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Old 05-21-2014, 01:17 PM   #21
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Both our Guaranteed Income annuities, VA and Fixed Indexed, have a guaranteed 5% growth in the income account so that even in down markets, the Income Account increased. And with this guarantee, I can use this "conservative" account to be more aggressive in other areas.
Is the 5% before or after the high (upwards of 4% usually) fees?
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Old 05-21-2014, 02:28 PM   #22
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There are two accounts within this type of annuity. You will need to see a dreaded investment/FA salesperson. I have seen presentations from FA and from the bank's/creditunion investment person.

^Your question indicates you are unfamilar to how the two accounts work and how this type of annuity works. The 5% goes to the Income Account which resets or stepups (distinct terms) on anniversery. The fees comes off of the Actual Account. The 2013 fiscal year, the Income and Actual increased 27%. In 2011, the Income Acct increased 5% but the Actual Acct decreased over 2010.

For me, this type of annuity is far superior to any CD, bond fund, treasury, etc. even with the higher fees.

Let the OP decide for himself and you yourself.
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Old 05-21-2014, 02:33 PM   #23
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Originally Posted by LongPrime View Post
There are two accounts within this type of annuity. You will need to see a dreaded investment/FA salesperson. I have seen presentations from FA and from the bank's/creditunion investment person.

^Your question indicates you are unfamilar to how the two accounts work and how this type of annuity works. The 5% goes to the Income Account which resets or stepups (distinct terms) on anniversery. The fees comes off of the Actual Account.

For me, this type of annuity is far superior to any CD, bond fund, treasury, etc. even with the higher fees.

Let the OP decide for himself and you yourself.
Tell us again what your commission schedule is when you sell this stuff?
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Old 05-21-2014, 02:42 PM   #24
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This stuff could be for some be worthwhile. For some this stuff is bad. I don't make opinions on what you need or even want.

Even if I sold this stuff, so what. Some will and some won't. I was like you, once, and it cost me a couple of hundred
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Old 05-21-2014, 02:49 PM   #25
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And if you really don't want to see the NAV go down, buy individual bonds. But it's just a myth that they don't "lose" money the way bond funds do. The principal may not go down, but you are stuck holding a lower yielding bond until maturity to avoid the loss.
+1 opportunity loss
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Old 05-21-2014, 02:53 PM   #26
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This stuff could be for some be worthwhile. For some this stuff is bad. I don't make opinions on what you need or even want.

Even if I sold this stuff, so what. Some will and some won't. I was like you, once, and it cost me a couple of hundred
And now that you have bought this crap it is costing you tens of thousands.

I hate annuity salescritters.
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Old 05-21-2014, 02:54 PM   #27
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For me, this type of annuity is far superior to any CD, bond fund, treasury, etc. even with the higher fees.

Let the OP decide for himself and you yourself.
I know enough about VA's after reading several prospectuses (which took some time, BTW). Once I saw in one VA that about 4% was taken as fees off the principal and the gains in the equities were void of the dividends paid, I decided to walk. Just not worth the gamble or the expense, although I wish I had a career selling the things . (although I don't know if I could stomach that kind of job)
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Old 05-21-2014, 03:57 PM   #28
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Individual bonds should be good if you need the principal on a certain date and buy accordingly. If all you want is the income, even if you will incidentally buy and sell shares, a bond fund should be fine.
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Old 05-21-2014, 04:05 PM   #29
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LongPrime; I'm not sure if you have picked up the fact that many who have read your comments on the boards over the last few days are very skeptical of your underlying motivations in continually bringing up annuities. It appears suspiciously self-serving. Other than SPIA's, annuities are considered rip offs by most long term posters.

Perhaps it would clear the air if you told us outright what your day job is and if it is related to annuities. If so then we will at least know where you are coming from.
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Old 05-21-2014, 04:17 PM   #30
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Other than SPIA's, annuities are considered rip offs by most long term posters.
And many respected financial professionals.
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Old 05-21-2014, 07:43 PM   #31
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I have stated before early on that I don't sell it. I take care of my mother, bed ridden, 97 for at least 4 years, 24/7. I got nothing to do, except worry whether wife and I can make it to our parent's age 95+. Three are still with us.

I written before that Annuities has acted as the conservative part of our portfolio and has allowed us to be more aggressive in other areas. In the past 5 years since 2008 when I took a more active role in our retirement investments, the annuity selections have done as well if not better than our more aggressive investments. I just thought that this forum will be more willing to accept my success than to "make fun" of other vehicles to get to FIRE. I hope I am wrong. See my new thread- And please "sell" me your ideas rather than attack mine.
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Old 05-21-2014, 07:45 PM   #32
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We aren't interested in "selling" anyone anything.
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Old 05-21-2014, 08:03 PM   #33
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We aren't interested in "selling" anyone anything.
+1. Selling is hard work, generally people will only do it to gain something important to them.

Same with criticizing your plans. Criticize you own plans, there is nothing in it for us. For all I know you are the genius of annuities. It could happen!

I would feel foolish if I told you how awful annuities are , and it turned out that you have found really good ones. Yet I am not about to take the time to deeply understand all the annuities out there. Overall, I expect that it is not deep stream.


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Old 05-22-2014, 02:35 PM   #34
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Since there doesn't seem to be a clear-cut winner for short term (ie. < 5 years) fixed income these days, we've taken the shot gun approach: some CDs, some I Bonds and short term munis (VMLUX).
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Old 05-23-2014, 11:00 AM   #35
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My investment strategy heavily weights equities, but still I need to maintain a stable, low risk, safe haven for 20% or so of assets. I want this safe haven to have 1, 3 and 5 year maturities. I just cannot get comfortable with any of the fixed income options. Well, for the 1-year bucket I will probably just get a CD.

Any thoughts on this?

Given the interest rates I wouldn't even bother putting effort into this. I'd just put it all in a Capiltal One 360 (i.e. used to be ING) online savings account. It looks like the interest is .75% right now. Its a savings account. So it is FDIC insured up to $250k per individual and its liquid.

There may be other online banks that pay a higher interest.
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Old 05-24-2014, 08:41 AM   #36
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Our solution to income for the immediate 5 yr window is a 4yr PFCU CD ladder + a chunk of $$$ in FTABX (Fidelity Tax Free Bond). All this is in taxable accounts, and the combined avg after tax return is a little north of 2%. Since we just started the ladder, yield should rise in the next couple of years as we exchange rungs.
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Old 05-24-2014, 09:18 AM   #37
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I have stated before early on that I don't sell it. I take care of my mother, bed ridden, 97 for at least 4 years, 24/7. I got nothing to do, except worry whether wife and I can make it to our parent's age 95+. Three are still with us.

I written before that Annuities has acted as the conservative part of our portfolio and has allowed us to be more aggressive in other areas. In the past 5 years since 2008 when I took a more active role in our retirement investments, the annuity selections have done as well if not better than our more aggressive investments. I just thought that this forum will be more willing to accept my success than to "make fun" of other vehicles to get to FIRE. I hope I am wrong. See my new thread- And please "sell" me your ideas rather than attack mine.
It's not a matter of selling or attacking; it's a matter of choice. My reason for not choosing the type (non-SPIA) of annuities you advocate can be explained by an acronym: ICE

I (Inflation): They lose value to inflation. Although inflation adjusted annuities can be purchased, the reduced payout makes them unattractive. Based on the VA, EIA, etc that I've seen, most standard products do not come with inflation adjustments.

C (Control): I lose control over the funds used to purchase the annuity. Note that this is still true despite the standard clauses that allow reclaiming principal because, reclaiming it is so punitive that the benefit is practically nonexistent. And, control is a very big deal, for rather obvious reasons.

E (Expenses): They are outrageously expensive. The drag they create erodes the potential upside so much that it's unlikely to manifest, meaning the only party who's sure to make money is the insurance company.

So, I'm not attacking annuities, and I'm not trying to sell any particular investment. What I am doing it making an informed and reasoned choice to not purchase what I consider to be illusive "security."

This reminds me of a recent article by Akaisha Kaderli, the essence of which is captured in the Helen Keller quote below. I'll leave it to others to draw their own Helen Keller comparisons.

Security is mostly a superstition. It does not exist in nature, nor do the children of men as a whole experience it. Avoiding danger is no safer in the long run than outright exposure.
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