UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next
Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75531  
Subject: Re: Are there alternatives to variable annuities Date: 4/22/1998 8:36 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Greetings, Amablaza, and welcome.

<<Does anyone know of an "umbrella" investment vehicle that:
(1) will accept a lump sum contribution all at once;
(2) will accommodate self-directed stock portfolios;
(3) can keep its annual fees and charges to 1.5% or less;
(4) is targetted for accumulating retirement funds; and
(5) will receive tax-deferred treatment on its earnings?

I have ruled out variable annuities due to their high fees. I have also been told that variable annuity monies can only be invested in mutual funds. Is this true?>>

I'm glad you clarified the source of the lump sum in your second post. If you hadn't, we may have thought you were speaking of a retirement plan cash out.

The monies you are receiving as an inheritance can be put to work for you in a tax deferred vehicle fully in a variable annuity, partially in an IRA or fully in tax-exempt municipal bonds issued by your state. You've ruled out variable annuities (good for you), and they can't be invested in self-directed stock trades anyway. Because that's your desire (i.e., trading in stocks), that also eliminates the municipal bonds, which would tend to significantly lag the after-tax performance of stocks over the long term.

That leaves you but one choice with two vehicles: Put $2K in an IRA (I'd suggest a Roth) and the remainder in a taxable account with the discount broker of your choice. Each year, move $2K of the taxable account to the IRA. The discounter will keep your annual expenses low and allow you maximum freedom for stock trades. The IRA will allow tax deferral on at least part of the money plus (if you use a Roth) ultimate tax-free withdrawals. If the taxable account is kept in stocks, you also gain the lower capital gains rate on most of your earnings.

Regards….Pixy
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! 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.
Advertisement