(New York)

While yields have been rising over the last few weeks, the reality is that they are still near historic lows, and far below the level most retirees need in order to earn decent income, especially given how risky bonds currently appear. So, in this very difficult environment annuities have emerged as a good option, but how to take best advantage of them when rates are so low? There are a few options, but the best one is “laddering”, or buying multiple annuities over time in order to not commit your entire pot of capital at a time when rates are so low. Additionally, some annuities offer dividend payments on top of regular payouts, which can provide extra income.

FINSUM: One of the big worries right now is putting a big pot of money into annuities, only to see rates and payouts rise in a couple years. Hence laddering is good strategy.

(New York)

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(Houston)

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(New York)

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(New York)

The muni market is in a very interesting place. Despite the overall erosion of credit quality for municipalities since the pandemic began, demand for munis is at an all-time high and returns have been great. Yields are very low, but until very recently, they still offered a substantial benefit over Treasuries. All of this has coincided with a major change to the space: the infusion of institutional investors. For decades, the muni space has been dominated by HNW individuals and their advisors, but over the last couple years, institutional buying has been rising strongly. According to a study by an industry body “Over the last decade, customer purchases of fixed-rate, tax-exempt municipal securities of $100,000 or less decreased by 46%, the MSRB found. Meanwhile, institutional-sized purchases of over $1 million increased 46% in the same time period”. “Most of the large retail managers have moved clients from traditional, transactional, retail accounts into discretionary platforms like SMAs … The firm itself then makes the allocation decisions and is, therefore, less responsible for making sure that the client understands their investment decision”, said Matt Fabian, partner at Municipal Market Analytics.

FINSUM: This is actually good news for all involved—retail investors and advisors included (in a broad sense)—as it improves liquidity and tightens spreads.