Annuities

[Nords]

Quote:

The insurance company that is paying you could go belly up.

Not with the commissions he's paid them!

They probably threw one heckuva party, too... reminds me of 1980s Prudential-Bache. But maybe that's not such a good example-- is it?

[Tony2002]

:NFS - I am sorry, you just don't "get it" the inflation protection I put in place!

I don't have the money all in one company. I am in Companies with A+ ratings. Insurance Companies are very safe do you due dilligence and check the record!

Any or all of the Investments You are in and drawing 4% Can go belly up also. Plus you have a great deal of market risk.

I have no market risk. Well only on $75,000 I am trading and on $150, 000 Equity Annuity (Only on future interest not my investment plus the interest paid to me).

Come bak in 30 Years and will see if you have any assets left to generate income for you or if the actual Dollars you receive are higher or lower than when you first started.

Remember what all advisors say and those commericals and adds say!

"Past investment performace does not guarantee future results"

This means that you have no idea what your future returs will be and they can also be losses.

You have 3 variables that you do not know at this point in time:

1. Your future rate of return
2. The future inflation rate
3: If you will be disaplined enough to only take 4% per year from your assets.


I only have one variable. The future inflation rate.

I know that my montly payment can not go lower than $5,475.42 per month or $65,705.04 per year. I know that in 14 months I will start to receive about $1,200 per month of social security that will incease each year.

I also have certainty of rate for $250,000 of my $550,000 because i locked in rates for 10 year & 6 years.

1 variable is easier to plan for that 3 variables. This is common sense!

In 30 Years I will be 90 and I don't think I will be out and about spending money like I am now. Plus I have set up inflation contingencies and it is a very sound strategy.


You still don't understand how I am protecting myself on inflation. No one person has looked at my whole picture disputed my inflation protection.

I will Repeat!

You are not understanding how I am protecting against inflation. Key, if you make up the monthly payment shortage caused by inflation buy purchasing new immediate annuities at an older ages, your shorter life span creates larger montly payments (high that the 7.3885% cash flow on each new immediate annuity. I would buy a new immediate annuity every 5 years or when I feel that my money isn't buying what I expct it to buy. Check it all out for yourselves www.jdsfinancialsolutions.com it works.

If you read my 1st two posts they completely explain what I did. Every base is covered including inflation.

I have $550,000 remaining after I purchased the immediate annuity. This is the amount that I invest to protect my fixed payments from inflation.
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My cost for the immediate annuities which I bought in May of 2004. Well I payed $889,287.49 and receive $5,475.42 per month or $65,705.04 per year for the remainder of my life. $2,146.00 per month or $26,832.00 per year is Tax Free.

That is a cash flow rate of 7.3885% ($65,705.04/$889,287.49).
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$75,000 I keep in a money market account ING Direct

What did I invest my reaming portfolio of $475,000 in? All but $75,000 in Deferred Fixed Annuities.

I put $150,000 in a fixed annuity with a 10 year interest rate guarantee of 5.15%.

I put $100,000 in a fixed annuity with a 6 year interest rate guarantee of 4.20%

I put $150,000 in an equity index annuity. This is more long term 10 to 15 years. This gives an opportunity to earn higher interest rates than regular fixed annuities without risking your initial investment amount plus interest earned. This is NOT a variable annuity, I think variable annuities are expensive with the fees. Variable annuities are like a mutual funds, your initial investment can lose value. They have some guarantees against loss, but I just don't like them.

With these 3 annuities I am very well protected against inflation.

What am I doing with the last $75,000? This is my play money. I do some swing trading. Buy 3 or 4 stocks and hold them for 3 weeks to 6 months. If I am good at it, this $75,000 will grow nicely over time and will also provide additional inflation protection. If I suck at this, I will lose the $75,000 and I will never do this again. To this point, my $75,000 has grown to about $125,000. Can I be successful over several years? I don't yet know the answer to that. That is why I call this play money!

The point is that you can invest the $550,000 any way you want, I chose to do the above.


*****
What you don't get is that it will be 5 years before I convert some of the $550,000 plus growth into an additional immediate annuity to provide me the bump up in monthy payment to offset inflation. I will also be 5 years older so montly payments will be higher per dollar invested. I will only use a small portion of my portfolio to get the increase in monly payment that I will need. I will do this every 5 years.

The cash flow rate will be higher than the 7.3885% I currently receive and will be higher in each subsequent 5 year period.

Tony

[laurence]

And how much principle will you have at the end of ten years?

I'm so glad you are here to enlighten us, Plato! I repeat: you paid a premium to mitigate some risk, your choice, not mine. This board is full of rather independent people who are happy to manage their own money, I don't think you'll find many takers here.

[MRGALT2U]

Annuities? We don't need no stiiiiiiiinking annuities.

JG

[malakito]

Quote:

I guess you people don't read very well!

Insulting the people you are trying to convince isn't very polite, and, on this board in particular, not very effective.

Also, repeating yourself isn't very useful either. *We can all go back and read your earlier posts if we didn't get it the first time.

malakito

[nfs]

Quote:

I am sorry, you just don't "get it" the inflation protection I put in place!

I am sorry that you don't understand that I have read all you have written. I understand exactly what inflation protection you have in place. Let me spell it out for you. You have none whatsoever until the first deferred annuity comes to term. You have none whatsoever after the last deferred annuity comes to term. In between, you have some.

Quote:

I don't have the money all in one company. I am in Companies with A+ ratings. Insurance Companies are very safe do you due dilligence and check the record!

Try googling for Executive Life, Tony.

Quote:

Any or all of the Investments You are in and drawing 4% Can go belly up also.

Yes, they can. So?

Quote:

Plus you have a great deal of market risk.

Yes, I do. I have some unfortunate news for you, though. That insurance company that's promised to pay you - they're paying you by taking market risk on your behalf. You have market risk too. That it's by proxy doesn't eliminate it. They have reduced the risk to you, partly by confiscating 1/4-1/3 of your nest egg.

Quote:

Come bak in 30 Years and will see if you have any assets left to generate income for you or if the actual Dollars you receive are higher or lower than when you first started.

30 years from now, SWR users who start with your level of assets are very likely to be pulling $120-150k a year out of their portfolios. You'll be lucky to be getting $100k a year. SWR users' portfolios are very likely to be worth $3-5MM in 30 years. You will have nothing but a smaller monthly cheque.

Quote:

endless repetition of "You don't understand" omitted

Tony, don't presume that I'm an idiot. I used to have a license to sell such things. I understand the products better than you, know exactly what I was supposed to say in order to sell products like this, and never sold it to anyone. Why? Because I don't have a poker face and I knew that, for the 95+% of the population that isn't pathologically afraid of financial risk, annuities make no economic sense.

[brewer12345]

Quote:

Not with the commissions he's paid them! * They probably threw one heckuva party, too... reminds me of 1980s Prudential-Bache. *But maybe that's not such a good example-- is it?

Unfortunately, the commissions go to the agent, not the insurance company. Tony still paid them, though.

[cute fuzzy bunny]

Sorry Tone old boy, we figured out you're a salesman just about from the get-go.

But its a cheap way to maybe net yourself a client or two...couple of minutes cutting and pasting a few bits of boilerplate into a message board.

Let me help you out a little. I have a tiny smidgeon of experience in sales and marketing. I think I took a class once back in the 80's.

Some buyers take to the "as-seen-on-tv, look how great this thing is and how it'll change your life" drive-by shooting attempts such as this. If they're average to below average intelligence buyers of $39 juice machines, smart choppers, sometimes even automobiles!

For a slightly more sophisticated, intelligent and independent crowd like this, I think you need to develop a little bit of a relationship first. Make a few posts about your fictitious retirement. Tell us about your fake home and family. Give us a few jokes about kayaks. Regale us with tales of how small you've torn up your dryer sheets.

THEN in a subtle way bring up your little pitch about annuities. A little at a time. Give us enough to make us want to hear more and start asking questions, which you of course somewhat grudgingly part with.

Its a dance, baby. Banging them on the head with a club and dragging them home by the hair doesnt work when you get past Chevys.

Making your first, or one of your first posts a double-pager on how great annuities is in half the sub-forums on a board (a universal no-no by the way), along with a link to your company, and then insulting the intelligence of every dissenter to your information is simply going to result in a razzing.

I've made a note of the name of the company you provided, along with their owner...a broadbased veneer thin marketing outfit (emerald publications, who sells books, guest speakers and pep-talks to a wide range of markets)...and will try my best to not do business with them in the future.

Have a nice day!

(PS...I didnt even have to put on my badge for that one...)

(PPS...any connection between Tony2002 and Hocus2004?)

[hocus]

Thanks for bninging a fresh perspective on investing to the board, Tony2002. We need a lot more of that sort of thing, in my view.

I have gained a certain amount of fame at Retire Early boards in the past three years for having put forward a fresh perspective on the SWR question. There are a number of community members who have fought an extremely hard fight to block community members from being able to participate in reasoned discussion as to what the historical data really says. I hope in coming months to be able to bring some new voices to the board and open up the discussion a bit.

I hope that those new people will open up discussions of the sort that you have tried to bring to the table as well. It is by hearing new ideas that we learn, and the learning experience that these boards can provide is what gives them their life. I hope you hang in there without stooping to the sorts of tactics engaged in by those trying to shut you down.

Please don't be fooled into thinking that a few loudmouths are representative of the board community as a whole. Most people love to hear new ideas. Most people love to learn. There are a few who have gotten the idea into their heads that because they have put up X number of posts, they own the place. I disagree. And I know from the reaction that I have received to my SWR stuff that I am not the only one.

[yakers]

Oh, Oh. ***** endorsed Tony2002, kiss of death....Wish I had thought of such an effective approach to Tony.

[hocus]

UncleMick has expressed an openness to hearing what Tony2002 has to say too, yakers.

http://www.nofeeboards.com/boards/viewtopic.php?t=3555

UncleMick: "A new cat, Tony2002, is getting the usual treatment over at Dory36's forum for doing something outside the box."

If someone tries to shut you down, I will put up a post favoring your right too to make a contribution without Self-Appointed Town Sheriff TH throwing you in the clink for it, yakers.

[Tony2002]

: :laurencewill - The annuity that I bought with $150,000 with a rate guarantee of 5.15% is guaranteed to grow to $247,847 at end of 10 years.

The annuity that I bought with $100,000 with a rate guarantee of 4.20% is guaranteed to grow to $127,999 at end of 6 years.

I knew both these amounts before I buy the annuity.


malakito - Sorry, I used the wrong choice of words. The people who criticize how I am doing the inflation protection, just don't understand and still don't. Its like they have an agenda to trash any creative concepts that don't use this 4% SWR.

They also failed to acknowledge that the SWR that was talked about in year 1997 to 2000 was in the 6% to 7% range and all were representing that this would hold up. Fact: 6% to 7% did NOT hold up. I just don't believe how they can rewrite history? By saying that it was 4% all along! Please!!!!!!! I did read some to be fair who said SWR should be 5% (Very Few at that time) and they were trashed by people who said it should be 6% to 7%.

Now, heaven behold they claim a SWR of 4%. In 10 years they will claim that is should be 3% or 2% even.

Please STOP with this almighty 4% SWR claim. It's nonsense!



NTF - I am not going to argue with you. You have your opinion and I have mine. I think you never were able to sell such thing because you did not understand what they do, how they work and how they benefit people. I am using them and they work very well for me. One part the joint life policy in a trust is completely paid off now. It work just as proposed to me.

I am not in this business, never have been.

It sounds to me that the guy's posting on this board are investment guy's who charge annual fees that grow based on value of accounts for their advise. If they advise people to buy an immediate annuity with 40 to 60% of that value, their fees go down by 40% to 60% when they do this.

They will never tell their people to buy immediate annuities for that reason.

NTF - sound like you this type of guy, even th could be this guy.


Tony

[unclemick]

Ah yes - I'm with ***** on this one.(maybe the kiss of death?? heh, heh).

Being blockheaded, I'd like to see some numbers.

I expect to see something as odious as Bogle's comparison of index funds vs managed funds in the 1-3% expense range(including the semi invisible turnover rate).

Thus probably not the cup of tea for 'most ER's' who got there thru self education.

The people who bought annuities in the 70's, 80's and early 90's probably don't post here.

I took a look at Vanguard variable annuities in the early 90's and passed.

Tony2002's numbers fall short of the rigor(numberwise) that I'd like to see.

Again - "show me the money". Who gets what and when? And how much am I paying for my 'guarantee'?

His referenced site is a sales site. Where are the academic studies of relavence?

[cute fuzzy bunny]

Quote:

Now, heaven behold they claim a SWR of 4%. In 10 years they will claim that is should be 3% or 2% even. Please STOP with this almighty 4% SWR claim. It's nonsense!

Wow does this sound familiar...

[hocus]

Please STOP with this almighty 4% SWR claim. It's nonsense! *

I know next to nothing about annuities, Tony2002. So I do not expect that I will be able to contribute much in the way of substance re that one.

I think it is fair to say that I am indeed a bit of an expert on the SWR topic, however. I am the founder of the SWR Research Group board, at NoFeeBoards.com. A poster named JWR1945 has been working full-time studying the historical data for close to three years now and his research shows that what you say above is absolutely true--claims that the SWR for a high S&P portfolio is today 4 percent are complete nonsense.

If you don't trust discussion board posters for your information on SWRs, please check out William Bernstein's book "The Four Pillars of Investing." Bernstein describes the REHP study and other conventional methodology SWR studies as "highly misleading" at times of high valuation, like those we are going through today. Bernstein calculated the SWR for a high-stock portfolio at the top of the recent bubble at 2 percent. JWR1945 reports that the SWR for an 80 percent S&P portfolio is now up to about 2.4 percent.

[laurence]

Tony, have you played with FIREcalc?

[unclemick]

SWR 3.1% for old unclemick(balanced index plus 25% portfolio boost from REIT index and dividend stocks) - not as good as psst - Wellesley, but I'm working on it.

Again since Vanguard sells low cost fixed annuities:

So who is the 'poster child customer'?

I suspect it's not an ER. So who is it?

[nfs]

Quote:

They also failed to acknowledge that the SWR that was talked about in year 1997 to 2000 was in the 6% to 7% range and all were representing that this would hold up. Fact: 6% to 7% did NOT hold up.

FACT: The 4% comes from the Trinity study, published in February 1998.

Quote:

NTF - I am not going to argue with you. You have your opinion and I have mine. I think you never were able to sell such thing because you did not understand what they do, how they work and how they benefit people.

You think what you like. I assure you that I do understand what they do, how they work, and how they can benefit some people.

Quote:

It sounds to me that the guy's posting on this board are investment guy's who charge annual fees that grow based on value of accounts for their advise. If they advise people to buy an immediate annuity with 40 to 60% of that value, their fees go down by 40% to 60% when they do this.

It could be, you know. Skepticism is a wonderful thing. For example, I am an "investment guy" and it could just be that I'm trolling for business myself. OTOH, you might find that hard to reconcile with (a) my being in a different country, (b) my not charging a percentage of assets, (c) my standing advice here and elsewhere to pay off home mortgages in preference to most taxable investments, and perhaps even (d) my not splattering a url all over hell's half acre.

But you just carry right on. Your style - pasting in the same lengthy details half a dozen times in the same thread - has almost certainly alienated almost every reader. If you really are new here, you deserve to be told that *****' endorsement will lead to almost certain discounting of your story.

A wee piece of advice to follow on to TH's. The only way to save yourself at this point is to provide some real value. I encourage you to go back to unclemick's question above and really try to answer him. You passed it over with a link to a lame website when, according to you, you have all these facts at your disposal and we - in particular, I, who used to be licensed to sell - just don't understand.

Help us understand, Tony. Answer unclemick's question.

[brewer12345]

Quote:

Again since Vanguard sells low cost fixed annuities: So who is the 'poster child customer'? I suspect it's not an ER. So who is it?

The typical buyer of fixed annuities is around 65, has modest net worth (not the kind of dough most FIREees would want to stop working), and expects to mostly get retirement income from SS and maybe a pension. And very few are buying from Vanguard, since V doesn't have an army of reps out there trying hard to sell the product. In the current low rate environment, equity indexed annuities (another scam, don't get me started) are gaining popularity among these customers.

[Tony2002]

:th - There you go again!

Selectivly pulling out one comment and picking it apart.

Why don't you comment on the this so called SWR rate (Or whatever it was called then) that was takled about form 1997 to 2000. Put the statement you selectivily pulled out in context!

Try agin:

The people who criticize how I am doing the inflation protection, just don't understand and still don't. Its like they have an agenda to trash any creative concepts that don't use this 4% SWR.

They also failed to acknowledge that the SWR that was talked about in year 1997 to 2000 was in the 6% to 7% range and all were representing that this would hold up. Fact: 6% to 7% did NOT hold up. I just don't believe how they can rewrite history? By saying that it was 4% all along! Please!!!!!!! I did read some to be fair who said SWR should be 5% (Very Few at that time) and they were trashed by people who said it should be 6% to 7%.

Now, heaven behold they claim a SWR of 4%. In 10 years they will claim that is should be 3% or 2% even.

Please STOP with this almighty 4% SWR claim. It's doesn't work because they change are alway's changing the numbers so that you do not run out of assets!

Was anybody around in 1997 to 2000 who can back me up here!

Or are you all new to this: Last 3 years!

Tony