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<Do you really think annuities are lousy when compared head to head with a mutual fund within an IRA?

I have a variable annuity through my 403(b) plan which invests in stocks much like a fund. >

I think that variable annuities are lousy. There is no reason to have one inside an IRA, since that keeps you from using the IRA funds for something more productive, and if you insist on having a variable annuity anyway, you get all the tax advantages (except the initial deductability) by having it outside your IRA.

I had a variable annuity for 20 years or so that I cashed out after running the numbers. I put about $30,000 in and got about $50,000 out. This gives an annualized rate of return of about 2.6%. You can do better with a certificate of deposit. Of course, I got unneeded (I have no dependents) life insurance with it, but if I needed life insurance, I could have obtained term insurance cheaper.
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