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Old 08-22-2008, 09:52 AM   #61
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I would define an annuity as an agreement among a group of people that those who die sooner than expected will leave their money to those who live longer than expected.
With another guy in the group siphoning money off all of the others and keeping whats left when they're all dead.

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With this agreement in place you do not need to plan to make your money last 5/10/15 years past your life expectancy, therefore your income is much, much higher than it would be without the agreement.
True if you bought an inflation adjusted annuity and your spending/personal inflation rate matches the CPI. By doing that, your payments are much, much lower. Also, since part of your money goes to fund the insurance company's endeavors, your payment will also be much, much lower.

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It is completely impossible to "create your own annuity", if you go it alone your income will unavoidably be significantly lower.
Fascinating. And I thought my system that produces superior and stable returns in all markets and will last for at least 50 years was a pretty good replacement with much higher returns than an annuity would pay me.

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(When comparing returns from traditional annuities with the income you generate from investing yourself, remember to assume you self-invest in the same kind of assets, typically government bonds. Otherwise you are not comparing like with like, in terms or risk and return.)
Here comes the hamstringing of the alternatives, so as to assure the table is tilted. Do I get to add in the fees and expenses built into the annuity, and the loss of principal to the self generated income so we're comparing like with like?

Why wouldnt I add some equities to my investment, since they're demonstrated to improve returns without significantly changing risk? Why wouldnt I use a bucket strategy or a black swan strategy to greatly improve my long term returns without impacting my short term returns?
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Old 08-22-2008, 09:53 AM   #62
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Originally Posted by clifp View Post
Art which would your kids (or your favorite charity) want you to own?

Pretty sure that would be VFINX.
The one that gives them the most money. In this market it's no contest the Annuity was the better investment. NONE!
How about your family? On $100k, Would they rather have
$106k or
$88,300?

However, just for funsies, lets just say the S&P was up 8.7% this year. My heirs would get about
$108,200 from Vanguard or
$107,000 from the Annuity.

Was it really worth the risk of not being protected?
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Old 08-22-2008, 09:54 AM   #63
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Not very hard to determine who sells annuities around here, is it?
Nor, who professionally offers all products so is willing to openly research them all.
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Old 08-22-2008, 09:56 AM   #64
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I need to start offering wrap accounts, it seems there's a sudden surge in interest..........

Charging a fee to buy index funds........not that's a hoot..........
Yeah, it's not enough the an Index fund is the only one guaranteed to underperform the Index, but now people want to pay another 1% per year to insure someone is watching it happen annually.:confused:
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Old 08-22-2008, 09:56 AM   #65
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Nor, who professionally offers all products so is willing to openly research them all.
And with total disregard for which products offer the greater profits to the seller?
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Old 08-22-2008, 10:01 AM   #66
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And with total disregard for which products offer the greater profits to the seller?
Absolutely! Apparently you've never been in sales. Any salesman worth a flip will tell you that they'd much rather take a bit less in commission and have a happy client than to rake them over and deal with someone who's pissed. You're not selling someone a steak dinner and then they're gone, you have to listen to them and take their calls when things don't work. Do you really think anyone wouldn't rather have the happy client who's going to refer them further business?
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Old 08-22-2008, 10:08 AM   #67
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Originally Posted by Art G View Post
The one that gives them the most money. In this market it's no contest the Annuity was the better investment. NONE!
How about your family? On $100k, Would they rather have
$106k or
$88,300?

However, just for funsies, lets just say the S&P was up 8.7% this year. My heirs would get about
$108,200 from Vanguard or
$107,000 from the Annuity.

Was it really worth the risk of not being protected?
How about if we compare the results over the last 15 years instead of the one or two that are unfavorable for one of the options?

$100k invested in the S&P 500 since 1993 would be worth about $340,000 today. An ER with $2M invested would have $6.8M

I'd feel pretty dang protected. My kids would probably be pretty happy with being financially independent when I was unable to spend all that money. Maybe my grandkids would end up with a good degree of protection.

Of course, you dont have to hamstring the non annuity side by just comparing it to an all stock index and then only for periods when that index didnt do well. Lets try it against Wellesley, Wellington and/or STAR. All of those produced more than 6% annually over the last 5 years and over a 15 year period thoroughly thumped 6% while offering a lot less volatility than the s&p 500.
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Old 08-22-2008, 10:11 AM   #68
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Apparently you've never been in sales.
Fortunately, no.

So you're a sales guy who is only looking out for the best interests of his client and is concerned about customer satisfaction more than the amount of income you will earn. I know those types of sales people must exist, and I'm glad to discover one on the forum.
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Old 08-22-2008, 10:16 AM   #69
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And with total disregard for which products offer the greater profits to the seller?
It's like you guys all have children, yet managed to remain virgins. Didn't all of us who didn't have government jobs have to turn a profit, for ourselves or for our companies?

I don't get the problem with making one's living by selling goods or services that some people obviously want. Since when is it necessary that because you could do something yourself, you should do it yourself?

I could detail my car, but I pay someone to do it because I don't want to do it myself.

ha
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Old 08-22-2008, 10:18 AM   #70
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I could detail my car, but I pay someone to do it because I don't want to do it myself.
...unlike Ernest Borgnine.
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Old 08-22-2008, 10:22 AM   #71
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...unlike Ernest Borgnine.
I believe you earn your living doing stand-up comedy. Pretty well too!

Ha
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Old 08-22-2008, 10:22 AM   #72
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I've abstained from joining this thread until now. Being an annuity thread, that's definitely amazing. As usual the annuities are championed by a seller. At least the seller will admit to it this time which is unusual.

The arguments are always the same. The seller/annuity advocate must bend longterm data into a pretzel to show their financial superiority or just rearrange facts to suit their need.

I'm tired of the topic but I'd sure hate to have a true newbie mislead down this path.

They only make sense if your name is Duncan MacCloud and you keep your sword skills up.
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Old 08-22-2008, 10:25 AM   #73
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Lets try it against Wellesley, Wellington and/or STAR. All of those produced more than 6% annually over the last 5 years and over a 15 year period thoroughly thumped 6% while offering a lot less volatility than the s&p 500.
Read my sig line.......... I'd be happy to do that fund-to-fund comparison for interested parties.......
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Old 08-22-2008, 10:28 AM   #74
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Fortunately, no.

So you're a sales guy who is only looking out for the best interests of his client and is concerned about customer satisfaction more than the amount of income you will earn. I know those types of sales people must exist, and I'm glad to discover one on the forum.
No, I'm not a "sales guy" I am a client obligated individual who is paid to seek out and offer ongoing money management assistance for those looking to have financial freedom.
Don't make fun of sales people, they are the lifeblood of society and the economy. Without them, you have a bunch of salaried or hourly "clerks" who could care less about customer satisfaction, being that they get paid whether they do a good job or not.
Out of curiousity, when dealing with your money, do you really prefer calling Vanguard and having the phone answered by an anonymous clerk who will never speak to you again, over an ongoing relationship with a trusted advisor?
When you go into your bank, would you rather see Sally, the teller who has been there for years and recognizes you and calls you by name, or an ATM machine? When you go to restaurants, do you return to those which gave you a good meal last time, or do you constantly try new restaurants with plans never to return? When you go to your doctor, do you prefer a different one with each visit? Is there anyone in the world you trust, or go through life assuming absolutely everyone is trying to screw you, even the ones you hand select?
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Old 08-22-2008, 10:30 AM   #75
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Read my sig line.......... I'd be happy to do that fund-to-fund comparison for interested parties.......
What on earth does that have to do with annuities versus vfinx?

start yer own thread, I can barely keep track of this one!
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Old 08-22-2008, 10:39 AM   #76
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Don't make fun of sales people, they are the lifeblood of society and the economy.
I agree they have their place in the world, just like eagles, hawks, buzzards and vultures. Of course some of those birds get made fun of, too.

BTW, how I choose to manage my money and who I trust isn't the issue.

You seem to really be working at selling your position here. Shouldn't you be spending more time taking care of your clients to insure their 'total customer satisfaction'? Out of curiosity, of course...
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Old 08-22-2008, 10:41 AM   #77
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How about if we compare the results over the last 15 years instead of the one or two that are unfavorable for one of the options?

$100k invested in the S&P 500 since 1993 would be worth about $340,000 today. An ER with $2M invested would have $6.8M

I'd feel pretty dang protected. My kids would probably be pretty happy with being financially independent when I was unable to spend all that money. Maybe my grandkids would end up with a good degree of protection.

Of course, you dont have to hamstring the non annuity side by just comparing it to an all stock index and then only for periods when that index didnt do well. Lets try it against Wellesley, Wellington and/or STAR. All of those produced more than 6% annually over the last 5 years and over a 15 year period thoroughly thumped 6% while offering a lot less volatility than the s&p 500.
Well since we get to use hindsight, why don't we use the years 1930-39? Out of curiousity, did you select a 15 year time span because it worked out in your favor?? If I have the luxury of looking back into the past, then I choose to have put all my money into RIMM 10 years ago.
FWIW, Investment Co of America vs. Wellesley for 15 years....

American Funds Inv Co of Amer A 9.62 % 296.48 % Vanguard Wellesley Income Inv 8.09 % 220.99 %

Here's the bottom line, if you can assure me that we are headed into another bull cycle, then of course, the MF's are the way to go, however, if you think there is any concern in the market, or if you want to make sure that you have income for life, or leave money for your kids, or if you just want to use the current climate, then the VA wins out, even with their aggregious fees.
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Old 08-22-2008, 10:45 AM   #78
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I've abstained from joining this thread until now. Being an annuity thread, that's definitely amazing. As usual the annuities are championed by a seller. At least the seller will admit to it this time which is unusual.

The arguments are always the same. The seller/annuity advocate must bend longterm data into a pretzel to show their financial superiority or just rearrange facts to suit their need.

I'm tired of the topic but I'd sure hate to have a true newbie mislead down this path.

They only make sense if your name is Duncan MacCloud and you keep your sword skills up.
What pretzels? I'm using the past year!
BTW, if you're Duncan MacCloud the living benefit is definitely the answer.
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Old 08-22-2008, 10:52 AM   #79
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I agree they have their place in the world, just like eagles, hawks, buzzards and vultures. Of course some of those birds get made fun of, too.

BTW, how I choose to manage my money and who I trust isn't the issue.

You seem to really be working at selling your position here. Shouldn't you be spending more time taking care of your clients to insure their 'total customer satisfaction'? Out of curiosity, of course...
Hold on thar! You're questioning my honesty and then telling me your trust issues are none of my concern? Kettle, meet pot.
BTW, do you allow your doctor to eat lunch or play golf, or do you expect him to daily be reviewing your charts for possible polyps?
FWIW, my people are fine because many were moved to safety back in October last year. Thanks for asking.
I'm not trying to "sell" my position at all. I'm not soliciting anyone. It would be nice however, if for a change, newbies had both sides of this issue, AND could actually read the benefits as opposed to hearing people slam a product without fully understanding it.
What you should be doing is thanking those professionals who offer their advice for free, and at the very least, not trying to offend them or question their integrity.
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Old 08-22-2008, 10:54 AM   #80
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What on earth does that have to do with annuities versus vfinx?

start yer own thread, I can barely keep track of this one!

I think you could be of great help on here. Get one of your ACTUARIES on here to answer our questions........
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