No. of Recommendations: 1
If you buy individual stocks & hold on to them, you'll only have to pay tax on the dividends (if any). You won't have to pay tax on stock price appreciation until you sell. This kind of tax deferral could even be better than an annuity because you have more flexibilty about where to invest, you don't have to wait until you're 59.5 to withdraw, and the capital gains tax rate is noticeably lower than the income tax rate that annuity gains are taxed at.

There are some mutual funds that try to follow this principle: look for funds with "tax-managed" in their name. Vanguard has a few (large minimum investment; fee for selling your shares too sono).
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