by John Darer CLU ChFC MSSC RSP CLTC
Those concerned about yields on structured settlements and other fixed income instruments should have a look at Smart Money columnist James B. Stewart's piece in the August 4, 2010 Wall Street Journal entitled "Defending Against Deflation". He says:
"Deflation is an ideal environment for high-quality fixed-income assets because the value of the income stream rises as prices drop. In February I urged fixed-income investors to shorten maturities. That meant moving into higher-quality bonds, such as investment-grade corporate and Treasurys (sic), as well as federally-guaranteed bank certificates of deposit. To protect against deflation, investors should maintain the focus on high quality, but lengthen maturities. This is easily implemented as short-term bonds and CDs mature. There also is nothing wrong with holding cash or cash equivalents, even with money-fund rates close to zero. Cash gains in value as prices fall".
Structured settlement annuities fall into a similar asset class. Structured settlement annuities are high quality fixed income assets. This holds true whether you are:
- a plaintiff settling a personal injury or wrongful death case, already receiving payments from a structured settlement, or payments from a structured judgment
- an attorney who is contemplating structuring his or her attorney fees
- a plaintiff in an employment lawsuit, a person with high value low basis real estate or a business that you want to sell (structured installment sales)
- or someone considering the purchase of structured settlement payment rights in the structured settlement secondary market.