I'm considering looking into annuities. I have heard that there are annuities that pay guarantees of 10% or greater annual interest payments. This sounds pretty good to me in light of the turmoil in the markets. What are some of the particulars (minimums, etc.) and specific type of annuities that some of you FTimers have? Looking for direction.
I have a sweet tender nature, however I enjoy sharing my thoughts and opinions.
Fulltiming RVer & homeowner.
Man! I'd sure be scared of ANY investment vehicle that would guarantee any particular rate of return. Usually if it sounds too good to be true, it is. Your money, though. Actually, right now is a good time to be buying into the stock market. The mantra is buy low, sell high. Look at all those idiots who have been and still are selling low after they bought high.
Personally and with experience in the field, I avoid them for the most part.
They pay very high commissions, they are very high profit investment vehicles. Generally the Annuities with high returns or guaranteed returns are invested in the market and there are guarantees on them, assuming the company makes it to pay and generally the # they quote is higher than the actual guarantee. Generally around 4-6% yet they'll quotes a 20 year return as an expected return. Many of these investment vehicles are sold through big companies, but the actual investment is placed in a shell company. Similar to how insurance companies in Florida and other high risk areas work. Sure its State Farm but the company is a Florida only company so if they go belly up they are on their own. Similar case with high risk investment companies. Trust me, 10% guaranteed returns are high risk. That is a high expected return on high risk investments over the course of 20 years much less in an annuity.
My only suggestion to you is to avoid them, if you want to go that route then make sure you know what you are buying and bring your HP-12c and figure out your discount rate and what the time value of that money is. If you don't understand that or don't know what it means then stay the hell away from this type of product unless you don't mind getting screwed.
This is a buyer beware market, make sure you read the fine print and re-read the fine print.
Its sad when an investor puts up good money and the agent that sells it makes a solid 6-10% off the top. Yes the commissions are that high on many of the products, especially the more exotic ones that offer high returns.
There are better options, don't get suckered into locking money away for long periods of time when interest rates are the lowest in decades. With all the government spending inflation is around the corner soon enough. Unless you are on your death bed (it doesn't matter much if your time horizon is under ten years) don't rush into anything.
Aridon -- Thanks for the input! They are not sounding so good if 4% to 6% is all they are capable of returning. I want to understand why so many people swear by them then?
I don't think you are going to find any reputable company offering annuities any where close to a 10% return.
If you insist on an annutity. Do your research. Then do some more.
There are all types of annuities. Fixed rate, which may be the safest but offer the lowest rate of return, varible rate, which depend on the stock market (very risky), etc.
Many insurance companies as well as financial services companies sell annuities . Some annutities are guaranteed for life, but remember that is as long as the issuing company is solvant. But nothing is for sure in today's economic climate.
It's really like anything else. BE CAREFUL and research what you are getting into. In todays market a 6% return isn't so bad. Alot also depends on your investment timeline. Close to retirement, a long way to go, currently in retirement.....etc
I have some $ in an annuity (large, long-time insuracne company) that pays 6%. Return is pegged on the amount you invest and then adjusted annually.
If the market it down the 6% is paid on less dollars the next year and if the market is up then it is on higher dollars. Adjusted annually. Must leave dollars in for 4 years. There is a graduated penalty for early withdrawl...something like 7% the first year, 6% years 2 and 3, and 4% the fourth year.
In todays volatile markets they are not bad investments for a percentage of your portfolio just not all that good when the market does turn around, if you have your money tied up in annuities. No I don't sell them, I do a little investing (for retirement) and a lot of research.
The fees paid (generally 3 to 4%, which are high as far as investig fees go) are paid from the entire fund and not just your investment.
3% of the funds a broker has invested will not equal 3% of your funds alone (unless you are the only funds the broker has invested with a particular annuity).
Brokers generally charge a fee for manageing your account but waive this fee for any dollars in an annuity (as the annuity pays them). Be very very leery of a broker that doesn't discount standard fees for dollars invested in annuities (in-fact running the other way comes to mind).
Good luck with whatever you decide.
* This post was
edited 02/15/09 04:51pm by LetsRV *
We are all good at something.....
I just happen to be a good bad example.
Just remember...annuties are sold not purchased. There are more hidden traps in them than you can imagine. Doubt that the salesman will tell you. Talk to a few folks that bought them in the past. A real tale of horror. Only if you are unwilling or unable to manage your own affairs, I'd stay way clear.
I don't know about annuities but just today I heard one financial guru on the radio advise NOT to get into the market at this time (I had already pulled out years ago). Right now I receive just under 3% in a money market account and although that's not much the money is relatively safe and that return, plus my retirement, is sufficient for me to get by without having to dip into the principle. That's one of the benefits of fulltiming...you have some control over your expenses.
Mr. Ed (fulltiming since 1987)
2007 Hitchhiker II LS Model 29.5 LKTG
2007 Dodge Ram 3500/6.7 CTD/QC/4X4/SB/SRW/6-speed man/Big Horn edition
Many full time RV's think that one day you retire, sell the stick house,buy the 45 footer,put the car on behind, put a dish on top the RV for PC and TV, let some sales person who send you a flyer sell you a annuities, or something like that, kiss the kids good by, drive to Yellowstone Park and then on the Az. or Fl. for the winter, and the money keeps coming in. Hello
2005 Chev 5.3 Supercharged 395HP 425 T hp. Two wheels on front, 2 on back. one seat, tint windows. front and rear bumpers, headlights, windows. Door on each side. Heater, floor mats, junk behind seats, some dirt. Pulls so hard.
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