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Author: ResN Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76074  
Subject: Re: Yield in low interest rate environment Date: 7/14/2013 5:04 PM
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My parents (aged 80) recently sold farm land and netted about $500k. They are risk averse sort of investors and are asking me where they can find safe opportunities that will beat bank cd rates. I had advised them in the past on a couple different annuities, we're they're getting between 4-5% annual returns. Any suggestions on current vehicles that can get them those sort of returns? Thanks for any suggestions!

Just so you know, you aren't getting a 4-5% annual return on these annuities. You're getting a payout of 4-5%, which includes principal, which by the way would no longer belong to your parents. The insurance company gets the principal, and your parents get a payout based on 4-5% of the original amount less fees, commissions, and a mortality premium, plus their money vanishes at death. Be sure to know what they are investing in, and make sure it's what they really want. As for what they can do with the money, there aren't a lot of choices at the minimal risk end of the investing curve. Bonds or bond funds. I would keep everything on the short end of duration, due to the risk of higher rates ahead. Good luck.
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