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URL:  https://boards.fool.com/100k-investment-paying-500-a-month-equals-6000-31213756.aspx

Subject:  Re: Hybrid/Other Annuities Date:  4/17/2014  4:58 PM
Author:  tjberko Number:  35254 of 36649

$100k investment paying $500 a month equals $6000 a year ~ 6%.
Such an investment is not designed to pay back principle, just like a CD is not designed to pay back principle.


Certainly a CD gives you your principal back. I don't understand why you say it is not designed to give you your principal back. With an annuity, if he dies in one year, his estate will lose $94,000 in value. That is hardly like a CD. At $6,000 per year, it will take over 16 years before he starts earning anything. Earning nothing for 16 years and then earning 6% after that is not the same as earning 6%.

There are a few (AAA rated insurance companies). I don't know why you trust them less than PSA considering the fact that most insurance policies have state guarantees up to $300,000 against default. PSA has no such protection. Even AIG, which basically went bankrupt, did not default on a single policy.

When I was growing up in Michigan, one small local corrupt insurance company wiped out the state insurance fund. They are wholly inadequate for a systemic meltdown, let alone 1 large insurance company going under. AIG was too big to fail, and was bailed out by the U.S. government. No state could have bailed them out. A huge annuity writer, Hartford, was literally bankrupt in 2009, but was not taken over. They were ignored and only through the good luck of a soaring stock market were they bailed out. PSA has no debt and is in a business that is steady in good times and bad. Just my opinion.
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