by John Darer CLU ChFC CSSC RSP
The S&P Case-Shiller index of home values has fallen to where it was in 2002.
Current national savings rate 5.7%, highest since February 1995.
Nearly 6% of fixed-rate mortgages to borrowers with good credit were in the foreclosure process according to the Mortgage Bankers Association and 12% of homeowners with a mortgage are behind on their payments or in foreclosure.
Stat Source: Bob Leclair's Finance and Markets Newsletter 6.6.2009
Stat 2Stat
The compound annual return on the S & P 500 for the ten-year period ending in 2008 was -1.37%.
Stat Source: Bob Leclair's Finance and Markets Newsletter 6.6.2009
Comment: Sound like a place for risk averse (by mind or necessity) tort victims to keep their money? Somewhere across America someone may be saying "You invested MY money for 10 years in an S&P 500 mutual fund and all I got was this stinking amount less"?
Comment: It is interesting to observe that every day since they have been offered in January 2003 the daily yield on 10 Year Treasury Inflation Protection Securities (TIPS) has exceeded the above. Source: Federal Reserve Board H15 Release
Comment: Structured settlements (whether funded through annuities or TIPS held to maturity), deliver a steady boring stream of payments free of income taxes and volatility. Ho Hum Ho Hum.
A fluke you say? 
Let's go back in time to suggest that this IS NOT a fluke…
A study was done of Historical Rates of Return (1979-1995)
T-BILL INCOME TAX FREE STRUCTURED
RATE MUNI SETTLEMENT
YEAR (3 MTH) (AAA) RATE
1979 10.07% 5.92% 7.26%
1980 11.43% 7.85% 9.16%
1981 14.03% 10.43% 10.16%
1982 10.61% 10.88% 11.54%
1983 8.61% 8.80% 10.28%
1984 9.52% 9.61% 11.70%
1985 7.47% 8.60% 10.56%
1986 5.97% 6.95% 7.78%
1987 5.78% 7.14% 8.62%
1988 6.67% 7.39% 8.94%
1989 8.11% 7.00% 8.65%
1990 7.50% 6.96% 8.55%
1991 5.38% 6.77% 7.96%
1992 3.43% 6.35% 7.26%
1993 3.00% 5.57% 6.19%
1994 4.29% 7.09% 7.62%
1995 5.64% 6.18% 6.61%
Average 7.50% 7.62% 8.76%
Standard
Deviation 2.88% 1.50% 1.59%
Source: "Structured Settlements and The Interest Rate Switch" by J. Thomas Romans and Frederick G Floss Journal of Forensics Economics , Vol. 12 1999 p57, who credit the Federal Reserve Bulletin and TSSC, St. Petersburg, FL for the information in the table.
Comment: Structured settlement annuity yield compared favorably with Treasuries and AAA General Obligation Municipals over the same time period.
Helpful reading
Structured Settlement IRR Rate of Return Compared to Other Investments (4structures.com)
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