Red Clay on Wall Street Dr. John Colegrove, CFP® Professional

On this episode of Red Clay on Wall Street, host, Dr. John Colegrove walks you through another financial query that you may be experiencing in your life. Today’s episode is centered around what a fixed annuity is and who it is most appropriate for, and how it compares to other financial vehicles, products, and investments. Dr. John Colegrove provides real life applicable examples for listeners to understand just how fixed annuities can work for their benefit.
 
In this episode:
0:09  - Welcome!
1:09 - Dr. John Colegrove introduces the episode theme: what is a fixed annuity
1:15 - A fixed annuity is an insurance product that provides investors with principled protection, a fixed rate of interest, and tax-deferred growth.
1:26 - What stage of life are fixed annuities geared toward and why?
1:51 - When should you own a fixed annuity? Though everyone’s situation is unique, there is one circumstance where owning an annuity is ideal
2:00 - Why and who should be maintaining a healthy emergency fund?
2:20 - Fixed annuities may make sense for those who are dissatisfied with some of the limitations of emergency fund accounts
3:09 - Are there any tax advantages to owning a fixed annuity?
4:12 - Fixed annuities have deferred interest as long as the interest remains in the annuity
4:29 - What if you don’t require the money once it matures?
4:33 - When a fixed annuity matures, an investor has three choices: 1) Cash out, 2) Renew, or 3) 1035 Exchange
5:26 - When would be a bad idea to buy a fixed annuity?
6:29 - What happens to my fixed annuity when I die or become disabled?
6:56 - How does a CD (certificate of deposit) compare to a fixed annuity?
8:06 - Dr. John Colegrove advises to seek advice from a trusted financial professional in regards to finding out financial options work for your life situation
 
Links:
Listen to more episodes of Red Clay on Wall Street on Apple Podcasts
Find out more about Calder and Colegrove by visiting their website

Trade tensions have interrupted an unusually calm year in U.S. stocks. In May, the S&P 500 Index fell from an April 30 record high as the United States and China failed to reach a trade deal and escalated tariff tensions. The United States also proposed new tariffs on Mexico, further complicating the outlook for trade. The turnaround in trade talks has surprised investors and rattled global financial markets.

A 401(k) plan is a retirement savings plan that is sponsored by an employer. It has grown quite popular in the United States, with over 100 million participants (Source: U.S. Department of Labor).
A 401(k) plan offers significant tax benefits while helping you plan for the future. You contribute to the plan via payroll deduction, which can make it easier for you to save for retirement. One important feature of a 401(k) plan is your ability to make pre-tax contributions to the plan. Pre-tax means that your contributions are deducted from your pay and transferred to the 401(k)plan before federal (and most state) income taxes are calculated. This reduces your current taxable income — you don't pay income taxes on the amount you contribute, or any investment gains on your contributions, until you receive payments from the plan.

The two major types of IRAs are traditional IRAs and Roth IRAs. Your contributions to a traditional IRA may be tax deductible on your federal income tax return. Your contributions to a Roth IRA are not tax deductible. You can invest only after-tax dollars in a Roth IRA. The good news is that if you meet certain conditions, your withdrawals from a Roth IRA will be completely income tax free, including both contributions and investment earnings.

The two basic types of life insurance are term life and permanent (cash value) life. Term policies provide life insurance protection for a specific period of time. Permanent insurance policies provide protection for your entire life, provided you pay the premium to keep the policy in force.