Do you remember 1984?

In 1984 a medium sized life insurance company made a portfolio allocation "bet" that caused its trajectory to soar for the next 30-years. Today they are one of the largest companies and have the very highest ratings for stability.

Their Whole Life policies would reward customers with the largest dividends and greatest values, both alive and at death. Every smart consumer wanted their policies.

Do you remember what was going on in 1984? Do you know what the "bet" may have been?

The 1980's had begun with long term (30-years) government bonds paying around 7%. Not a bad return- higher than rates had been dating all the way back to 1900.

But then a nasty bout of inflation hit the economy and interest rates started to rise. Just four years later interest rates increased from around 7% to 15%. WOW!

The worst part was that everyone thought interest rates were going to go a lot higher. Could we see rates at 25%?

Our life insurance company did not think interest rates were going higher. They thought that a recession would force rates lower, So, they took the bulk of their investment portfolio and bought 30-year bonds at 15-18%.

They were right.

A couple years later everyone else was earning 7% again and this life insurance company had over two decades of 15%+ to look forward to.

Today interest rates are not anywhere near 15%. But do you think they are going higher or lower?

Do you think rates will be higher or lower a couple years from now?

Give it some thought and allocate accordingly.

Let us know if we can help. We have access to accounts with locked-in multi-year rates above 5%.