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Making Sense with Ed Butowsky
Hosted by 35-year investment manager, Ed Butowsky, "Making Sense" is designed for delving deep into understanding investing in episodes less than 30 minutes.
To learn more about Chapwood Investments, you can visit us at our website (www.chapwoodinvestments.com).
Making Sense with Ed Butowsky
Cost of Living: Why Are Your Grandparents So Cranky?
Have you found yourself taken aback by the significant increase in the Consumer Price Index (CPI) over the past few years? If you have, brace yourself for a revelation – these figures have actually been consistently underestimated for decades.
Join Ed Butowsky and Jordan McFarland in the upcoming episode of "Making Sense," where they engage in a discussion about the escalating living costs driven by factors like inflation and taxes. However, their conversation goes beyond just the cost increases.
Ed and Jordan delve into the risky landscape of financial services products. Frequently, products like annuities are marketed as "safe" investments, yet in reality, they can exacerbate the financial challenges people face.
Don't forget to submit your questions for next week's episode!
The Making Sense podcast is recorded by Chaplain Investments managing partner at Butosky and Jordan McFarland. If you have any questions, please email them to info at chaplainvestmentscom.
Speaker 2:Hi everyone. Welcome back to the fourth episode now of the Making Sense podcast. I am Jordan McFarland, your co-host, joined as always by Ed Ed. How are we doing today?
Speaker 3:Doing great. I'm looking forward to this subject quite a bit.
Speaker 2:Absolutely. I was just saying before we got on. I know this is something I talk about a lot around the office, so I'm glad I can finally discuss this in a public way. We're titling today's episode why Are your Grandparents so Cranky? Behind the title, what we'll be discussing is social security, annuities and why issues like this butt heads with the cost of living increase, whether you live in Dallas, whether you live in the middle of nowhere. This is something that is probably close to you and you may have this issue as we speak. But before we hop into that, obviously we have to go to the trivia question. Today's trivia question, ed, is what is the average retirement age in America and how much net worth is the average couple retiring with?
Speaker 3:So I'm going to say 71 and 800,000.
Speaker 2:So the average age and this is the average age, so this does not include the median is 61 years old. So this was taken from a 22 study by NerdWallet. So the same thing goes with the amount they're retiring with. The average net worth they're retiring with is 1.2 million, so your guess was a little bit closer there, but the median net worth that they're retiring with is 212,500. So you can see, by comparing the median and the average, there's a large discrepancy in retirees' income or, excuse me, retirees' net worth as they're retiring.
Speaker 2:I actually just saw a study that came out yesterday that ranked the United States 22nd out of I think it was 47 or 49 countries pulled. So obviously we're not doing incredibly great on the retirement side. But I think what we'll get into with this entire discussion is you can't depend on the government for anything, ed. I mean depending on the government for money is about as poor of a strategy as it gets. So let me turn it over to you. I want to ask what is the cost of living increase and what does that mean to the everyday person?
Speaker 3:Yeah, and this is a really important subject. In fact I wanted to do a 60-minute segment just on this. I actually approached 60 minutes to do this and we got down pretty far in the discussions. Because back in 1983, the government changed the way they calculated the CPI, the Consumer Price Index. So up until 1983, there were 1,700 items that they measured every single month and figured out what the cost of increase was. And the number got to a point where it was 13% in 1983. And therefore the government had to pay out an entitlement program increases 13%. So Newt Gingrich was instructed to come up with a new way to calculate the CPI. So the CPI no longer reflects the rising cost of living for everyday items.
Speaker 3:They started with doing a lot of crazy things to change it up, but the inflation where the CPI went from 13% down to 3% in two years, which is just not accurate. Now one of the negative unintended consequences of this number being lowered is that you have people in the private sector, their increases in their salary and this is normally middle income and lower income people their increases are tied to the CPI. So if they're getting an increase of, let's say, 5% and their cost of living to maintain the same standard of living is up 10%. They're getting spit on 5%. Basically, their lives have become 5% harder. But you just do that over a three-year period and you're 15% behind.
Speaker 3:And to me, this is why, in everything I do, I never talk about the CPI.
Speaker 3:I always talk about the cost of living increase, because the cost of living increase is what is the most damaging thing to almost every single person out there, and it's sort of like a little virus that you never know is. You know you're suffering from until all of a sudden you get bronchitis and then you get a you know a breathing disease and then you basically die. You know not to be so morbid. But this is why it's so important for people to understand that the government has been manipulating the CPI and they did it again in 94, jordan. In 94, there was a professor named Boskin at a Stanford and he was asked to come up with another way to measure the cost of living increase, or the CPI. So the Boskin Commission again made it lower, and it's in both houses. The Democrats and Republicans want that number to be lower because that means there's less money going out of the government and entitlement program increases with Medicare, medicaid, social Security and any others that are tied to the CPI number.
Speaker 2:No, that's an incredibly important part. And first thought I think of is back to our webinar a couple of weeks ago with Scott Hodge, and Scott had indicated that if something doesn't change in terms of what they're doing with Social Security, that it's going to deplete by 2033. So if you think of how they've already decreased it and there's still significant risk that it's not going to be there at all, that's definitely a worrisome thing. And the other thought is well, let's compare this whole entire situation to a business. Right, let's say a small business makes $100,000 in a year, right, but they turn in that they only made $30,000. So that way they have to pay less taxes. Well, you would say that's incredibly unfair, right? But that's almost what the government is doing by lowering the CPI to a lower number than the actual inflation is. Does that make sense?
Speaker 3:Yeah, it does. The government is the big culprit here and they do it and people just blindly accept this and they shouldn't. There's a gentleman named John Williams who has a website called shadowstatscom and he calculates the alternative real calculation on the CPI where it really should be, and he does it on a national level where you can actually go there and put in what the year is and you'll see what the BLS the Bureau of Labor Statistics says the CPI is. And then he puts in his alternative or shadow statistic what the real number is. And this is why everybody feels a drain and I feel terrible for middle and lower income people and the reason I talk about them is that their increases in their income are tied to the CPI, usually One percenters. Their increase in their income or decrease in their income is tied to their performance and that's a real big difference.
Speaker 3:And this is why you have somebody who lives in Baltimore. I always think about somebody in Baltimore. I have no idea why. Somebody who wakes up, takes the bus to a business, comes home and pays their taxes and feeds their family. But every year it gets harder and harder and again, this is why I wanted to do that 60-minutes segment, because this is the number one reason why we have crime Because people are following the rules and then they reach a threshold of pain. And when they reach that threshold of pain, they have no choice but to find another alternative to take care of their families. And this is kind of a subject that nobody ever talks about, but it's damaging to everybody every single day.
Speaker 2:And do you think this plays a key part in why it's so difficult to buy a house these days? As you've seen anywhere, the amount of renters in America has significantly increased, of course, especially with my generation, but even there's people in their 40s and 50s who are merely renting a house instead of purchasing, just because it's become so hard to own a home in America.
Speaker 3:Yeah, well, every day that you are having to pay a lot more than what you're making takes away from your ability to put a down payment on a house. The interest rate that you are charged is inflationary and that comes from the mortgage, and a mortgage rate isn't necessarily tied to this. But saving money and being able to put a down payment on a house does tie to this very much so.
Speaker 2:Well, let's talk about what the government did just a few months ago to kind of social security for the next year. They only increased it a little over 3%. Why don't you talk to us a little bit about that, why they selected that number and the issue that comes with it?
Speaker 3:Yeah, so to me this is just a terrible result because you have the cost of living increase, or the CPI, according to the government, is going up by 3.2%, so that's what social security payments are going to increase by. But if you were to take a look at the real out of pocket costs for seniors, it is incredibly high. It's somewhere close to 10% a year. That's the increase over last year. That includes food, energy, medicare or medical stuff Every single thing that they do in their lives. It's closer to 10%, not 3.2.
Speaker 3:So you have people who just got literally spit in the face 6.8%. 6.8% made their lives got that much tougher, and that's why we're calling this, why your grandparents are so cranky. But it also don't look for Christmas presents to be that great, because every single year, people who rely quite a bit on social security or even any kind of pension payments are going to be finding themselves on the wrong side of this equation, where they're going to see that what they're getting is an increase does not even come close to what their rising cost of living truly is. And everybody listening should go ahead and take a look at your electric bill, take a look at your gas bill, take a look at your food bill, take a look at your insurance, take a look at the taxes and then come back and tell me that everything only went up 3.2%. That's just not true.
Speaker 2:Absolutely and yeah, I think anytime you can look at a number like that and then point to what it's actually doing is very frustrating. So if we use your 10% of your example and you go into the life of a senior citizen, and sometimes they're living 30, 40 years past retirement, so we're talking their expenses could double three to four times just in their time that they're not working. So the fact that some of them rely on social security I'm gonna use this as a natural way to segue into annuities and other things that they rely on to pay for their retirement is just scary to think about. So the next thing I really wanna talk about is when people try to find income vehicles, when they look for guaranteed income. Obviously, that's a big part of this industry is you look at anyone, maybe in their 70s, maybe in their 80s, and you'll look at their portfolio and they'll have at least one or two annuities, typically for the husband and the wife and, in my opinion, ed. This is just very frustrating for me.
Speaker 2:So for a little background on myself, I do have my life insurance license. I've sold annuities before. This was before I actually knew what an annuity was. Typically, when you talk about the lifespan of a financial advisor. When you first come into a large scale company, they want you to sell these products to people as a way to bring in commissions and things around that. But, ed, just talk to us about your experience with annuities. Talk to us about what you think about them after 35 years in the industry, because we may have a different opinion on them. I can't believe we do, but we'd love to hear your take.
Speaker 3:Yeah well, I have never been insurance licensed and never will be. I do not like annuities. Fixed annuities are one of the worst investments anybody could ever make. And a fixed annuity is a fixed amount of interest that you're gonna get off of the annuity. But then when they become annuitized, that's even worse. So let's say you put $100,000 into an annuity, then it becomes annuitized, that $100,000 is gone and what you're left with is a guarantee number of payments and that payment number doesn't change. So it does not go up based on the cost of living increase.
Speaker 3:Now some might be adjusted, but even if it is, it doesn't keep you up with your real out-of-pocket expenses. But then you have variable annuities that are sometimes will grow, but they're also capped for how much growth they're gonna get. But annuities also are extremely expensive. You have a risk and mortality charge which is 1.4% off of the top. Then you have the administration fee for the annuity. Then if it's a variable annuity, you have to pay for the mutual funds inside it and the benefit is very, very minor. So I steer away from annuities completely and I'm happy to hear that you're a reformed negative or a reformed annuity salesperson.
Speaker 2:Absolutely. And when you really look at the numbers on an annuity, I know, okay, the thing that bothers me most about it is these annuities that people are getting sold are never based off of. Hey, let me show you all of these numbers. It is completely sold to emotion. Are you fearful that you're gonna run out of money in retirement? Yes, okay, I have a great product for you, right, it's never actually sold. Where I'm gonna pull out actual numbers, I'm gonna show you what it is.
Speaker 2:In fact, if a listener is listening right now and they have an annuity, I know this may be a painful conversation and it's not your fault that, honestly, that you were sold this. In fact, I know a lot of people who own an annuity and can't really describe what it is. Even it was just told to them that they have guaranteed income. All they have to do is just sit back and relax and they'll get a monthly or annual check. But the problem is is like you had just mentioned there briefly, these have significant fees for surrender value.
Speaker 2:If you wanna pull your money out, you get double taxed, and the problem with all of that is you're not even getting a return that's worth putting your money away, right, and so you always talk about liquidity as the most important part of building your wealth, right? So if I'm putting my money away for oftentimes 10 years with these annuities, what am I getting back in return? Right? Is me giving you my money and I'm not gonna touch it, I'm gonna let you have it for 10 years? Is that worth my 2% return sometimes? Is that worth you capping me at 8% when the market did 25% this year? Right? So this very infuriating for me because it's a very undercover topic for people that own them and, frankly, I think it even dives into a moral issue with our industry. But there's these people that own these policies or, excuse me, these annuities and have no idea what they own.
Speaker 3:Well, I'll tell you, you said something they're sold on a motion to keep. People go and say are you afraid you're going to lose all of your money? Well, from the stock market standpoint, there's only been two 10-year rolling periods where people lost money in the stock market. That's 10-year rolling periods. That's 1927 and 1937 and 1928 to 1938. And you lost on average 1% per year. So the idea of losing money. But if they went up and said, are you afraid of losing purchasing power? Because you can not lose money but lose purchasing power. So you can have a dollar today and that dollar was worth two times what it's worth today 15, 20 years ago.
Speaker 3:And inflation is a goal of the government. They want to have growth, so they want to have a targeted inflation of 2% to 3%. Well, 2% to 3% is only about 20 years. Your money or your cost of living is going to increase. It's going to double in 20 years. If it came up with basically a 4% inflation factor, it would double in 18 years. So the goal is to not lose purchasing power and that's what people kind of lose sight of and why these people living off of Social Security right now are going to lose purchasing power and that's why your Christmas presents are not going to be that good this year. They're just not going to be because of the manipulation of the CPI Absolutely.
Speaker 2:And this is going off that point for purchasing power. This is the last thing I'll mention about annuities, because I know you mentioned index annuities and I've been there. I've heard the discussion. The foot in the door technique is used where we talk about fixed income, fixed annuities oh no, that's not as good. But wait, we have an index annuity that's tied to market performance and you can have guaranteed income and you can have market performance. But the problem in lies with this that you don't make money just by getting a guaranteed income a year. The problem is okay.
Speaker 2:Last year we had what let's call the average portfolio loss of 15%. Is that standard? About 20. Okay? So this year, let's say, I have a cap of 8%, and this is all just general. If the market goes up 25% and I only get 8%, I'm still way behind last year, right?
Speaker 2:So whenever you compound this over 10, 20 years of owning these things, these people are just getting shelved on not being able to take in the excess returns Because, let me tell you, the stock market is incredibly volatile. It's going to go up, it's going to go down. But the thing is you need to have those excess returns on the good years because you need to be able to confront and combat the bad years that the market's inevitably going to have. So that's why even these index products I mean while they're better, I guess, than a fixed annuity I mean I like to be efficient, I like to only find the best option, and just because it's better doesn't mean it's good, right. So that's just another thing that people always say well, it's tied to the market, I can do this, I can do that, but it's really not good for you.
Speaker 2:Still, in the end and I know this may frustrate some people that own annuities, it may frustrate people that sell annuities for sure, but at the end of the day, there's a lot of ways to get to where you want to be in retirement. I just can't see this playing a part in that. But I'll wrap up that section and get off my soapbox for a little bit. Ed, give us some without for our compliance. Guy Randy, we have to be careful in this. Give us some strategies instead of annuities, instead of depending on social that people can look for in retirement If they do want to see guaranteed income guaranteed is a loose term If they want to see income in retirement.
Speaker 3:Yeah.
Speaker 3:So when you say the word guarantee, you guarantee a loss of purchasing power Anytime there is a guarantee, that's the one thing you should always say I'm going to lose purchasing power.
Speaker 3:So once you learn enough and we try to educate people as best as possible about the different pros and cons and the risk of the different investments once you get your head around that you don't need a guarantee, then you can start looking at income alternatives and senior rate floating notes. Business development companies pay variable income but they're selling at discounts right now, just like preferred stocks are, pay variable income, and those are great ways to get really good income without paying the tremendous fees that you have to pay on annuities. But at the same time as interest rates are high, you might also want to lock in some of these yields. So you could be looking at some lower grade bonds and I'm not saying buy terrible bonds, but buying triple B rated bonds that go out about two or three years. You can lock in some pretty good yield to maturities and as interest rates drop, the value of those will go higher. Those are some things that you could be doing to replace the quote guarantee that you might get on an annuity.
Speaker 2:Absolutely. And yeah, just what comes to mind is I'll use a personal example I looked at my grandparents' financial statements. Both of them had annuities and I looked at what they had in the annuity versus what they could have had if they invested in the market. So we always have to consider and let me say again for compliance, there's no guarantees in anything. In fact, I think the closest you can come to a guarantee is anything with the government, with a T bond or something of that nature. But even then there's still no guarantee in anything investing-wise.
Speaker 2:But just by having a larger pool of money to select from if you leave your money in the market, compared to if you leave your money in a guaranteed again, not guaranteed, but some vehicle that aims for that, I mean at the end of the day. I know the song says no money, more problems, but I don't think that's the case here. And so if our final goal is just to have as much flexibility, if it's to have as much optionality in retirement that we want, if leaving our money in the market through the ups and downs is going to get us there, I don't really understand the need to diversify into products at all.
Speaker 3:Yeah, I mean the idea of diversification is really important and the reduction of risk. You have to look at what the different risks are. There's capital risk, which we all talk about, but then purchasing power risk is the other one and they sometimes should go hand in hand. I mean, if you lose your capital, then you've lost purchasing power, but you got to assume that you're not going to lose capital. But you can lose purchasing power and that can be just as damaging. So think about that if you were to make 2% on your income and inflation was 10%, that's just the same as losing 8% of capital.
Speaker 2:Absolutely Sorry. We're going to say something no, no, no. Okay, well, let's jump into the Q&A, and I selected questions that would be more relevant to this. Like I said, we had a webinar with Scott Hodge the other week, so I did grab some questions from that. The first question is actually a question we received from a client a couple of weeks ago and he basically asked should I invest $150,000 into I believe he said an index annuity for my retirement? So obviously we've kind of we've got a we weren't doing an answer for that?
Speaker 2:Absolutely not, but I think it just goes into. You know, two things that people are often told in retirement is one don't run out of money. Two, don't forget rule number one, right. So whenever someone tells them that they can have this guaranteed income, that it properly diversifies their portfolio, you know it's just something that people really cling to, unfortunately. So I hope you know this podcast has been helpful for that. Again, I know some people might come after me for going after annuities, but it is something I'm convicted by. You know I was in the industry. I have family members that have been sold this. You know this is something that's kind of personal to me and you know I just feel like it's something that can be avoided, unless maybe a 0.01% of time for compliance, I guess I should say Ed. But let me go into the second question. Please share your thoughts on how to invest with inflation the way that it is.
Speaker 3:So you want to be investing because equities have the ability to increase their pricing. Companies can increase what they charge. So it's a great way for you to invest is in equities during inflationary pressures real estate as well. But with real estate you've got to be very, very careful and you should be investing in those through REITs real estate investment trusts and I would not be investing in commercial real estate right now. I'd be looking at multifamily housing, public storage, digital storage units and multifamily housing. Those are the places that I would be looking on the REIT side. But the reason I brought up senior rate floating notes in business development companies earlier is because the rate that they charge goes higher as interest rates go higher. So as long as we're in inflationary pressure, equities are the only place you should be investing, along with BDC's senior rate floating notes and REITs. That's where I would be looking at. I would not be just yet be buying and locking in the yields on corporate bonds, although there's going to come a time to do that, but it's not right now.
Speaker 2:Absolutely, and I think oftentimes people forget about money markets. Obviously, a lot of times you just want to have cash to sit around and while an emergency fund of three, six, nine months depending on your necessary needs is crucial, I think people oftentimes forget that money market is honestly, it's been up over 5% Several times this year, I know. As inflation comes down, hopefully it will decrease, but I think that's an often forgotten one.
Speaker 3:If you just want to have high liquidity with at least somewhat of an expected return, yeah, but the important thing to remember about money market is anytime money market, whatever it's paying, there's a line right below it and that line is the quoted CPI. So if you could get 5.5% today and inflation is, let's say, 4%, then you take out taxes, you've lost purchasing power, because it's not just the CPI where you've lost purchasing power, but you've also lost it because of taxes. So the idea with money market is to have it there for as short a period of time as possible. But if rates are rising which you appropriately pointed out, jordan if rates are rising, then you want to have it in something that can pay additional money. But then, when the time is right, you want to lock in that higher yield and then make money on corporate bonds. Absolutely.
Speaker 2:And I think I looked at. I got a notification from my bank the other day and it gave me a statement in my savings account that I had earned 50 cents on my money. And I said is this all for me? I get to keep all this, so it at least beats that. But let's go to the third and final question Is there anything that government plans on doing to change social security? And this was really a topic that Scott hit home on in the webinar, so he could say this a lot better than anything we could, but that was a question that I grabbed also.
Speaker 3:I think that there's going to be mean testing to see if people really need it. I don't know if I'm going to need it when I retire, but I sure wish I had it and I think anybody who's paid in for all these years and had a promise to get it back is going to expect it. I think the younger generation might end up paying that money in and not having a promise to get it back because it's so upside down and there's going to have to be a major change in social security, in the social security fund, to make it liquid and make it available for everybody, because the numbers don't add up. I remember Governor Perry from Texas, when he was running for president, called Social Security a Ponzi scheme and he got a lot of backlash for that. But it really is. It truly is a Ponzi scheme. Money goes in, they print more money and they just continue to print money and create money out of thin air to pay people and that's not a really great way to do this.
Speaker 2:Absolutely, absolutely. So as we conclude here, we obviously thank all of our listeners who have tuned in the last months. We've had a great time doing this show. Of course, you can continue to send your questions to info at chapwoodinvestmentscom, but just want to leave you with the final message to at least consider what we're talking about. Obviously, if you're an owner of an annuity, unfortunately with your surrender charges and things of that nature, there's probably not much you can do. But I would just advise you to share this information with people that you care about, because if you have a family that's large enough, I can almost guarantee you I can use the word guarantee there that they have an annuity in their investments, if you would call it that. So, other than that, feel free to shoot us any questions about anything on this episode. If you disagree with me, tell me I don't know what I'm talking about and shoot it my way. I won't take it personal. But just thank you guys so much. It's always great time and, ed, I will pass it to you to wrap us up.
Speaker 3:Yeah and again. As Jordan talks about annuities, I really want to focus on the manipulation of the CPI and how wrong that number is and the negative unintended consequences that it brings into the private sector, because there's so many people who are being hurt by this manipulation. Now the question is well, if it wasn't manipulated, where would inflation be? And that's a scary proposition. It would be much, much higher than what it is right now, and we'd have a lot of people who wouldn't be living off of the government pocketbook if, in fact, they had kept up with the rising cost of living. So it's a problem that's only going to get worse. But that's why, grandparents, if you're watching this and listening, don't be too upset about giving bad gifts this year because the CPI made you do it.
Speaker 2:I absolutely couldn't have set up better myself. Well, that'll do it for us today, folks. Thanks again for tuning in. We will see you next Wednesday on the Making Sense podcast, and I hope you guys have a great day Thanks.
Speaker 1:The Making Sense podcast is recorded by Chaplain Investments' managing partner at Butoskey and Jordan McFarland. If you have any questions, please email them to info at chaplaininvestmentscom. This podcast contains general information that may not be suitable for everyone. The information contained herein should not be construed as personalized investment advice. Past performance is no guarantee of future results. There is no guarantee that the views and opinions expressed in this podcast will come to pass. Investing in the stock market involves gains and losses and may not be suitable for all investors. Information presented herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security.
Speaker 2:The Consumer Price Index, or CPI, is a measure of inflation compiled by the US Bureau of Labor Studies. Fixed annuities are long-term insurance contracts and there is a surrender charge imposed generally the first five to seven years that you own the annuity contract. Withdrawals prior to age 59 and a half may result in a 10 percent IRS tax penalty in addition to any ordinary income tax. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company. Index annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation growth, if any, of a stock market index. Such contracts have substantial variation in terms cost of guarantees and features and may cap participation or returns in significant ways. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges may apply if not held to the end of the term and withdrawals are taxed as ordinary income. If taken prior to 59 and a half, a 10 percent federal tax penalty. Chargers are cautioned to carefully review and index annuity for its features, costs, risks and how the variables are calculated. Please consider the risks of objectives, charges and expenses carefully before investing in variable annuities. The prospectus, which contains this and other information about the variable annuity contract and the underlying investment options can be obtained from the insurance company or your financial professional. Be sure to read the prospectus carefully before deciding whether to invest. The investment. Return and principal value of the variable annuity investment options are not guaranteed. Variable annuities sub-accounts fluctuate with changes in market conditions and the principal may be worth more or less than the original amount invested when the annuity is surrendered.
Speaker 2:A REIT is a security that sells like a stock on the major exchanges and invests in real estate directly, either through properties or mortgages. Reits receive special tax considerations and typically offer investors high yields as well as a highly liquid method of investing in real estate. There are risks associated with these types of investments and include, but are not limited to, the following Typically, there is no secondary market for the security listed above. Financial difficulty discerning between routine interest payments and principal repayment. Redemption price of a REIT may be worth more or less than the original price paid. Value of shares in the trust will fluctuate with a portfolio of underlying real estate. It involves such risks as refinancing the industry, interest rates, availability of mortgage funds, operating expenses, cost of insurance, lease terminations, potential economic and regulatory changes. This is neither an offer to sell, nor solicitation or an offer to buy the securities described herein. The offering is made only by the prospectus. Investing does not guarantee a profit or protect against a loss in a declining market. It is a method used to help manage investment risk.
