Are You Paying Thousands Each Year to Lose Money?

Are You Paying Thousands Each Year to Lose Money?
Is Your Conservative Plan Losing Money or At Risk?  
Annuities, dividend stocks and target-date funds are offering less income than certificates of deposit, without the safety net of FDIC Insurance. Stablecoins are now backed by dollars, but we’ve seen one failure and another almost fail. So, why are they being sold to us?
 
The S&P500 has almost doubled over the past 5 years, going from 3,271 on July 31, 2020, to 6,370.86 on July 29, 2025. So, has your wealth doubled over the same period? Or are you barely hanging onto even, or inching along, in the name of protecting your wealth?

S&P500 5-year performance through August 3, 2025. Source: MSN.com. (c) Microsoft. Used with permission.

All the explosive gains that we’re hearing about on Wall Street makes us happy, thinking we’re getting richer every time Wall Street rings in a new high. However, if we’re not invested in the trillion-dollar tech, bitcoin or gold industries, we might be earning less than inflation. Many annuities, dividend stocks, bonds, and target-date retirement funds are earning half or less of what we could make in a short-term, FDIC-insured CD. Add in management fees and paper losses, and we might be losing money. Conservative investors – those with very little appetite for losses and risk – are the ones who are most vulnerable to this. Sadly, paper losses have become common in certain sections of the bond market.
 
Are you aware of how much you pay in expenses are every year? It might give us peace of mind to have someone else “manage our money,” where we might pay 1.65% or more annually for that service. However, few of us would find those fees palatable when we are losing money. It is important to remember that most managed plans do what the markets do, but 1-2% lower, due to fees. Conservative investors are usually missing out on large cap growth companies (many of which don’t pay dividends). If we’re not reading the fine print of our complete brokerage statement and doing the math, we might be thinking we’re earning some money, without realizing how little it actually is when we subtract the fees and paper losses.
 
1.65% annual management fee of $250,000 is $4,125/year or $16,500/year of $1,000,000. An S&P500 ETF might not cost anything.
 
Here are the topics we will discuss in this blog.
 
Annuities
Target-Date Retirement Funds
Dividend Stocks
Bonds
Fixed-Income Paper Losses
Stablecoins
High-Yield Savings Accounts
A Time-Proven, Easy Wealth Plan
401k (RSP) vs. IRA (TFSA)
 
And here is more information on each topic.
 
Annuities
Many annuities are underperforming. I recently looked at one that was earning 2% annualized. If it’s earning more than that, it could be tied to the stock market and might get hit hard in an extended downturn. Annuities are one of the few investments where you lose up to 9% the minute you purchase them. Then, even if they are only giving you 2% back each year, you feel like you must wait a decade to extricate yourself – so that you don’t lose your surrender fee – even though you’ve given up hope for making much money on it. Were you advised of this upfront, or was this downplayed? Are you aware that many annuities pay 6-7% commission to the broker-salesman? That’s $6,000 if you invested $100,000 or $18,000 if you put in $300,000.
 
Are you aware of the other hidden fees and risks? Annuities are not government backed or FDIC insured. Life insurance companies are some of the most highly leveraged companies in the U.S., and some of them have very poor credit quality. According to the most recent Financial Stability Report, “Life insurers’ leverage remained at the upper end of its historical distribution, and life insurers continued to hold a significant share of illiquid and risky assets.” It’s important to remember that AIG wouldn’t even be in business if we hadn’t bailed the company out in 2008. It would have gone the way of Lehman Brothers.

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Federal Reserve Financial Stability Report. April 2025.

FINRA.org has a good tutorial on annuities that everyone should read before buying. In a world where FDIC-insured CDs and short-term T-bills are earning almost 4%, it’s easy to earn more income and have more safety than most annuities offer.

Target-Date Retirement Funds
The Vanguard Target Retirement 2030 Fund (symbol: VTHRX) earned 10.6% total over the past 5 years, spending most of the time underwater. That’s another asset that crept along at a 2.1% annualized ROI.

Source: MSN.com. (c) Microsoft. Used with permission.

Why are target-date retirement fund such miserable performers? Most of them have everything and the kitchen sink in them, including some of the highest risk, poorest performing sectors – such as long-term bonds. Remember, even investment-grade bond funds can have up to 20% junk bonds in them. We’re often missing out on the spectacular performance of the Magnificent 7 (or have only a sliver of this in our exposure).  
 
So, what should you do instead? Essentially, we should adopt an age-appropriate, properly diversified strategy (time-proven) that we rebalance 1-3 times a year. Check out my blog on how to get safe and hot in one easy plan. We want to think about all the ways that we can build wealth and minimize taxes, including funding our employer-sponsored retirement plan, our own Individual Retirement Plan, potentially a Health Savings Account and our child’s college savings or dependent IRA account. You can learn more about our time-proven, easy-as-a-pie-chart nest egg strategy in The ABCs of Money, 6th edition, at our Financial Freedom Retreat and in my blogs.

Dividend Stocks
The higher the dividend, the higher the risk. Chasing “income” can sometimes cost us our principal investment. We’ve seen this in former dividend darlings, such as General Electric and in many of the CRE REITs. Dow Jones Industrial Average funds can be vulnerable due to legacy debt and leverage. (Boeing and 3M are two of the 30 components that have struggled over the past few years; 20% of the DJIA was bailed out or went bankrupt during the Great Recession.)
 
There is a place for income in our portfolio. However, we need to be aware of the low credit quality that plagues a lot of the U.S. based income-generating funds. In our sample pie charts, we are using value substitution funds, some of which have higher credit quality and higher yield — we’re getting paid more for less risk. We discuss this in greater detail at our Financial Freedom Retreat.
 
Bonds
Long-term bonds have been the worst performers on Wall Street over the last three years.
 
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Long-term government bonds lost -6.41% in 2024.

On one hand, we might be aware of the public debt. However, how many of us are conscious of just how much there is in total debt and loans, including corporate debt – which is an astonishingly high $103 trillion.

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Many Main Street investors are not informed that the capital losses of -26% in long-term government bonds in 2022 were directly responsible for the bank failures in March 2023. (Some quick financial engineering prevented a spate of bank failures.) Long-term bonds lost again in 2024. You might be told these are only paper losses.
 
What are paper losses? They reflect the new value of what we purchased, if we were to resale them. Our wealth and assets are based upon this new market value, not the amount we paid for the bond. We are supposed to be repaid at the agreed upon term. However, some of these are long-term bonds with a duration that is longer than our lifespan. The minute we purchase them, they lose value because no one wants to buy them from us.
 
So, is there a better strategy? Of course there is. No one is suffering paper losses who is using our safe strategy that we’ve had in place since 2009. Learn more by joining us at our online oct. 11-13, 2025 Financial Freedom Retreat. We spend one full day on what’s safe. We will follow that training up with a Bonds, Fixed Income without Paper Losses Masterclass on Saturday, October 18, 2025.
 
Fixed-Income Strategy
Be careful reaching for yield. Sometimes chasing income can mean that we lose principal. Oftentimes we’re told it’s just a paper loss. However, as you’ve read above, that money is no longer available to us. If we need access to some cash, we’re going to have to sell and realize those losses.
 
I’m seeing a lot of conservative investors who are sold into illiquid, high-risk investments in the name of earning a small amount of income. Sometimes they are even locked in without the ability to get even a portion of their money back. Reading the fine print and the risk factors on everything today is essential – before we agree to the investment. Don’t be rushed, pushed or baited into anything without doing the proper due diligence. (If you need help with this, email [email protected] and learn more about our private coaching program.)
 
Stablecoins
In my stablecoins blog and videoconference, I pointed out that we really must read the risk factors on stablecoins. The marketing copy on the first page of the website might be factual, but could be misleading if we re not reading every word very carefully. The risk factors are where the drawbacks are clearly state in bold. Disclaimers make things legal, even if we don’t bother to find the Risks page and read it.
 
Some, but not all, stablecoins pay dividends. Here again, the higher the dividend, the higher the risk rings true. One notorious example was Terra Luna, which was a business that went bankrupt, taking investments down with it. Investors are not expected to be made whole. When Silicon Valley Bank failed, the USDC stablecoin dropped in value after Circle (the company behind the coin) advised investors that they had $3.3 billion deposited at SVB. Within days, the FDIC and Treasury Secretary Yellen advised that there would be an exception in the SVB failure to make all depositors whole – even uninsured depositors. Both events are cautionary tales. The FDIC is not expected to make an exception for uninsured investors in the event of another bank failure.
 
Paypal’s stablecoin is backed by dollars held at the Paxos Trust Company – not a bank, and thus not FDIC-insured. Stablecoins are only backed by the company offering them (not the government). The same holds true for many income-producing savings accounts offered by non-banks.
 
https://newsroom.paypal-corp.com/2025-07-28-PayPal-Drives-Crypto-Payments-into-the-Mainstream,-Reducing-Costs-and-Expanding-Global-Commerce
 
High-Yield Savings Accounts
The interesting thing about these so-called high-yield savings accounts is that they aren’t really paying much more than FDIC-insured Certificates of Deposit and short-term treasury bills. Some of these are being offered by non-bank financial services companies. American Express is not a bank, neither is the Coinbase, Cash App, Rocket Money, Venmo or PayPal. When brokers say that your cash is FDIC insured, there is a loophole because brokerages are not banks. If the brokerage or financial services company goes out of business, the FDIC does nothing to backstop it (only if the bank does). Learn more in my blog on the various risks by clicking on the blue-highlighted words.
 
A Time-Proven, Easy Wealth Plan
There’s room for safety without paper losses, earning steady income, and spectacular gains with the Magnificent 7, while also capturing gains to make sure we keep our wealth. As I mentioned above, we are using value replacement funds that pay a higher income than most US based dividend equity funds. Get additional information in my Safe, Hot blog.
 
I encourage you to at least start by personalizing your own pie chart using our free Web app. (Email [email protected] for a link.) You can read about these strategies in The ABCs of Money 6th edition. You can learn and implement them at our next Financial Freedom Retreat online October 11-13, 2025. If you know that you have paper losses or are worried about anything else in your wealth plan or are ready to be the boss of your money (even if you have a money manager) consider getting an unbiased 2nd opinion from me through my private coaching program. It’s always good to know exactly what you own and why and to capture games at an all-time high. That’s going to be a lot smarter than waiting for a problem to occur and then scrambling to try and rebuild wealth.
 
401k (RSP) vs. IRA (TFSA)
Our wealth plan should consist of an employer-sponsored plan, where we might get free money through a match, but have less freedom of choice in what we invest in, and individual retirement accounts, where we can get better diversification and potentially even safety. One other tip: it’s very important to invest within a retirement account, so that we are eliminating our capital gains exposure. This is even possible with Bitcoin and Ethereum ETFs, something that wasn’t available just a few years ago.
 
Bottom Line
A lot of the conservative, safe products are not as safe as we’re being told, many are costing us paper losses, which reduce our wealth and our FICO score. Now is a beautiful window of opportunity to fix things at an all-time high. Wall Street is on fire, and there still is a little liquidity in the bond market. Liquidity is tightening in the bond market, and even with Treasury bills.

Now is the time to read the fine print and know what we own and why and to make appropriate adjustments to ensure that we have an age-appropriate, properly diversified wealth plan. Why now? Summer is a low-volume time on Wall Street, and September is historically the worst performing month of the year.




Register now to join us at our online Financial Freedom Retreat Oct. 11-13 2025 where you'll learn how to protect your wealth, save thousands annually in your budget and how to hedge in a volatile Debt World. If you'd like a life-changing adventure of a lifetime, be our guest at a royal manor house in Cornwall, England, March 12-19, 2027. (With just eight rooms available, this exclusive, private, bucket-list adventure sells out a year in advance!) Call 310-430-2397 or email [email protected] to learn more. The 2025 Restormel Retreat was a magical and royal experience. Click to learn more. 

Receive the best price when you register with friends and family for the online Financial Freedom Retreat Oct. 11-13 2025. Request testimonials at [email protected]. You can also view some on the flyer page of the retreat. 

Learn how to:

* Invest in hot industries, such as cryptocurrency, Nvidia, artificial intelligence, and quantum computing,
* Hedge against a weaker dollar,
* Invest and compound your gains,
* Green your retirement plan,
* Easy and efficacious nest egg strategies,
* Get hot and diversified (including in artificial intelligence, quantum computing and crypto),
* Evaluate stocks,
* Avoid capital gains and financial predators,
* Keep an age-appropriate amount safe, and,
* Know what's safe in a Debt World.

You'll even discover how to save thousands annually with smarter big-ticket choices. Yes, it's a complete money makeover. 
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Email [email protected] or call 310-430-2397 to learn more and register. Learn the 15+ things you'll master and read testimonials in the flyer on the home page at NataliePace.com. Register with friends and family to receive the best price. ​

"Ten minutes into the first day I was already much smarter about investing than I ever thought I would be in my life and I knew I was in exactly the right place at this retreat. I am amazed at how EASY and FUN it is to make my money work for me and those I love. I think this kind of information should be compulsory in schools. I wish I'd learned this sooner." CM

If you’d like an unbiased 2nd opinion on your current wealth plan, email [email protected] for pricing and information.

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Receive the best price when you register with friends and family. Visit NataliePace.com to learn more. Call 310-430-2397 or email [email protected] for pricing, additional information and to register.

Join us for our Restormel Royal Immersive Adventure Retreat. March 2027. Email [email protected] to learn more. Click for testimonials, pricing, hours & details. Register now to receive the best price, the best room and eight private, prosperity coaching sessions. There are only 8 rooms available. This retreat includes an all-access pass to all of our online training for a full year for two. Considering the perks, you're receiving a 65% discount to learn the life math that we all should have received in high school, and the room is free! Email [email protected] to learn more. The best rooms at the 2025 retreat were sold out in 2024! Yes, it's a great idea to register and start transforming our lives now!

Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The ABCs of Money (6th edition) and The Power of 8 Billion: It's Up to Us, and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is (2nd edition) are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​​

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Check out Natalie Pace's Substack podcast on Apple and Spotify.
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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly-traded companies, funds or projects mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect an age-appropriate, diversified wealth plan, which has been designed strategically, with the assistance of financial professionals who are familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge, patience and diversified strategy.  
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Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument.

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