Fixed income investments

[brewer12345]

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.

 

[aja8888]

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)

 

[Animorph]

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.

 

[Golden sunsets]

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.

 

[jebmke]

Other than SPIA's, annuities are considered rip offs by most long term posters.

And many respected financial professionals.

 

[LongPrime]

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.

 

[REWahoo]

We aren't interested in "selling" anyone anything.

 

[haha]

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.


Ha

 

[mrfeh]

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).

 

[ESRwannabe]

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.

 

[Huston55]

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.

 

[Huston55]

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.