Allianz High Five

[earlyout]

For general discussion of the pro's and cons for this "investment"

Guarantees 100% of investment, invests in mutual funds, you can lock in gain at any time (up to 4 times a year), then after 5 year waiting period from the time of initial investment or lock in value (wjichever is later) you can get 100% of investment out. Supposedly no downside risk and get upside potential.

I can see a number of short comings, thought others might have some insights as well. Anybody else aware of this? Any comments?

Never heard of it. Sounds funky to me, based on
limited info provided.

John Galt

[fire5soon]

Any 'investment' which promises high returns with no risk is a scam. The only guaranteed profit is to the advisor selling this to you.

I'd stay away.

-Jay

[unclemick]

Steve Sigurude(<spelling??) - one of guys going to make me rich - IF I bought his newsletter( I still get a lot of mailbox stuff).

Poke into the nuts and bolt's of they plan to do it. Usually involves buying fixed income instruments and options on stocks.

[ats5g]

USAllianz High Five Variable Annuity

I see a number of short comings as well.

First, the M&E fees are 1.40-1.60%. Then on top of that, add on the underlying mutual fund expenses (most of which include unnecessary 12b-1 fees). The cheapest total expense looks like around 2.00%. yikes!!

Second, b/c this is a variable annuity, tax treatment of gains is different for taxable accounts. If you invest any of the VA in equities, all of those gains will be taxed at ordinary income rates vs. lower capital gains tax rates. Not to mention the inability to take capital gains losses disappears once you put money into a VA.

Third, I believe that insurance contracts like these have minimum distribution ages, like 85 or so.

Fourth, surrender charges going out to 7 years (I think ?). What if you decide that you need the money before this? You may find out that not only will the principle guarantee not kick in, but you'll also be paying surrender charges.

Fifth, the guarantees are only as good as the quality of the insurer. Have you checked their ratings?

Sixth, can you actually calculate the GAV on your own? Looks pretty confusing.

So, while the downside is only as good as the insurer, the upside is only as good as:

Return - minimum of 2.00% - minus ordinary income taxes - inflation.

I think there is a good chance (especially if future equity and bond returns are low) that a negative real return will insue.

See what the NASD and SEC have to say on VA's.

- Alec

[mickeyd]

Hey earlyout,

This sounds more like an "indexed Annuity" than a variable annuity but I do not have any direct knowledge on the "High 5" annuity. A VA can not "guarantee" anything nor can it indicate "no downside risk". Security products can never be guaranteed and they always have downside risk. An indexed annuity can promise all kinds of things as these salesmen are not "Series 6 NASD" qualified.

I suggest that if you are going to give them some of your hard-earned $, that you become an expert in this annuity. What I mean by expert is that you should know more about the product that either the sales person or that person's manager. After all, they are not investing in it, you are!

Most annuities are a wonderful vehicle for agent/rep/manager/insurance company to get rich on your behalf.

[Zipper]

Somewhere near San Antonio TX? 8)The Zippers are at 43N 81W. I'll trade you your winter for our summer!

[mickeyd]

Zipper...

No thanks I like it hot 365/366