of purchasing a fixed index annuity is to realize greater gains than those provided by CDs, money market funds or bonds while still protecting principal.

    In addition, in a taxable account the earnings in the Fixed Income Portion of the portfolio allocated to the Fixed Index Annuity will be Tax Deferred.
  • A index universal life policy is a permanent life policy that allows policy holders to tie accumulation values to a stock index. Index universal life insurance policies typically contain a minimum guaranteed fixed interest rate component along with the index account option. Indexed policies give policyholders the security of fixed universal life insurance with the growth potential of a variable policy linked to indexed returns.

    Indexed universal life insurance differs from variable universal life insurance in that indexed policies follow a stock market index, while variable policies can allow policyholders to allocate funds to a variety of investment vehicles, such as stocks, bonds & equity funds. Indexed policies tend to be less expensive than variable policies, and offer greater security against stock market declines.