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Old 04-03-2014, 06:30 AM   #61
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I also bought a couple of deferred annuities last year, with a 12% payout if / when I reach 62.
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All these low rates on fixed income and fears of falling bond prices make my TIAA-CREF Traditional deferred annuity look better and better. Right now contributions to it get 4.726% and the guaranteed minimum rate is 3%.
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Old 04-03-2014, 06:45 AM   #62
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I also bought a couple of deferred annuities last year, with a 12% payout if / when I reach 62.
That seems very high.......what is the pay out term? I got a pension forecast from TIAA-CREF recently and taking a singe life time income at 55 my payout rate is 7% and I was very pleased with that!!
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Fear of bonds
Old 04-03-2014, 07:06 AM   #63
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Fear of bonds

I am turning 49 this year, so the payout is much higher. I already posted on this topic a few months ago with all the relevant details, so please feel free to use the search function. Take care.
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That seems very high.......what is the pay out term? I got a pension forecast from TIAA-CREF recently and taking a singe life time income at 55 my payout rate is 7% and I was very pleased with that!!
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Old 04-03-2014, 07:32 AM   #64
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I am turning 49 this year, so the payout is much higher. I already posted on this topic a few months ago with all the relevant details, so please feel free to use the search function. Take care.
Ahh, I used "SEARCH" and things are a lot clearer now. My 7% payout rate is calculated by dividing my income at 55 by the projected size of my annuity account at 55. Still, I like getting 4.726% interest on money I contribute.
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Old 04-03-2014, 08:46 AM   #65
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Ahh, I used "SEARCH" and things are a lot clearer now. My 7% payout rate is calculated by dividing my income at 55 by the projected size of my annuity account at 55. Still, I like getting 4.726% interest on money I contribute.
Obgyn's 12% payout rate is probably the monthly benefit at 62 in relation to the deposit at age 49, so it includes 13 years of growth of the initial premium deposit whereas Nun's 7% payout is actually slightly better assuming that 4.726% crediting rate holds as $100 would grow to be $182 in 13 years and result in a $12.76 payout.
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Old 04-03-2014, 09:26 AM   #66
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I am also concerned about bonds. Therefore, I will keep buying 10-year CDs.
Do you understand that the brokered CDs you are buying will get clobbered right along side of bonds in a rate spike?
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Old 04-03-2014, 09:30 AM   #67
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Do you understand that the brokered CDs you are buying will get clobbered right along side of bonds in a rate spike?

Give it up. Brew me a beer instead!
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Old 04-03-2014, 09:47 AM   #68
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CD's are bonds + insurance combined. No thanks, I think I will invest my money elsewhere.
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Old 04-03-2014, 10:24 AM   #69
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CD's are bonds + insurance combined. No thanks, I think I will invest my money elsewhere.
Not really. They are redeemable (the non-brokered ones) and as such are closer to cash.
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Old 04-03-2014, 10:53 AM   #70
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Maybe technically it is cash but in my mind if you lend money to the bank you have a bond. Then the bank gives you a guarantee which is insurance.

Maybe it is worth it to feel secure but I can't get my brain around it to give so much money away.

Maybe I'll feel different some day.
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Old 04-03-2014, 11:49 AM   #71
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CD's are bonds + insurance combined. No thanks, I think I will invest my money elsewhere.
We sure have some highly individualistic ways of defining ordinary things.

Ha
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Old 04-03-2014, 12:25 PM   #72
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I do. As mentioned many times before, it's a risk I am willing to take.
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Do you understand that the brokered CDs you are buying will get clobbered right along side of bonds in a rate spike?
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Old 04-03-2014, 12:44 PM   #73
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I do. As mentioned many times before, it's a risk I am willing to take.
So how is it different than buying bonds?
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Old 04-03-2014, 12:51 PM   #74
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Fear of bonds

Brewer - as mentioned in the past, I like the predictability of CD income. This, in my opinion, is what I like most about CDs : no surprise. Can't say the same about bonds or bond funds.
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So how is it different than buying bonds?
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Old 04-03-2014, 12:57 PM   #75
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With equity being all time high, if I worry about bond, I might as well extend my OMY to FiveMY . But I am hoping that things will work out over time (20 - 30 years), especially, by keeping to well diversified AA (Equity, Bond, Real Estate - my house, cash, gold, lottery tickets, ...) .
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Old 04-03-2014, 01:07 PM   #76
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Brewer - as mentioned in the past, I like the predictability of CD income. This, in my opinion, is what I like most about CDs : no surprise. Can't say the same about bonds or bond funds.
I would not agree with you OB, a bond is really very similar to a CD. It a promise to pay a certain amount in interest periodically until a maturity date. The only real difference between a brokered CD and a bond is credit risk. Both have interest rate risk and both repay the principal if held to maturity. Bond income is as predictable as CD income other than credit risk.

Up to the FDIC limit there is no credit risk with a CD, there is a smidgen of credit risk with an investment grade bond.
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Old 04-03-2014, 01:19 PM   #77
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I think if you fear bonds (and stocks) you end up giving a huge chunk (most) of your earnings (from the money) to 3rd parties. CD’s, Annuities, Stable Value Funds, are similar in that they are predictable and expensive.
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Old 04-03-2014, 03:19 PM   #78
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Obgyn's 12% payout rate is probably the monthly benefit at 62 in relation to the deposit at age 49, so it includes 13 years of growth of the initial premium deposit whereas Nun's 7% payout is actually slightly better assuming that 4.726% crediting rate holds as $100 would grow to be $182 in 13 years and result in a $12.76 payout.
That crediting rate only holds for current deposits, older vintages have lower and also higher rates. TIAA-CREF quoted me assuming my annuity balance grows by 3% per year until I'm 55, that's in 2.5 years time. The 7% payout comes from dividing the annual payment by the annuity balance at 55. If I was to wait to 62 I imagine the payout would be higher still.
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Old 04-03-2014, 06:03 PM   #79
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I just read this thread from the beginning and my head is spinning lol. I invest in funds (Fidelity 4 in 1 and Target age retirement fund 2030) in IRA and 401k which in turn invest in bonds. All my taxable investments are going into VTSAX. Given I have another 10years before I consider ER should I worry?

Currently my AA is:

50% domestic stocks
20% intl stocks
13% bonds
15% cash and CDs
2% unknown/alternatives

Unlike most here I'm not as well read on what makes the economy tick but just like the housing bubble which most people didn't see coming I'm worried about the stock market bubble.
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Old 04-03-2014, 06:10 PM   #80
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Unlike most here I'm not as well read on what makes the economy tick but just like the housing bubble which most people didn't see coming I'm worried about the stock market bubble.
No need to worry. I can GUARANTEE you the stock market bubble will come. Eventually. And the market will go down a lot. And then it will come back. And then it will go down again. Rinse and repeat. So if you're worried that it might happen, don't bother. It will. I promise.
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