Bob Bauman JD, Chairman, Freedom Alliance
Dear Sovereign Investor,
Business news reports describe how foreign exchange traders worldwide have abandoned their recent belief that the U.S. dollar was regaining some of its lost vitality.
So if not the dollar, where are those money experts going to go?
To more reliable currencies such as the Swiss franc, of course, which they know from experience will continue to rally while the dollar continues its multi-decade slide.
In this time of a wildly fluctuating, declining U.S. dollar, you would do well to follow suit. And one of the best ways to do this is with an investment that produces a guaranteed income free from the ravages of the diminished dollar…
That investment is a Swiss Fixed Annuity.
A “fixed annuity” may be unfamiliar because the word “annuity” is used in so many different ways.
As I recently told readers of Offshore Confidential, my new monthly whitepaper series, it’s nothing more than an insurance contract in which the insurance company promises to make fixed payments to you as the purchaser/annuitant for the term of the contract. Typically that means a fixed number of years, though sometimes contracts are structured to pay out until you die. The insurance company guarantees both earnings and principal.
The Flexibility of a Bank Account…
Without the Bank
While Swiss banking often gets the spotlight (for reasons both bad and good), its insurance companies offer a broad range of services that, in some cases, approach the flexibility of a bank account.
Indeed, many Swiss residents use their insurance company as their only financial institution. In the entire history of Swiss insurers, no life insurance company ever has failed to meet its obligations or been forced to close its doors.
Besides security, Swiss insurance policies – including annuities – have other important advantages:
- Swiss law affords annuities special asset protection, exempting them from enforcement of foreign court judgments, including bankruptcy.
- Insurance and annuity contracts are exempt not only from the Swiss 35% withholding tax on earned bank interest but from all other Swiss taxes, including taxes on income, capital gains, and inheritance.
- Swiss annuities generally offer higher interest rates than Swiss bank accounts. In 2000-2010, Switzerland’s average bank interest rate was 1.52% with an historical high of 3.50% in June 2000 and a record low of 0.25% in March 2003. That low is matched currently at 0.25%. However, the interest rate paid on Swiss annuities as of May 2011 is about 1.75%.
What all this means is that a Swiss fixed annuity actually is both a savings plan and a pension fund all wrapped up in one policy.
But perhaps one of its most appealing benefits is that Swiss fixed annuities also offer unique protection against a declining dollar…
A Good Income Play for Savvy Investors
A Swiss fixed annuity, denominated in one of the world’s most reliable currencies, the Swiss franc, is also a good income play. The reason is, as the dollar depreciates, your annuity income appreciates.
For example, a 64-year-old Mr. Smith invests 100,000 Swiss francs (CHF) in a Swiss annuity. Every year, for the rest of his life, this annuity will repay him a guaranteed 4,623 Swiss francs.
His March 1, 2009 payment of 4,623 Swiss francs would have converted to US$3,952. Today, his 4,623 Swiss francs annuity payment would convert into US$5,268.
That is $1,316 more cash earned with no added effort… all because the Swiss franc has appreciated 27% in two years against the faltering U.S. dollar.
The bottom line is, when you invest in a Swiss fixed annuity, with immediate payments over a 10-year term, you will enjoy greater spendable income when you later convert those Swiss francs back into the dollar at a much better exchange rate.
Free Your Future From the Dollar
The franc has a history of strength and value, and has been largely unaffected by inflation. The Swiss franc generally has reflected the state of Swiss banking – strong, valuable and unaffected by inflation and monetary fads. In times of international economic trouble the franc has been a currency refuge.
Since 1971, the franc has appreciated nearly 400% against the U.S. dollar. American owners of Swiss franc-denominated assets have profited handsomely as a result. In recent years, the value of the franc has fluctuated against the U.S. dollar, strengthening in the early 1990s, weakening from 1995-2001, and strengthening once again in recent times. Today it’s generally at parity with or above the dollar.
All things considered, with the rapidly declining U.S. dollar, a Swiss franc-denominated fixed annuity can produce both a good income and unparalleled investment safety.
Bob Bauman, JD
Chairman, Freedom Alliance