No. of Recommendations: 0
downisland: "My brother just bought a variable Annuity. The broker claims it has a 7% living guaranty which insures the annuity will grow at 7% per year regardless of how his mutual funds perform inside the annuity."

I doubt it. Broker should be able to show the provision of the VA that issues this guaranty; my best guess, there is a short guarantee period.

Also a quarterly ratchet feature that locks in the performance of his mutual funds- he can use it to lock-in to determine his income stream.

I told my brother about a recent Kenneth Fisher article which said the only people who make money on annuities are the insurance companies issuing them. My brother claims that only applies to equity index annuities and that his is a variable annuity."

Not correct.

"Ken Fisher pointed out that profits from annuitites are taxed as ordinary income instead of the 15% tax on capital gains and dividends. My brother claims he paid no fees for this product. It sounds too good to be true."

He paid, one way or another.

"He must leave it for 10 years but they guarantee a minimum of 7% a year."

What is he getting racked for fees and expenses during those 10 years?

Here is a recent thread briefly discussing VA. post 47754 on Ret. Inv. board

Most of the older discussions about VAs are on the insurance board.

Regards, JAFO
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.