Insurance Annuity or Agricultural Annuity
Insurance Annuity or Agricultural Annuity
Which makes most sense for generational income?
1|A g ri -A nn ui ty
Growing Money Biologically Positioning money with the goal of long-term income can be a difficult proposition. Traditional investment options that spin off annual cash flows are subject to market conditions that may result in sudden and long-lasting value loss. While stock dividends and insurance annuities have been the mainstay for most investors, savvy investors have been earning income from alternative assets and have avoided repetitive principal value losses too. The world’s elite investors have built their portfolios to produce superior returns not just during market growth, but during market declines as well. The strategies they use may not be that familiar to average investors, but they are not unique when it comes to the tried and true principles of making money. The good news is this; the very same strategies and instruments that the super-wealthy have used to build their high-performing portfolios are available today for any informed investor. This short guide, produced by Precious Timber, S.A., should be used as a tool to help investors garner an educational appetite into discovering the profit potential of income-producing agriculture. Our goal is to simply make you aware of an asset space that has been around since the beginning of time (farming). One in which the profits generated are in many ways totally different to profits generated by traditional asset classes (such as stocks, bonds, and real estate). In certain farm-related commodities (we will focus on coconuts in this guide), biology is the driver of profit-making. Unlike more traditional investments, where an investor buys something for one price, and then hopes to sell it to another investor at a higher price, it is the biological growth produced by MotherNature, and not market timing or price appreciation, that generates much of the profit an investor in the agri-space receives and enjoys.
Wary of investments they struggle to understand, investors are now turning to the most basic asset of them all: Land. 2|A g ri -A nn ui ty
In Search of Income Global debt has reached three hundred trillion dollars, which has affected the psyches of many investors. More and more, investors have become guarded about complicated and difficult to understand investments, especially the kind that reportedly generate “guaranteed” income for life. The fears are real, and were fueled by the 2008 economic crisis in which almost all boats sank. Smart investors today are avoiding instruments designed inside of board rooms and by so-called “think tanks,” especially when they can’t easily understand how they work. These wary investors are looking instead at asset classes that are less complex, more traditional, that can be understood easily, and yet still potentially provide meaningful profit. Interest has risen sharply in income producing farmland in developing Latin American countries, in part because it is a relatively uncomplicated asset class, and also because these are assets they can actually touch, feel, and even walk on.
The Need to Feed Data from the World Bank shows the total available arable land worldwide is set at about 3.4 billion acres. Global population rose to 7 billion in 2011, according to The United Nations (U.N.), and could reach 8 billion within a decade. There will be many more mouths to feed in the years ahead, yet the amount of food the world produces is basically fixed. What does the emerging world’s growing appetite have to do with farmland? Investments in Latin American farmland have produced above average returns for U.S. institutions and endowments over the past two decades, and it’s why we think coconut farm investments could see similar returns, or higher ones, in the decades ahead. The coconut tree has a productive life of up to sixty years. A single tree, managed under strict commercial best practices can produce between 100 and 200 nuts or more annually.
3|A g ri -A nn ui ty
In a 2015 Barron’s article on annuities, reporter Karen Hube, wrote; Fixed-income annuities have never paid out so little, and yet had so much appeal. These annuities, which provide a lifetime of guaranteed income, are paying out 12% less, on average, than in 2011, and 25% less than in 2007. And yet sales jumped 17% last year, to their highest level in five years. Fixed annuities typically pay between three and four percentage points more than the 10-year Treasury bond, which in 2015 yields were 2.3%. Competitive contracts now are paying between 5% and 6%; that means a $200,000 investment will kick off about $12,000 in annual income, more than double the $4,600 you’d get from a 10-year Treasury. Clearly, there’s a caveat. With a Treasury bond, you collect the yield while you own the bond, and your initial investment is returned at maturity. With an annuity, your initial investment, or premium, is returned through your annual payouts. If you die young, you could end up collecting less income than you paid upfront. But if you live long, it could far exceed your original investment. The full article can be read here: http://www.barrons.com/articles/the-best-annuities-1434769209 Choosing highly productive Latin American farmland, in countries where ownership laws allow full foreign ownership that can be held in one’s own name, trust, self-directed IRA, LLC, or any other legal structure, is an investment that anyone can comprehend. Growing the tropical coconut on that farmland, for commercial production and under organic standards and certification, could provide not only greater income returns, but do so for up to sixty long years. Private ownership of coconuts, professionally managed in tropical conditions and locations, isn’t something most investors are aware of. But large, multi-national companies like Coca-Cola and PepsiCo have recently acquired two of the top three coconut water brands in the world. You won’t find a mountain of confusing small print and restrictive clauses in a farm management contract as you may in an insurance annuity contract. Maybe you are looking outside of the box for your long-term income needs? There are many ways to generate retirement income, only you can decide what fits best for you.
4|A g ri -A nn ui ty
INSURANCE ANNUITY Insurance annuities can provide a steady stream of income for life but are not right for everybody. Here are a few situations where they may be a good choice for you. Perhaps the most universal reason people are attracted to annuities is the opportunity for consistent, predictable income. A quick calculation on Fidelity's annuity income estimator shows that as of this writing (10/14), a 65-year-old man can purchase an annuity for $100,000 that will pay him $550 per month (an annual total of 6.6% of the original amount) for the rest of his life, whether he lives to 110 years old or dies tomorrow. It would take him about 15 years to recoup his original investment. So an annuity can be quite risky in this way. However, you can also guarantee a benefit for a certain period of time, such as 20 years. In the above example, a 20-year guarantee would reduce the monthly payment amount to $485, but in the event you die before 20 years of payments, the remaining payments will be made to your beneficiaries. Now, there are a few things you need to be aware of. First, you should know that an annuity is only as good as the company that issues it, so you should limit your shopping to well-known companies. Further, annuities can be expensive. The fees associated with annuities can vary drastically, so these expenses definitely need to be taken into consideration. You should look into "surrender charges," which you may have to pay to pull out your contributions early. While annuities offer relatively low returns and can come with high fees, there are some situations where they can be a part of a solid investment and retirement plan. As with any investment, do your research and shop around before you buy.
or
AGRICULTURAL ANNUITY Private coconut ownership can provide a steady stream of income for not just your life, but for the next generation to. Like insurance annuities, coconut ownership is not right for everybody. Here are a few situations where they may be a good choice for you. Perhaps the biggest reason some people are attracted to agricultural land ownership, and growing coconuts, is the opportunity to own an asset that is virtually unaffected by market cycles. Coconut trees only know how to do one thing – grow coconuts! So when the stock market crashes, coconuts grow. When the economy is weak, coconuts grow. When traditional property values fall or rental income is sporadic, coconut trees just keep growing coconuts. A quick calculation on a six-acre coconut plot planted with 600 coconut trees, and offered by Precious Timber, S.A, at $100,0000 should begin to generate nuts in year 4. By year 6 the trees will be fully mature and could generate 100 to 200 nuts each year. At a conservative 150 nuts/yr., and a wholesale supplier price of $0.30/nut, the owner would receive approximately $17,000 a year (net after all expenses). That would equate to $1,416 per month. Coconut trees have a productive life of 50 to 60 years, and ownership, as with any land, can be passed on to family members upon death. While potential farmland/coconut ownership offers a higher return than an insurance annuity, and pays for a longer period of time, there are risk factors that must be seriously considered. As with any investment, do your research and read all the risks before investing. 5|A g ri -A nn ui ty
Toll Free: 855-888-6288 I Office: 949-495-4142 www.precioustimber.com I [email protected]
Important Notice: This booklet is provided for general information only and nothing contained in the material constitutes a recommendation for the purchase or sale of any investment security or real estate holding. Although the statements of fact in this booklet are obtained from sources that Precious Timber, S.A. consider reliable, we do not guarantee their accuracy and any such information may be incomplete or condensed. Also views expressed in this booklet are based on research materials available from sources considered reliable. Views are subject to change on the basis of additional or new research, new facts or developments. The risks described herein are not purported to be exhaustive, any person considering timberland ownership should seek independent advice on the suitability or otherwise of the particular asset. The financial projections contained herein serve only as a guide and are for illustration purposes only, and do not constitute a guarantee of returns. Actual returns could be higher or lower depending on many unforeseen circumstances. Precious Timber provides general information, not individually targeted personalized advice. Investors should assess for themselves whether the information is appropriate to their individual investment objectives, financial situation and particular needs before making any decision on the basis of such information. Investors are free to make their own assessment of the information or seek the assistance of a professional adviser. The information provided is proprietary to Precious Timber and should not be disclosed to any third party or used for any other purpose without the prior written consent of Precious Timber, S.A.
6|A g ri -A nn ui ty
Which makes most sense for generational income?
1|A g ri -A nn ui ty
Growing Money Biologically Positioning money with the goal of long-term income can be a difficult proposition. Traditional investment options that spin off annual cash flows are subject to market conditions that may result in sudden and long-lasting value loss. While stock dividends and insurance annuities have been the mainstay for most investors, savvy investors have been earning income from alternative assets and have avoided repetitive principal value losses too. The world’s elite investors have built their portfolios to produce superior returns not just during market growth, but during market declines as well. The strategies they use may not be that familiar to average investors, but they are not unique when it comes to the tried and true principles of making money. The good news is this; the very same strategies and instruments that the super-wealthy have used to build their high-performing portfolios are available today for any informed investor. This short guide, produced by Precious Timber, S.A., should be used as a tool to help investors garner an educational appetite into discovering the profit potential of income-producing agriculture. Our goal is to simply make you aware of an asset space that has been around since the beginning of time (farming). One in which the profits generated are in many ways totally different to profits generated by traditional asset classes (such as stocks, bonds, and real estate). In certain farm-related commodities (we will focus on coconuts in this guide), biology is the driver of profit-making. Unlike more traditional investments, where an investor buys something for one price, and then hopes to sell it to another investor at a higher price, it is the biological growth produced by MotherNature, and not market timing or price appreciation, that generates much of the profit an investor in the agri-space receives and enjoys.
Wary of investments they struggle to understand, investors are now turning to the most basic asset of them all: Land. 2|A g ri -A nn ui ty
In Search of Income Global debt has reached three hundred trillion dollars, which has affected the psyches of many investors. More and more, investors have become guarded about complicated and difficult to understand investments, especially the kind that reportedly generate “guaranteed” income for life. The fears are real, and were fueled by the 2008 economic crisis in which almost all boats sank. Smart investors today are avoiding instruments designed inside of board rooms and by so-called “think tanks,” especially when they can’t easily understand how they work. These wary investors are looking instead at asset classes that are less complex, more traditional, that can be understood easily, and yet still potentially provide meaningful profit. Interest has risen sharply in income producing farmland in developing Latin American countries, in part because it is a relatively uncomplicated asset class, and also because these are assets they can actually touch, feel, and even walk on.
The Need to Feed Data from the World Bank shows the total available arable land worldwide is set at about 3.4 billion acres. Global population rose to 7 billion in 2011, according to The United Nations (U.N.), and could reach 8 billion within a decade. There will be many more mouths to feed in the years ahead, yet the amount of food the world produces is basically fixed. What does the emerging world’s growing appetite have to do with farmland? Investments in Latin American farmland have produced above average returns for U.S. institutions and endowments over the past two decades, and it’s why we think coconut farm investments could see similar returns, or higher ones, in the decades ahead. The coconut tree has a productive life of up to sixty years. A single tree, managed under strict commercial best practices can produce between 100 and 200 nuts or more annually.
3|A g ri -A nn ui ty
In a 2015 Barron’s article on annuities, reporter Karen Hube, wrote; Fixed-income annuities have never paid out so little, and yet had so much appeal. These annuities, which provide a lifetime of guaranteed income, are paying out 12% less, on average, than in 2011, and 25% less than in 2007. And yet sales jumped 17% last year, to their highest level in five years. Fixed annuities typically pay between three and four percentage points more than the 10-year Treasury bond, which in 2015 yields were 2.3%. Competitive contracts now are paying between 5% and 6%; that means a $200,000 investment will kick off about $12,000 in annual income, more than double the $4,600 you’d get from a 10-year Treasury. Clearly, there’s a caveat. With a Treasury bond, you collect the yield while you own the bond, and your initial investment is returned at maturity. With an annuity, your initial investment, or premium, is returned through your annual payouts. If you die young, you could end up collecting less income than you paid upfront. But if you live long, it could far exceed your original investment. The full article can be read here: http://www.barrons.com/articles/the-best-annuities-1434769209 Choosing highly productive Latin American farmland, in countries where ownership laws allow full foreign ownership that can be held in one’s own name, trust, self-directed IRA, LLC, or any other legal structure, is an investment that anyone can comprehend. Growing the tropical coconut on that farmland, for commercial production and under organic standards and certification, could provide not only greater income returns, but do so for up to sixty long years. Private ownership of coconuts, professionally managed in tropical conditions and locations, isn’t something most investors are aware of. But large, multi-national companies like Coca-Cola and PepsiCo have recently acquired two of the top three coconut water brands in the world. You won’t find a mountain of confusing small print and restrictive clauses in a farm management contract as you may in an insurance annuity contract. Maybe you are looking outside of the box for your long-term income needs? There are many ways to generate retirement income, only you can decide what fits best for you.
4|A g ri -A nn ui ty
INSURANCE ANNUITY Insurance annuities can provide a steady stream of income for life but are not right for everybody. Here are a few situations where they may be a good choice for you. Perhaps the most universal reason people are attracted to annuities is the opportunity for consistent, predictable income. A quick calculation on Fidelity's annuity income estimator shows that as of this writing (10/14), a 65-year-old man can purchase an annuity for $100,000 that will pay him $550 per month (an annual total of 6.6% of the original amount) for the rest of his life, whether he lives to 110 years old or dies tomorrow. It would take him about 15 years to recoup his original investment. So an annuity can be quite risky in this way. However, you can also guarantee a benefit for a certain period of time, such as 20 years. In the above example, a 20-year guarantee would reduce the monthly payment amount to $485, but in the event you die before 20 years of payments, the remaining payments will be made to your beneficiaries. Now, there are a few things you need to be aware of. First, you should know that an annuity is only as good as the company that issues it, so you should limit your shopping to well-known companies. Further, annuities can be expensive. The fees associated with annuities can vary drastically, so these expenses definitely need to be taken into consideration. You should look into "surrender charges," which you may have to pay to pull out your contributions early. While annuities offer relatively low returns and can come with high fees, there are some situations where they can be a part of a solid investment and retirement plan. As with any investment, do your research and shop around before you buy.
or
AGRICULTURAL ANNUITY Private coconut ownership can provide a steady stream of income for not just your life, but for the next generation to. Like insurance annuities, coconut ownership is not right for everybody. Here are a few situations where they may be a good choice for you. Perhaps the biggest reason some people are attracted to agricultural land ownership, and growing coconuts, is the opportunity to own an asset that is virtually unaffected by market cycles. Coconut trees only know how to do one thing – grow coconuts! So when the stock market crashes, coconuts grow. When the economy is weak, coconuts grow. When traditional property values fall or rental income is sporadic, coconut trees just keep growing coconuts. A quick calculation on a six-acre coconut plot planted with 600 coconut trees, and offered by Precious Timber, S.A, at $100,0000 should begin to generate nuts in year 4. By year 6 the trees will be fully mature and could generate 100 to 200 nuts each year. At a conservative 150 nuts/yr., and a wholesale supplier price of $0.30/nut, the owner would receive approximately $17,000 a year (net after all expenses). That would equate to $1,416 per month. Coconut trees have a productive life of 50 to 60 years, and ownership, as with any land, can be passed on to family members upon death. While potential farmland/coconut ownership offers a higher return than an insurance annuity, and pays for a longer period of time, there are risk factors that must be seriously considered. As with any investment, do your research and read all the risks before investing. 5|A g ri -A nn ui ty
Toll Free: 855-888-6288 I Office: 949-495-4142 www.precioustimber.com I [email protected]
Important Notice: This booklet is provided for general information only and nothing contained in the material constitutes a recommendation for the purchase or sale of any investment security or real estate holding. Although the statements of fact in this booklet are obtained from sources that Precious Timber, S.A. consider reliable, we do not guarantee their accuracy and any such information may be incomplete or condensed. Also views expressed in this booklet are based on research materials available from sources considered reliable. Views are subject to change on the basis of additional or new research, new facts or developments. The risks described herein are not purported to be exhaustive, any person considering timberland ownership should seek independent advice on the suitability or otherwise of the particular asset. The financial projections contained herein serve only as a guide and are for illustration purposes only, and do not constitute a guarantee of returns. Actual returns could be higher or lower depending on many unforeseen circumstances. Precious Timber provides general information, not individually targeted personalized advice. Investors should assess for themselves whether the information is appropriate to their individual investment objectives, financial situation and particular needs before making any decision on the basis of such information. Investors are free to make their own assessment of the information or seek the assistance of a professional adviser. The information provided is proprietary to Precious Timber and should not be disclosed to any third party or used for any other purpose without the prior written consent of Precious Timber, S.A.
6|A g ri -A nn ui ty
