Recovery Planning
What is recovery planning? Recovery planning is a financial solution using mathematics to compute future value of an investment product to solve for the recovery of the original investment principal. The solution uses multiple investments acting independent of each other in the same mathematical solution. You have three investment legs, an income leg, growth leg, and recovery leg. Traditionally fixed annuities are used in this type of mathematical solution. A recovery solution may or may not solve for income, but most solutions involve liquidation of the income & growth leg to solve for income…so the customer can liquidate to zero to seek maximum income, yet recover the original investment principal at a fixed date in the future. In addition, by using annuities the client guarantees the investment against loss (if held to term), and reduce the over-all aggregate tax liability of the client (through tax deferral). Recovery planning is highly recommended for conservative investors who seek a return, but want the guarantee of recovery of the original investment principal.
A more sophisticated type of recovery planning, involves the use of mutual funds to solve for income & growth, while using fixed annuities (or CD’s) to solve for recovery of the original investment principal. Two types of investment working side-by-side in the same mathematical solution…one investment guaranteed and one is not. This type of solution filters for prior positive consecutive returns within the mutual fund database. Filtering mutual funds for prior positive consecutive returns (relative to risk) produces the best possible fund picks for the next 12 months. Regardless, if client does well or not in the mutual fund arena, the investor will recover the original investment principal, plus interest (if the solution is held to term).
It will be up to the financial planner to determine which recovery solution (direction) is best for the client, based on the market cycle and risk tolerance of the client. If you’re interested in recovery planning call your insurance agent or financial planner.
Sincerely,
John Bagwell
The Truth About Financial Products.com
www.thetruthaboutfinancialproducts.com
