Can You Participate in the Markets with Zero Market Risk after Retirement?

Can You Retire:

Mark Elliot: Welcome back to The Retirement Income Show with Troy Sharpe, the CEO and founder of Oak Harvest Financial Group. Oak Harvest is located I-10 in Bunker Hill right at 920 Memorial City Way. To find out more, go to the website Of course, you can always check out the YouTube channel. Over 300 videos Troy and the team have put together for you. There’s no cost to watch them, there’s no cost to subscribe to them. That way, you’ll get the notification of the new ones, and there’s always new ones coming up on the YouTube channel. Just search Troy Sharpe and Oak Harvest. Post any questions you have about where you are.

Hey, Troy, can I retire, or when can I retire? Will my money last as long as I do? Will my loved ones be okay if something happens to me? Really at the end of the day, you want to know can I retire and I’ll be okay? Can we retire and will we be okay? That’s what Troy and the team at Oak Harvest are all about. Setting that plan, the retirement success plan, that’s about you. It’s specific to you. 800-822-6434, 800-822-6434.

I’m Mark Elliot. Glad you’re with us today. We’ve been talking the critical steps in the pre-retirement phase. Talking really 10 years out but for sure at least 5 years out.

Not that if you call Troy, “Hey, I retired last month. Troy, can you help?” Probably, but he doesn’t really know until you guys chat. That’s why we always give you the number, 800-822-6434. You were talking about the guardrails. Certainly, emotions lead us to not making the right decision sometimes when it comes to the market, our market monies, oh, we just lost 20%, 30%, 40%. You go back to the great recession of ’07/’09 when the markets were down 45%, 50%, and your 401(k) was becoming a 201(k), you’re like, “Holy cow, I’m never going to be able to retire.”

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The guardrails are so that not all of your money is at risk all of the time. There’s so many moving parts here, Troy, but you guys are really good. Chris Perras, your chief investment officer, his resume is incredible, but your team that works on the wealth management side, the monies that we have in the markets are incredible. You also have a side of the company because it’s not all about the money in the markets, it’s also about money that might be in the life insurance world, the annuity world, the safer side of money. Are guardrails also using that side of the financial world?

The Planning Aspect:

Troy Sharpe: Now we’re getting into the planning side as far as what are your income needs. This does have to do with risk tolerance, of course, but when you introduce tools into a financial plan that have no downside market risk, you completely eliminate the downside by introducing them. Think CDs, okay? You put your money into a CD, you’ve eliminated downside market risk. Now in exchange for that, you have significantly limited your upside potential. When we introduced other tools, speaking specifically to the fixed index annuity marketplace right now, rates in the fixed index annuity marketplace are better than they’ve been in probably 14, 15 years. I’m thinking back to maybe ’07 prior to the great crash.

When you introduce a financial tool that has absolute 100% downside protection and realistically you have the opportunity for double-digit returns, not on average, but absolutely the potential in any given year, now you’ve eliminated that downside risk. Now some people call it sleep insurance or peace of mind protection, but all it is is a financial tool that eliminates downside market risk while still giving you the potential for reasonable returns to the upside. Now we don’t have to worry about what we call downside deviation, the only question becomes upside deviation. “Am I going to average 3% over time or am I going to average 7.5%?”

Now, the goal with these tools typically is to average somewhere between that 5% to 6% range, and it’s very possible. I had a client recently come in and he asked me, he said, “Troy, I heard someone on the radio talking about 11%, 12%, 13% returns with fixed index annuities. He made it seem like I should expect that every single year. Could you tell me the truth here?” I said, “Yes, absolutely.” Right now, because rates are so good in the fixed index annuity marketplace, the historical backtests that these insurance companies run, they look really, really, really good. Some of these fixed index annuities are showing historical backtests.

Most of these are hypothetical based on the rules or mechanisms that that index, that that fixed annuity tracks, how it would have hypothetically performed in the economic conditions based on the rules of that index because it may have been created a year ago or three years ago, or five years ago. There are a lot of indexes out there where they have been able to be tracked for the past 5 years, 10 years, 15 years.

There is a lot of great growth opportunity in that safe marketplace. I had to make sure he understood and I want you to understand as well because apparently, there’s someone out there speaking of very good returns that you should expect.

– The rates are excellent. You do have really good growth potential in the fixed index annuity marketplace with no downside risk right now.

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That is absolutely 100% true, but the past 10 years, let’s say you’re looking at an illustration from an index that has been around for the past 10 years, and based on today’s rates, if we overlaid it over the past 10 years, yes, it would have averaged 10% per year. The thing is past performance is not indicative of future results, right? As far as I’m aware, a pundit or somebody who forecasts equity markets growth over the next 10 years that thinks equity markets are going to average 10% a year, I don’t know what the exact number is but it’s double digits for sure.

Somewhere in between that 13% to 17% range depending on what your timeframes are, what dates you’re looking at. Equity markets, primarily due to the Federal Reserve’s soft money, easy money, quantitative easing, low-interest rate policies has fueled the success of growth in equity markets over the past let’s call it 12, 13 years, really coming out of the great crash. That is not anticipated to take place over the next 10 years. My point here is, yes, there are very strong and powerful safe tools in the marketplace that give you the potential for very reasonable growth, but telling someone that you should expect to average 10% or 11% or 12% per year is misleading at best.
Now, getting back to these guardrails, first let me put it in context of a full retirement plan.

This is what the retirement success plan is, is we wanted to create a plan that allows what you define as success in retirement to give it the best possibility that we can to come true. That means making sure you have plenty of income during your life, when you’re gone, for your spouse’s life, you’re not worrying about where that income is coming from. We want multiple streams of income. We want it from interest and dividends and guaranteed sources, maximize social security. We want to combine that with a tax plan so you pay less in tax than you have to. We want those two working together.

Then of course we want to pair that together with the healthcare and then the estate side of things. First and foremost, we really need to understand that risk tolerance, your portfolio’s risk capacity, your willingness to take risk, and that’s where that guardrail discussion comes in. First we were talking about your investment portfolio, having guardrails. We can statistically quantify the expected return to the upside with a 95% probability based on historical performance and average returns, and also 95% probability to the downside.

It’s two standard deviations based on the investments that you own, their mean returns historically speaking, as well as the correlation amongst those securities combined inside of a portfolio. There still is downside risk though when we do that. Those are market investments.

If you look at bonds, if you look at stocks, if you look at real estate, if you look at commodities, these are all market-based investments and they all have market risk.

When you introduce the insurance-based safe fixed annuities, index annuities that have the potential for upside, and now you’re introducing a tool that has zero downside deviation, we don’t have to worry if markets crash. If markets crash, you make zero. Zero is your hero, zero is your best friend. If markets go up, you’re going to participate in a certain part of that. Now we have protection in the form of not only do we have the potential for reasonable returns, even double-digit returns in a given year if markets perform really well, those returns can be locked in.

Your principal, your interest is protected, can never be lost while the investment, the market-based investments that you have can hopefully appreciate in value over time. When they do go down or when markets do retreat, you have a plan in place where you have some money that’s protected, you know where you’re getting your income from because we’ve built multiple streams of income for you. That’s when you put all those pieces together in the form of a plan.

The Main Takeaway:

You don’t have to worry as much, we find, when markets are down because you don’t need to touch that equity portfolio for three or four years because we have this money over here and this money over here and this income stream here and this going on over here where all these pieces of the puzzle are working together in concert with one another to help you feel comfortable about where you’re getting your income from, what happens in a market crash. Then it’s the relationship, it’s ongoing communication.

Chris does a great job with his weekly podcast and YouTube video. He does two of them now. I put out two a week. Jessica, co-owner here at Oak Harvest Financial Group, is putting out videos weekly now. We’re constantly in communication beyond the reviews that we do with clients. All of these pieces put together are why we feel it’s important to have a relationship with someone in this retirement phase because they all work off one another. They all improve– They create a synergy, a synergistic type effect. 180-822-6434. You have to give us a call though. You have to pick up that phone.

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Go to the website, send us an email, say, “Hey, I want to learn more about this retirement success plan. I want to learn more about putting some guardrails in place over my portfolio and making sure that my portfolio is within my emotional guardrails, and I want multiple streams of income.” You have to pick up the phone, give us a call, send us an email, and we’re going to sit down and have a conversation with you. We can do that here at the office HQs at I-10 in Bunker Hill, or if you’re out of state, if you’re listening to this elsewhere, then Houston, we’ll just simply set up a Zoom meeting.

It’s 45 minutes to see if we’re a good fit for one another, understand what’s important to you, what’s important to your family. If we’re a good fit, we’ll move on to that next visit. If you’re an engineer, sometimes it takes seven or eight visits, but most people we identify within two to three if we’re able to help them and if they want our help. The first step, of course, is to give us a call. That phone number is 1-800-822-6434. The website is Tons of videos out there. Then the YouTube channel.

Maybe you’re not ready to sit down with us right now, maybe you feel maybe you’re not prepared, and you want to learn more about us, you want to learn more about our planning strategies, the investment team, myself, the YouTube is a great way to do that. Hey, if you’ve heard enough and you say, “You know what? I want to learn more about you guys. I think you might be able to help me,” then give us a call. Let’s have a conversation. There’s no cost, no obligation. We’ll let you know on that first visit if we’re a good fit. Then if you agree and we agree, we’ll move forward and start to build the relationship from there. 1-800-822-6434


Announcer: Investment advisory services are offered through Oak Harvest Financial Group, LLC. Oak Harvest Financial Group is an independent financial services firm that helps people create retirement strategies using a variety of insurance and investment products. Investing involves risk, including the loss of principal, any references to protection benefits, or lifetime income generally referred to fixed insurance products, never securities, or investment products.

Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Oak Harvest Financial Group, LLC is not permitted to offer and no statement made during this show shall constitute tax or legal advice. You should speak to a qualified professional before making any decisions about your personal situation. We are not affiliated with the US government or any governmental agency. This radio show is a paid placement.