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Investing/Strategies / Retirement Investing
|Subject: Re: How to make your own annuity on the cheap||Date: 1/24/2012 6:30 PM|
|Author: ptheland||Number: 70015 of 78037|
Insurers by and large have to manufacture products like these out of the same instruments available to pretty much everyone. They don't have a magic, giant source of yield to play with.
Well, yes and no. They can manufacture these out of stuff available to us average joe types. But they can also lend the money directly.
Insurers do a fair amount of lending for larger commercial properties. Those loans can be as short as 3 years, and are rarely longer than 7. It's secured by the real estate, so there is some level of downside protection. (Not as much as was generally believed in 2005, but still some.) Loans don't typically exceed 80% LTV, and are often more like 50% - 60%.
For this, I would imagine they still get around 7% even today.
So in a way, insurers DO have a source of big yields available to them - a source that you and I can't access. Well, I can't. Perhaps you have a spare $40 or $50 million available to lend. ;-)
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