Free Lunch, FIA

[KRobby]

Quote:

Originally Posted by 73ss454 You made this statement, I'm just asking you to make sense out of it.

Oh ok, well the General Accounting Office (GAO) did a rather extensive study on the matter to see what the difference is in trading between retail and institutional (ins. co. etc). They found retail traders are being overcharged by 2.5% on small trades, compared to institutional investors. "When a transaction does occur in the municipal bond market, institutions normally get a much better price than individual investors."

[brewer12345]

Quote:

Originally Posted by KRobby Oh ok, well the General Accounting Office (GAO) did a rather extensive study on the matter to see what the difference is in trading between retail and institutional (ins. co. etc). They found retail traders are being overcharged by 2.5% on small trades, compared to institutional investors. "When a transaction does occur in the municipal bond market, institutions normally get a much better price than individual investors."

Wow, spin, spin, spin. Don't you get dizzy from all of that?

[KRobby]

Quote:

Originally Posted by brewer12345 Wow, spin, spin, spin. Don't you get dizzy from all of that?

He asked me twice to answer his question, so I did. And as directly and to the point as possible. Sorry you think it's such a conspiracy

[frayne]

KRobby, a simple concept that most here understand very well. Anytime you put a middleman between you and your investment(s), it is going to cost you money, restrictions, and even penalties. Oh and by the way, it is very easy for an individual to diversify any type of portfolio by doing just a little homework.

[rescueme]

Quote:

Originally Posted by brewer12345 If you are worried about full faith and credit, you should be buying guns, ammo, MREs and a mule...(snip).

I get the first three, but what's the mule for (unless you're going to use it as food?) ...

[MichaelB]

Quote:

Originally Posted by rescueme I get the first three, but what's the mule for (unless you're going to use it as food?) ...

More like transportation for the ammo and MREs.

[brewer12345]

Quote:

Originally Posted by rescueme I get the first three, but what's the mule for (unless you're going to use it as food?) ...

General agricultural purposes.

I have been buying emergency survival stuff for the house (like a 55 gal potable water storage drum) and for while in the bush (hunting this Fall/Winter at ~9000 feet elevation) as well as buying a few firearms for hunting. As such, I get exposed to some of the hardcore survivalist mentality and those people are big on being able to grow your own food after a societal collapse. So non-hybridized packs of seeds and similar sell well.

[brewer12345]

Quote:

Originally Posted by KRobby He asked me twice to answer his question, so I did. And as directly and to the point as possible. Sorry you think it's such a conspiracy

I think we are about done here, but I will leave you wil a parting thought, "Rob."

Life, Investments & Everything: The Limitations of Magic Factories

"
Despite what an insurance salesman might have you believe, insurers face pretty much the same capital markets that retail investors, banks, mutual funds and other participants do. They can trade the same yield curve, invest in the same equity markets and trade the same futures and options you and I can access. There are a few opportunities insurers have that most retail investors cannot access, such as commercial mortgages, non-registered bonds, hedge funds, and the like, but most other types of financial product manufacturers (banks, brokers, mutual fund families, etc.) do have access to these instruments and can use them to offer products to investors. It would be nice if the insurance industry had a magical source of returns to offer investors a leg up, but the world is simply not built that way.



Insurers also labor under a number of constraints which do not affect retain investors. Insurers must pay significant commissions to the people and organizations who sell their products, and these commissions can be quite hefty (up to 10% of your investment or more). Insurers must cover their generally quite significant overhead costs. Insurers must also adhere to very substantial regulatory requirements (all 50 states have their own independent insurance regulatory machinery) and put up quite significant amounts of capital against the products they sell. Capital is a scarce commodity and insurers generally wish to show a strong balance sheet, so a return must be extracted on the capital employed when an insurer sells a product. Investors putting up this capital generally demand a double digit expected return and that has to come out of the policyholder’s pocket. Finally, insurers must pay a percentage of revenues in excise taxes to their home state. These “premium taxes” are built into the price of insurance products and (again) come out of the policyholder’s pocket."

[KRobby]

Quote:

Originally Posted by frayne KRobby, a simple concept that most here understand very well. Anytime you put a middleman between you and your investment(s), it is going to cost you money, restrictions, and even penalties. Oh and by the way, it is very easy for an individual to diversify any type of portfolio by doing just a little homework.

So you don't buy mutual funds either, all individual stocks and bonds?
(Are homebuilders a scam too?)

1. I understand that quite well, but not everybody has the economic opportunity to diversify their own individual security portfolio and obtain 50+ face value bonds etc.

2. Diversifying does not equate to minimum guaranteed rate or protection from loss. Diversifying does not rescue you from loss. If diversification is able to meet YOUR minimum risk tolerance, then GREAT, but it won't meet everybodys.

3. FIA's don't cost money. There's no sales charges or fees unless you elect a rider or bail out early.

[KRobby]

Quote:

Originally Posted by brewer12345 I think we are about done here, but I will leave you wil a parting thought, "Rob." Life, Investments & Everything: The Limitations of Magic Factories

I think you need to 'diversify' where you get your information. Too bad we're done, I was looking forward to more informative 'blogs'.

[REWahoo]

Quote:

Originally Posted by KRobby 2. Diversifying does not equate to minimum guaranteed rate or protection from loss. Diversifying does not rescue you from loss. If diversification is able to meet your minimum risk tolerance, then GREAT, but it won't meet everybodys.

Why are you wasting your sales pitch on us?

Haven't you figured out by now we aren't interested in funding your boat payment and no matter what chapter or verse of "Annuity Sales for Dummies" you quote, we ain't buying.

[pb4uski]

Quote:

Originally Posted by KRobby So you don't buy mutual funds either, all individual stocks and bonds?.......

I know I shouldn't feed the trolls, but I just can't help it.

Actually Rob, most of us here are fine with paying a fee for services provided by a mutual fund company, insurer or whatever - but we are looking for good value for our money. My entire portfolio cost is only 16 bps and I am glad to pay it for the services that my mutual fund company provides to me (don't tell them though )

With most insurance products the value provided in relation to the cost is not something that interests me and isn't anything that I would recommend to others.

I realize that many people are not interested in DIY and as a result end up being sold insurance products that have fees and expenses that are much more than what I am willing to pay.

BTW, minimum guaranteed rates, particularly on EIAs are a bit of a joke since the minimum guaranteed rate is only applied to 90% of the premium for most contracts which has the effect of significantly overstating the effect of the minimum rate. After 10 years, the effective guaranteed rate is only 1.9% and for 20 years it is only 2.5%, much less than the 3% trumpeted with great fanfare by salesmen.

[brewer12345]

Quote:

Originally Posted by KRobby I think you need to 'diversify' where you get your information. Too bad we're done, I was looking forward to more informative 'blogs'.

Sweetheart, I am a financial professional who has spent the bulk of his career analyzing, consulting to, rating, investing in, and beating over the head insurance companies. I am not an actuary, but I was mistaken for one earlier this month by an insurance company exective. Please don't embarass yourself by suggesting I don't know what I a talking about.

[frayne]

Quote:

Originally Posted by KRobby So you don't buy mutual funds either, all individual stocks and bonds? (Are homebuilders a scam too?) 1. I understand that quite well, but not everybody has the economic opportunity to diversify their own individual security portfolio and obtain 50+ face value bonds etc. 2. Diversifying does not equate to minimum guaranteed rate or protection from loss. Diversifying does not rescue you from loss. If diversification is able to meet YOUR minimum risk tolerance, then GREAT, but it won't meet everybodys. 3. FIA's don't cost money. There's no sales charges or fees unless you elect a rider or bail out early.

Actually I only own a few stocks outright as most of my diversification comes from a number of no load stock/bond index funds.

I don't understand your comment about homebuilders being a scam too, as I am not saying anything is a scam.

Diversification is a basic tool for spreading risk, no more, no less.

FIAs may be a good vehicle for some but if you actually believe there are no fees, you are only fooling yourself.

[KRobby]

Quote:

Originally Posted by REWahoo Why are you wasting your sales pitch on us? Haven't you figured out by now we aren't interested in funding your boat payment and no matter what chapter or verse of "Annuity Sales for Dummies" you quote, we ain't buying.

Sales pitch? I quoted the Federal Government Accounting Office (GAO), from an official study. The other guy quoted a blog that is filled with misrepresentation from an unlicensed 'guru'. Belief what you wish. Besides, how could any common sense person be pitching on here, you realize the industry is regulated right?

Why so jumpy and defensive? Did a fixed index annuity assassinate Archduke Franz Ferdinand?

[KRobby]

Quote:

Originally Posted by pb4uski With most insurance products the value provided in relation to the cost is not something that interests me and isn't anything that I would recommend to others. I realize that many people are not interested in DIY and as a result end up being sold insurance products that have fees and expenses that are much more than what I am willing to pay.

Oh really, what was the last fee and sales charge you were quoted on the last FIA you looked at?

[KRobby]

Quote:

Originally Posted by brewer12345 I am not an actuary, but I was mistaken for one earlier this month by an insurance company exective.

Well this changes everything then.

[M Paquette]

Quote:

Originally Posted by KRobby Did a fixed index annuity assassinate Archduke Franz Ferdinand?

No, but I hear the Duchess Widow was pretty disappointed when their FIA underperformed, and didn't even keep up with inflation. But at least that Sarajevo financial advisor had his commission in pocket...

[73ss454]

Robby, are you one of the folks that keeps sending me the free dinner invitations to hear about this crap. If so, please take me off the list.

[REWahoo]

Quote:

Originally Posted by KRobby Sales pitch?

I notice your snappy response avoided answering the question of why you are wasting your time here trying to convince us to believe fairy tales like this:

Quote:

Originally Posted by KRobby 3. FIA's don't cost money.

I can only surmise there must be a shortage of clients old folks out there in the early stages of dementia willing to buy your "guaranteed, no cost, risk-free" magic money making machine. Times are tough.