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Wolfgang T. Sailler
Certified Financial Planner ™

Joseph D. Witt
Certified Financial Planner ™

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PO Box 5190
Salem, OR 97304-3060

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Office: (503) 375-0208
Home: (503) 587-9811
Fax: (503) 371-2615

Secondary Market Annuities May Solve Income Dilemma

January 20, 2014

Fixed income investors have been suffering from low rates ever since the Federal Reserve Bank sought to stimulate the economy with ‘easy money’, driving interest rates to record lows. Only a few years ago one could just sit back and collect dividends on money market funds.

No more.

The last three years saw dividend rates on MM accounts near zero and even multi-year Certificates of Deposit are paying very low digit interest rates. Chasing rates in the bond markets or with dividend paying, listed securities can be rife with peril. While treasury bonds are considered the pinnacle of safety, if you hold them to maturity, their value is inversely related to the level of interest rates: If rates go up, prices of existing bonds go down, if rates go down, prices go up.

During the last six months holders of long-term treasuries saw the prices of their holdings melt like ice cubes in the sun at only a hint of reducing the money supply by the Fed. Imagine something that can pay you 4, 5, or even 5.5 and 6% with the backing of a highly rated insurance company and fixed payments. Here are two examples to illustrate.

Case 1: Initial purchase price of $41,374 would buy 120 monthly payments of $450 starting July 2015. That equals an interest rate of 4.5%.

Case 2: Initial purchase price of $67,906 would return a lump sum of $96,222 in June 2021, which represents an interest rate of 5.0%

There is a cheer endless variety of purchase prices and payout situations, as each case results from individual circumstances.  Offers like the above come about as the original owners are in need or want of a lump-sum of money now, as opposed to future payments. They are willing to relinquish their rights to the payments in a court ordered transfer to a new owner for large discounts. Hence the relatively high interest rates for ‘save’ money.

Call us if you like to find out more.

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(503) 375-0208




PO Box 5190
Salem, OR 97304-3060



Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

Goldmark Financial Planners, LLC, is a Registered Investment Advisor Firm in the State of Oregon. Prior to any advisory work conducted outside Oregon, Goldmark Financial Planners, LLC, would become registered in that jurisdiction or qualify for an exemption or exclusion to the registration.

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