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Annuity has gained NOTHING....help! (long)
Old 02-14-2015, 02:27 PM   #1
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Annuity has gained NOTHING....help! (long)

I have a variable annuity that is tied to 3 indices

S&P 500 Index
Russell 2000 Index
MSCI EAFE Index

Annuity has lost money since May 2014 (last checked balance a couple of days ago)

Could someone please help me figure out what the performance of these indices were from this time frame:

May 1, 2014 - Feb 12, 2015 (investment is split equally among all three)
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Old 02-14-2015, 03:26 PM   #2
Confused about dryer sheets
 
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Quote:
Originally Posted by tgc641 View Post
I have a variable annuity that is tied to 3 indices

S&P 500 Index
Russell 2000 Index
MSCI EAFE Index

Annuity has lost money since May 2014 (last checked balance a couple of days ago)

Could someone please help me figure out what the performance of these indices were from this time frame:

May 1, 2014 - Feb 12, 2015 (investment is split equally among all three)
Sorry for the drastic edit, English is not my 1st language and have trouble writing in a way as to be understood- i kno the orig post was terribly convoluted
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Old 02-14-2015, 03:40 PM   #3
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Usually annuities do not include re-invested dividends, but the seller gets to keep those

Without dividends reinvested:
11.4% S&P500
08.5% Russell 2000
-6.6% EAFE

One can use the Morningstar charts at morningstar.com and plot SPY, IWM, and EFA which are ETFs that follow those indexes.

If you want the returns with dividends reinvested, plot VFINX first.

Weighted average return would be about 4.4%.
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Old 02-14-2015, 03:58 PM   #4
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Usually annuities do not include re-invested dividends, but the seller gets to keep those

Without dividends reinvested:
11.4% S&P500
08.5% Russell 2000
-6.6% EAFE

One can use the Morningstar charts at morningstar.com and plot SPY, IWM, and EFA which are ETFs that follow those indexes.

If you want the returns with dividends reinvested, plot VFINX first.

Weighted average return would be about 4.4%.
Thanks for the calculations, wow...
If the weighted average return is around 4.4%, would the reason I'm not seeing that gain in my portfolio be because of fees? Do you know offhand how much on average a variable annuity will charge? I have an annuity with Metlife and cannot understand their prospectus.
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Old 02-14-2015, 04:17 PM   #5
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I can't answer your question, but let me say that your written English is excellent!
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Old 02-14-2015, 04:27 PM   #6
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Quote:
Originally Posted by LOL! View Post
Usually annuities do not include re-invested dividends, but the seller gets to keep those

Without dividends reinvested:
11.4% S&P500
08.5% Russell 2000
-6.6% EAFE

One can use the Morningstar charts at morningstar.com and plot SPY, IWM, and EFA which are ETFs that follow those indexes.

If you want the returns with dividends reinvested, plot VFINX first.

Weighted average return would be about 4.4%.
Ouch!!!!

Annuities don't keep dividends?!?!?

I sort of remember that these "guarantee" type variable annuities don't give you the dividends, but it just hits as a shock all over again.
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Old 02-14-2015, 05:44 PM   #7
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Are you SURE that you get the gain on these indexes Or the losses....

There might be some other language that says you get a percent or something else... also, they might only 'pay' once a year... there could be many reasons you do not see any gain...
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Old 02-14-2015, 06:55 PM   #8
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some annuities that track the markets... especially the ones that limit downside ... also limit up side. They have things like "participation rate" that give you some % of the gains. There are many other fine print items. Unfortunately I think we have no idea of what kind of annuity the OP really has.

Really need to read the fine print.
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Old 02-14-2015, 07:00 PM   #9
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One doesn't have to read the fine print as long as one doesn't buy such annuities.
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Old 02-14-2015, 07:09 PM   #10
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A few years ago a co worker asked my advice on a variable annuity that he was planning to purchase and after reading the material and the fine print the fees were around 3%. I advised him against buying it.

So you could very well be a victim of high fees.
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Old 02-14-2015, 09:03 PM   #11
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They should provide you an annual statement that shows returns, fees, etc. but it is not always easy to follow. Ask your agent and keep pressing until you get a straight answer, but it is probably fees eating up your returns.
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Old 02-14-2015, 10:25 PM   #12
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The other thing we might assume is that this is a foreign annuity since English is not his first language....

Not sure about now, but when I worked in the UK 15 years ago I was shocked how high bank and investment fees were compared to the US... and we have gone way down in our fees since then....
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Old 02-14-2015, 11:49 PM   #13
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I had an Ameriprise annuity that followed the market or offered a guaranteed 3% per year if in "cash". Sounds like a good deal these days, right? Not really . I discovered the reason that the balance was not increasing over the past couple years while in cash was because of fees equaling almost 3%. I was able to roll over to Vanguard IRA without penalty since I had owned the fund for many years.

If it sounds too good to be true, sadly it often is.

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Old 02-15-2015, 07:07 AM   #14
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They should provide you an annual statement that shows returns, fees, etc. but it is not always easy to follow. Ask your agent and keep pressing until you get a straight answer, but it is probably fees eating up your returns.
I just looked at my Fidelity annuity annual statement... nothing about fees. Note this was a replacement for a hartford annuity that I was sold in the late 80's. But fidelity will try to sell annuities to "guarantee" some of your retirement income. I have not bought into that and really don't get offered that anymore.
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Old 02-15-2015, 01:17 PM   #15
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Not just management fees, but also insurance costs I would assume. So you should get something additional for letting them skim your market gains off the top.
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Old 02-15-2015, 04:42 PM   #16
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I invested some money that was in my mother's trust for the benefit of my Dad in an annuity. He was the annuitant. The trust was the beneficiary. Not that it matters but the reason I did this was because any gains were deemed "growth" and not "income and I didn't have to pay it out as income every year, there was a 5% guarantee that added to the basis and a guaranteed death benefit that included all those amounts. Did this because the trust was in need of generating income to pay what I knew would be it's proportionate share of estate taxes at my Dad's passing.

Try as I might, I could never get the returns for the underlying investments. Not ever. The broker told me the "underlying" mutual funds did not have to disclose that info to them and they didn't have the information. I don't know whether that was/is true or not but that is what I was told…repeatedly. Like a hidden veil….
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Old 02-15-2015, 05:33 PM   #17
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Sounds like BS to me. Where I used to work the partners had a VL product and each subaccount (underlying fund) had a prospectus similar to a mutual fund. A VA would not be any different. I believe that the SEC requires them.
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Old 02-15-2015, 05:40 PM   #18
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I thought so too pb4uski..which is why I kept trying. Other family members made the same inquiries with the same results.
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Old 02-15-2015, 05:51 PM   #19
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Have you tried googling the names of the subaccounts? Or the website of the annuity provider? Or calling the annuity provider?

It has to be BS. As I recall you can't sell equities to the public without going through the SEC and VA subaccounts are equities. Tell the broker that you plan to complain to the SEC and I suspect that the materials might magically appear.

Below is an example of what Prudential provides on their website relating to their annuities.

http://www.prudential.com/view/page/public/12669
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Old 02-15-2015, 08:09 PM   #20
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pb4uski ..Thank you for the thought of doing that. It's a non-event now. My Dad passed and the annuity paid out the death benefit several years ago.

It wasn't invested long, had a 23.5% gain. Of course the trust had to pay taxes on it.

Just could not get the detail information about the sub accounts. Didn't try past the broker.
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