Dear galleta,Prior to finding the "Fools", I was primarily a mutual fund investor,and as a means of getting more deferred growth, I researched the various variable annuities that are out there, focusing first on expense and second on performance. I narrowed it down to Vanguard and T.Rowe Price. I elected to go with T.Rowe Price because I thought their performance had the edge over Vanguard, although Vanguard may have had a slight edge in annual charges. I have since thrown out all the info from the other companies so I can't quote them to you, but I can tell you that T.Rowe's annual mortality charge is .55%, and that is less than half that of many out there. Their total annual charges (including mortality and portfolio mgmt expenses) range from 1.25 to 1.60%, depending upon the fund. To put that in perspective, the much advertised and touted Kaufmann fund has total annual expenses of 1.88%, including a .75% 12b-1 fee, according to the third quarter Schwab mutual funds Performance Guide.I don't think that Fidelity can touch either of the above in terms of expenses, but I can't really recall; and I an biased against Fidelity because we tried them with a regular brokerage account and they messed it up from the git-go. We finally transferred out!:-(Another positive for T.Rowe is that they do not have a redemption fee should you decide to pull your $$$ out at any time after your first deposit.[Of course, a 10% penalty may be required by the Fed if you withdraw before you're 59 1/2:-)] I believe, but am not sure, that Vanguard has the same policy. A usual policy is to charge a 7% fee for withdrawals the first year, 6% the second year.....1% the seventh year.A third positive for T. Rowe is that it is one of the Cash Kings:-) While on the subject of Cash King (CK), you know that investing in companies like the CKs can act just like an annuity without the insurance or the expense. By that I mean, you can have deferred growth, other than some small taxable dividends, by buying great companies like Schering Plough, Cisco, American Express and CocaCola,Oh, & T.Rowe, and not pay a dime in taxes until you decide to sell them. Some, like Cisco, pay no dividends so there would be no taxes at all untill you decide to sell! The $$$ you save on expenses would more than make up for the taxes you would pay on the dividends that some of the companies charge. For example, lets make two hypothetical investments. We'll buy $100,000 of Cisco through Waterhouse's on-line web broker. Our commission would be $12. That's it. Of course, we'll also have to pay $12 each time we sell some of our shares.(I chose Cisco to simplify matters as they pay no dividends and therefore there would be no taxes until you sell your shares.You would then pay only 20% on your capital gains, if our omnicient leaders don't change the tax code again.) Now,lets put $100,000 in the T.Rowe variable annity. I don't believe there is any up front fee, but at the end of the year management is going to deduct 1.425% (we'll use an average of the high and low charges) off the top of the total $$$ managed. We'll just work with your $100,000, disregarding a probable increase in net asset value to keep the example simple. That means you paid them $1425 for the year. If you had an increase in net assets, which is highly probable as T.Rowe does a better than average job in the world of mutual funds, you also paid them 1.425% of your increase. This goes on year after year after year:-(Additionally, when you begin to withdraw your $$$, I believe you pay the ordinary income tax rate on your gains, for us, that will be 28% not the 20% we will pay on our long term cap gains earned on Cisco. (Please check this out. I believe this is right, but am not positive.) Do I still own my T.Rowe annuity? Yes.It makes up about 15% of our total portfolio. Have I been pleased with T.Rowe's service? Yes. Has it beaten the long term market averages of 11%? Yes. Has it beaten the recent, three year S&P500 averages? No. Why don't I sell it? I believe it's called inertia. All our other mutual funds were in accounts at Schwab which made it easy to convert them to Cash King companies. However, if the mkt were to experience a real melt down, and my favorite CKs were at super, bargain basement prices, I'd probably liquidate the annuity in a heartbeat. (Fortunately, or unfortunately;-), we're over 59 1/2)I really didn't mean to get so lenghty but it appeared that you were not getting much info, so I tried to give it all at once. If an annuity makes you feel comfortable, I can highly recommend T.Rowe Price. You ought to know, however, that I subsequently bought shares of T.Rowe Price. It's going to be fun to see which investment gives me the better return. I think I know;-) time will tell.GNGB3
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