Financial Product from Legacy Financial Advisors, Inc. Helps Cut Risk in Complex Economic Times

Business Wire, Oct 23, 2008

Solutions for investors from Paul J. Mauro, CLU, ChFC, Legacy Financial Advisors, Inc., Milford, MA

MILFORD, Mass. -- "While today's stock market may be robbing Americans of sleep, there are alternatives -financial products that conservative savers and retirees can rely on to earn interest with less risk," advises Paul J. Mauro, CLU, ChFC, founder and CEO of Legacy Financial Advisors, Inc. in Milford, MA (www.lfsadvisors.com).

Mauro says, "A commonly overlooked financial product known as a SET RATE FIXED ANNUITY is a solution for complex times."

He explains, "SET RATE FIXED ANNUITIES are purchased by individuals who pick the length of time they want to keep their money invested. The interest rates are set in advance for the duration of the term - ranging from one to 10 years. You put in your money and collect the interest or let it build up until the contract comes due."

According to Mauro, many well-established insurance companies sell this product, but they are not vigorously marketed because profits are low and they lack sex appeal.

Laddering Annuities

These annuities or contracts lend themselves well to laddering. With laddering, instead of buying one contract for 10 years, the individual buys five separate contracts that come due every two years over the next decade. By doing so, money can be withdrawn periodically and reinvested if interest rates go up. "Most are sold with no front-end load or commission charged to the contract, just a declining or vanishing rear-end, early termination charge. Laddering these contracts, reduces the chances of having to pay a termination charge if some of the money is needed at some time in the future," Mauro explains.

Tax-deferred Interest

Set Rate Fixed Annuities are excellent tax planning tools. With this product, the individual is in control of paying income taxes on the interest. Says Mauro, "You only pay taxes on the interest you spend. With $500,000 in a set rate contract earning 5 %, one can leave the entire $25,000 in interest untouched and not have to pay taxes on it every year."

Those who need steady income from the interest, can have it sent to them every month by check or deposited in their bank account just as Social Security does. If done this way taxes would be due when withdrawn. Since contracts are annuities they can help avoid probate at death as well.

Fixed Rate Annuities are backed by the claims-paying ability of the insurance company and usually pay a fair interest rate. "Shop around before buying. Insurance companies are very competitive right now," emphasises Mauro.

"Fixed Rate Annuities are a boring financial product without any frills, but in these economic times boring is good," says Mauro who recommends making a selection with help from a professional in the financial industry who holds the CLU ChFC or CFP designation. These individuals have taken the advanced courses necessary to know how to best use these products.

Fixed annuities are long-term investments designed for retirement purposes. Surrender charges may apply Withdrawals are subject to ordinary income taxes and, if made prior to age 59 1/2, may be subject to a 10% penalty.

Paul J Mauro CLU CHFC is Managing Partner of Legacy Financial Advisors Inc. located in Milford, MA. (www.lfsadvisors.com). Legacy has recently opened its 7th office in Massachusetts at 35 Harvard St, Worcester. Securities and advisor services are offered through SII investments Inc. Member FINRA SIPC. SII and Legacy are not related companies.

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