The fruits of investing strategies

If you wanted to assure your family fresh fruit for a lifetime, would you plant an apple orchard or a raspberry patch?

People can easily understand the metaphor of comparing apples & oranges. How can you compare the merits of two completely different but equally good fruits? A good chef will use the two delectable fruits in very different recipes.  Some will love the apple dish and pass on the orange. Others will far prefer the orange-infused plate.

There is an even more profound difference between apples and raspberries.

Apple orchards don’t spring up annually like raspberry plants.  The trees must be planted as saplings and nurtured to maturity. It may take a decade-plus for the trees to start producing apples. Once firmly rooted, the orchard is there to stay and produce abundantly as long as it is tended to. Being very hardy, the apple trees can withstand extreme weather, drought and pest infestation. Even during the worst of growing seasons the apple orchard will still bear edible fruit in relative abundance. Yields may recede but the orchard is still there. The trees live and produce for generations.

Raspberries are annuals, meaning a new plant grows every year from seeds produced the prior year. The right set of growing conditions is needed for these plants to spring up and produce fruit. If the patch is well tended and weather cooperates, the fruit yield will be fast, furious and abundant for a few weeks in-season. But if seasonal growing conditions are bad for raspberries, the yield will drop like a rock. The harvest may be scant or the entire crop could be lost.

If you wanted to assure your family fresh fruit for a lifetime, would you plant an apple orchard or a raspberry patch?

Risk tolerance

Annuities are safe havens for asset preservation, growth and income that are not subject to the same volatilities as securities markets.  Therefore, they can be ideal financial instruments for certain individuals and families depending on such factors as age, risk tolerance and life goals.

The nation’s insurance-annuity firms operate under completely different sets of regulations and oversight than do banks and the securities markets (stocks and bonds). Their charters dictate they must have sufficient funds to cover every dollar of liability and more. Like the apple orchard, roots are deep and branches are pruned for long-term yields. Carriers of annuities must operate with sufficient cash reserves to cover every penny of debts and liabilities plus prudent reserves.

Conversely, the securities markets are a known gamble. Unforeseen losses can often occur as they have for many investors and continue to in such volatile and unpredictable world markets as we have today.

Banks are paying only fractions of a percent in interest on deposits. They lend money based on holding only a fraction of assets to cover their deposits. Not only that, in recent years the FDIC  insurance coverage has been stretched beyond its ability to meet its obligations.

A bad growing season in the case of the raspberry patch means cutting losses and starting over for next season. The same can be said for investments in stocks and bonds; environmental factors can lead to disappointing harvests or even the loss of principal assets. Not so with apple orchards (fruit) and annuities (money).

A recent published report shows that the top U.S. insurers are about 170 percent solvent, meaning that if every claim and liability came due at once they would still have 70 cents left for every dollar they paid out. History and current events both show annuities to be safe, reliable and predictable options to protect wealth and guarantee growth and income.

Age and risk tolerance will largely dictate where to distribute funds to save or invest. Young and ambitious people may want to risk more in the markets for higher potential returns as illustrated by the ideal raspberry growing season. Annuities, on the other hand, can be likened to the apple harvest. Their value is predictable and reliable year after year.

Bill Meyers, founder and president of Meyers Financial in Concord, is the local authorized representative of Tarkenton Financial LLC. He can be reached at finsvcs@comcast.net.