UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next
Author: op456op Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76421  
Subject: Re: Yield in low interest rate environment Date: 7/14/2013 5:10 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 3
I agree annuities are a poor investment. Money Magazine August issue has an article on the changes going on in annuity products, in particular, variable annuities. Any guarantee is always dependent upon the company being able to pay what is promised. Now they're all changing the rules limiting what people can invest in. Plus, they'll usually push their Class A funds which generally have 5% front load fees. That's a $25,000 commission on a $500,000 investment. It will take a lot to overcome that, if at all possible.

snips:

Over the past 18 months, most of the insurers that sell these products have seriously scaled back guarantees offered on new contracts while
hiking fees and restricting investment allocations on both new and existing policies. Seven major firms, including AXA, John Hancock, and
Prudential, have limited or prohibited additional investments in some of their older, more generous contracts.

While each insurer is tweaking its terms differently, there are a few common threads: limited investment freedom, tightened minimum return and income guarantees, and higher fees.

If you have a VA or were thinking of buying one, you're probably wondering where all this leaves you. For owners, the answer depends on your contract, your account value, and the changes to your terms. For income shoppers [your parents], it ultimately comes down to what risks you can accept though there are cheaper, simpler, and more profitable ways to ensure that you won't outlive your money.


Fixed Income annuities run the risk of once a person(s) dies, the insurance company keeps any remaining balance. At age 80 that seems like a high risk to lose a lot of capital. CD's would be safer, laddering them can help increase/maintain yield as interest rates rise.

Or sensible EFT's (as mentioned), I like Vanguard for their no commission on Vanguard ETF's. VTI, VIG, VYM & VOO might be good choices. They'll be some overlap of holdings between the ETF's.

I couldn't find the Money article on online (you might want to get the mag) but here is a site that offers some good information. It's always the fees that (and there are many - mostly hidden) limit your return. Just read one of their annuity compensation disclosures.

http://www.understandannuities.com/pros-and-cons-of-annuitie...
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
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.
Post of the Day:
Macro Economics

Looking at Currency Ratios
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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