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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76419  
Subject: Re: Annuities Date: 2/14/2005 7:07 PM
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>> I am not sure what an annuity is or why it is beneficial to have one. When I did a (very quick) Internet search, I came up with a bunch of companies trying to sell annuities (mainly Insurance companies). Where can I find some information? or is anyone willing to explain it to me? <<

Short answer: Back away and sign *nothing* if someone is trying to sell you one. The harder they push it, the more strenuously you should back away from the pen.

Longer answer: There are different types of annuities. Some require regular contribution to pay out monthly payments at some point in the future. Some require one lump sum payment in exchange for a lifetime income stream, either starting immediately or years from now. Some require putting in a lump sum now and taking out a lump sum in the future.

Et cetera.

Annuities are sold to a lot of people for whom they make no sense. They often carry large loads and commissions. For that reason it's a good idea to be wary of them.

Having said that, the right annuity, for the right situation, not sold with a huge load, can be a good idea for a few people. Depending on how much money we're talking about, finding a good fee-only financial planner to crunch the numbers with might be a good idea. I think annuities are a bad idea for *most* of the people being sold them, but there *are* circumstances when they make sense. Hopefully a good financial planner who has no vested interest in selling an annuity could look at your *specific* situation and help steer you.

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