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Old 11-05-2007, 03:11 PM   #21
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Audrey, you do realize that low cost funds still have fees, right? Why don't you just start your own mutual fund and avoid any costs? Oh, and are those mutual funds guaranteed? You mention the rest of your life....so in a downturn market what are you doing for safety? Just curious. What if the market drops 10%? How about 20%? What about 50%? What are you doing with your money?
Wow - I guess you weren't pulling my leg!

Yep - the low-cost mutual fund fees I'm happy to pay as I don't care to run my own. I've got a fun retired life to live instead. Plenty of good quality low-cost funds to choose out there. It's easy to keep expense ratios well, well under 1%

"Safety" is having a big enough nest egg (and small enough withdrawal needs) to ride out the downturns and survive 50 years, inflation included. What if market drops - 10%, 20%? - been there, done that. 2000-2002.

I don't need to pay outrageous fees for any "guarantees". A reasonably conservative asset allocation will do well enough.

Audrey
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Old 11-05-2007, 03:12 PM   #22
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What more than a 350BP expense ratio do you need to know this is almost certainly a ripoff? Besides, we have been over this nonsense umpteen times before you got here and started marketing.
It's not 350 bps. above everything else out there. You're paying for a CD. You're paying for a mutual fund. You're paying for a treasury bill. And you're paying to keep your money in a checking or savings account. Now if you wanna get me started, start breaking down the expenses you're paying for your checking account at the bank! Talk about ripoffs!
Listen, the product may not be right for everyone. However, for those people who are afraid of losing their hard earned money in one big short term downtrend in the market, this may be a great product. Obviously, for most of the financial geniuses here, it's unneeded. I only responded because someone claimed this was a Hall of Shame product, and it really isn't. If you all don't wish to discuss the pro's and con's then that's fine. I just hate reading a one sided discussion when obviously all the functions of the product haven't been considered. For someone to say that they hate it because it's named an "annuity" is just plain silly.
Carry on with your hatefest though.
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Old 11-05-2007, 03:16 PM   #23
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Sorry, but just wanted to finish responding to those responding to me....
Audrey says....
"Safety" is having a big enough nest egg (and small enough withdrawal needs) to ride out the downturns and survive 50 years, inflation included."

Well I can't argue with that! Of course what part of the population falls into that group? Of course I have to wonder, Audrey if you've got your financial needs all covered and are just enjoying retirement, then what the heck are you doing posting on an investment website?
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Old 11-05-2007, 03:20 PM   #24
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Well I can't argue with that! Of course what part of the population falls into that group?
There is no magic to a VA with supplementa guarantees. If a retiree doesn't have enough assets to make it, buying a VA won't suddenly make them wealthier. With expense ratios and fat commissions like these things have, it will likely do the opposite.
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Old 11-05-2007, 03:26 PM   #25
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Just some comments...

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First off, as soon as you do that immediate annuity you have given up control of that money. If you die tomorrow that money is gone. Kaput! Bupkis! Your heirs are now hating you for giving away their money.
Nope - I have an immediate annuity (coverers both my DW/me) with a 28-year guarantee period.

As far as my heirs hating me after my death, I'm ahead of the game, since they hate me while I'm living ...

Seriously though, if me and/or my DW die before the end of the guarantee period the remaining payments go to our estate, which is going to charity.

- Ron
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Old 11-05-2007, 03:35 PM   #26
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Well I can't argue with that! Of course what part of the population falls into that group? Of course I have to wonder, Audrey if you've got your financial needs all covered and are just enjoying retirement, then what the heck are you doing posting on an investment website?
This is an early retirement website. I'm part of THAT cool population.

But people with more limited means are certainly NOT benefited by handing over 3.45% of their net worth year after year.

Audrey
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Old 11-05-2007, 03:36 PM   #27
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Nope - I have an immediate annuity (coverers both my DW/me) with a 28-year guarantee period.

As far as my heirs hating me after my death, I'm ahead of the game, since they hate me while I'm living ...

Seriously though, if me and/or my DW die before the end of the guarantee period the remaining payments go to our estate, which is going to charity.

- Ron
OK, if the immediate annuity has a period certain then they are covered for some length of time, but that only means they'll receive monthly payments and then it will stop. There isn't a lump sum going to your charity. However, I do admire you're donation. Of course, in that case, the immediate annuity with mutual fund more than likely underperformed the results of the annuity with living benefit.
BTW, as opposed to Prudential, Allianz, AXA and ING all have some very good products. Someone mentioned the quality of the insurance company issuing the contract. I would agree that you would be best served picking a larger more secure company like the one's I have listed.
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Old 11-05-2007, 03:39 PM   #28
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This is an early retirement website. I'm part of THAT cool population.

Audrey
Great! So you'd think then, you all would be open to the viewpoint that a particular product may be being perceived incorrectly. Apparently you are here to learn about your financial options.
Today's variable annuities are largely evolved from your father's annuity products. Even Scott Burns recognizes that.
As to people with limited resources and what they can afford. Those are the people most in need of lifetime income, wouldn't you say? Would you like to be 80 years old and out of money?
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Old 11-05-2007, 03:47 PM   #29
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"Perceived Incorrectly" - LOL!

"Open" to paying super high fees - LOL!

Personally, I can't imagine every paying more than 1% of net worth for financial products, mutual funds fees included. Lots of folks here pay less than 0.5%.

Unfortunately, I know that the general population tends to pay a LOT more. It's too bad. Lots of snake oil salesmen out there taking advantage of financial ignorance/insecurity.

Audrey
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Old 11-05-2007, 03:48 PM   #30
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Today's variable annuities are largely evolved from your father's annuity products. Even Scott Burns recognizes that.
Yes, like me he has noted that they have higher expenses, bigger commission payouts, and even more bewildering embedded out of the money put options.
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Old 11-05-2007, 03:56 PM   #31
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Audrey, you do realize that low cost funds still have fees, right? Why don't you just start your own mutual fund and avoid any costs? Oh, and are those mutual funds guaranteed? You mention the rest of your life....so in a downturn market what are you doing for safety? Just curious. What if the market drops 10%? How about 20%? What about 50%? What are you doing with your money?
Art G,

I realize you were addressing audreyh1, but I'll give you my answers.

1. Yes, low-cost funds still have fees. They also tend to do better than high-cost fees by the difference in fees.

2. If I could set up a diversified mutual fund with less costs and not significantly more hassle than investing with, say, Vanguard, then I would. I can't.

3. Are mutual funds guaranteed? Well... sort of. They're 'guaranteed' (and here I'm speaking of index funds) to closely track the return of their target market. No guarantee on what the market will do short or long term. However, I consider that a US Wilshire 5000 fund is more guaranteed than the 'guarantee' backed by only a single company, no matter how strong it looks at the moment. That's a risk I don't think enough folks consider (this board being an exception!).

4. If the market drops at this point (since I'm still in the savings phase), I mentally go 'Yippee! A chance to buy at bargain prices!', and rebalance at the end of the year as ususal. If I were in the disbursement phase, I'd gulp, take some deep breaths, look at cutting back on some discretionary expenses, and remind myself of the reasons and research that drove me to implement the plan.
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Old 11-06-2007, 08:37 AM   #32
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Art, you wouldn't be selling these things would you?

And, BTW, how do you answer Scott Burns contention that similar or better goals can be reached more cheaply by a combination of low cost funds and an immediate annuity?
Ha
Different strokes for different folks. However, we have a lot of folks on here that think that even SPIA's are the "devil's work"...........
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Old 11-06-2007, 09:33 AM   #33
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Art G,

I realize you were addressing audreyh1, but I'll give you my answers.

1. Yes, low-cost funds still have fees. They also tend to do better than high-cost fees by the difference in fees.

2. If I could set up a diversified mutual fund with less costs and not significantly more hassle than investing with, say, Vanguard, then I would. I can't.

3. Are mutual funds guaranteed? Well... sort of. They're 'guaranteed' (and here I'm speaking of index funds) to closely track the return of their target market. No guarantee on what the market will do short or long term. However, I consider that a US Wilshire 5000 fund is more guaranteed than the 'guarantee' backed by only a single company, no matter how strong it looks at the moment. That's a risk I don't think enough folks consider (this board being an exception!).

4. If the market drops at this point (since I'm still in the savings phase), I mentally go 'Yippee! A chance to buy at bargain prices!', and rebalance at the end of the year as ususal. If I were in the disbursement phase, I'd gulp, take some deep breaths, look at cutting back on some discretionary expenses, and remind myself of the reasons and research that drove me to implement the plan.
Ticktock, I'll respond to you because you seem sincere and truly interested in discussing this vs. looking to start a lynch mob. It's funny how mob mentality can take over, especially when discussing things so dear as your own money. So allow me to respond in order....

1. I'm sorry, but I challenge anyone to find a family of funds that has performed over good times and bad for a long period of time as the American Funds have. Granted, as far as managed funds go, they are relatively inexpensive, however, cheap does not equate with good. It's just that there are so many no load funds in existence that the bad ones are glossed over for the few good ones. This is known as chasing results. Check out the entire family of American Funds during up and down markets and find me any flaws.

2. Well your key word here is "hassle". You are willing to pay someone to do something for your for convenience sake. With that said, cost is just relative to results. If you go to a bad restaurant you don't return, the same thing can be true for investing. There are bad doctors and bad lawyers also. The key in anything in life is finding someone you are happy with. Personally, I'm not a Walmart kind of guy. I'll pay a little more to get quality. I don't worry that my car salesman made too much on me if I bought the car for the price I wanted to pay. And I wouldn't worry that my investment advisor made money if he achieved my goals. (BTW, to those he keep mentioning it, annuity commissions are now much lower than ever before. You just may not have been aware of them in the past.)

3. The only guarantee you have with an index fund is that it is guaranteed to underperform that index. It has no choice with the return being index minus fees. As for me, what's so great about "average"? Why would I want to buy a product based solely on it using the largest companies? I'd much rather have the human element of someone at least attempting to outperform the average. Again, compare American Funds to the averages, not even close.

4. Great, so you're still in an accumulation phase. Dollar cost averaging is king. However, first off, it's still tough for the very steadfast investor to keep adding money and watching their values drop, to a market declining by 50%. I recall when Intel started falling, the stock was around $60 and people asked me where I thought it would fall to, I told them I thought around $9, and they scoffed. Well eventually those people panicked, not right away, but when you are watching your money disappearing, it becomes very personal and nerve racking.
However, what we were talking about was not that person in accumulation phase. A living benefit if obviously far from that person's mind. What we are talking about is the person in the distribution phase of their lives. They have a set sum of money and it has to last them the rest of their lives. Go ask a majority of those people if they wouldn't be willing to give up some amount of their return for the guarantee that they never run out of money. What we are talking about realistically is about an additional 1.5% over the average mutual fund. Are you really willing to say you wouldn't pay someone 1.5% to sleep at night? Hey, if people want to slam index annuities, I can give you many reasons why that product has holes in it, however, I have reviewed these living benefits quite extensively, and for certain people they are a great source of comfort.
BTW, this is all just my own opinion. I'm certainly not trying to sell anyone anything here.
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Old 11-06-2007, 10:12 AM   #34
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.............. BTW, this is all just my own opinion. I'm certainly not trying to sell anyone anything here.
Art, since you are relatively new here, most don't know where you are coming from, financially speaking. What is your background and what interest do you have in the opinions you express?
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Old 11-06-2007, 10:25 AM   #35
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Art, since you are relatively new here, most don't know where you are coming from, financially speaking. What is your background and what interest do you have in the opinions you express?
travelover, I'd rather not speak of my background, as I'd rather not be painted as an expert in financial investing. Let's just say I'm a person of experience who has done their fair share of research.
As to my interests, they are only in giving a reasonable yin to what seems like a collective yang. I came here because I followed the Scott Burns label, and while I read him religiously, I find he often gives a one sided version of his story, and this in itself I find annoying.
What I would prefer to do (if anyone is interested), is to discuss the products at hand, not my experience on the topic. If I state something that is clearly not true, I have no problem being called on it. However, the same should be true for those who wish to spread negative misinformation. I would say that the goal of us all is the same, to get to those golden years with the most ability to enjoy them fully. This is not politics whereas there must always be a zero sum gain. My personal goal is to enjoy life, and if that means someone else can profit from my wealth without ultimately affecting me, then so be it.
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Old 11-06-2007, 10:31 AM   #36
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Heh, must be a sleazeball annuity salesman. Out with it, or you will be relentlessly mocked.
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Old 11-06-2007, 10:53 AM   #37
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Heh, must be a sleazeball annuity salesman. Out with it, or you will be relentlessly mocked.
brewer, are you this miserable a person in real life as well? Tell us about yourself, what job did you get stuck with in life to make you so obnoxious?
My background is no concern of yours. Either my information interests you or it doesn't. If it doesn't then why don't you just ignore me. I'm guessing other people would rather know the pros and cons.
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Old 11-06-2007, 10:56 AM   #38
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Heh, thought so. Twist and shout and do anything to try to sell guaranteed VAs and EIAs, even though they are hugely overpriced and a waste of time and money for the overwhelming majority of buyers of these things.
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Old 11-06-2007, 11:10 AM   #39
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Heh, thought so. Twist and shout and do anything to try to sell guaranteed VAs and EIAs, even though they are hugely overpriced and a waste of time and money for the overwhelming majority of buyers of these things.
ROTFLOL! Your disclaimer states that people should consult with their own financial advisor, and then you go on a rampage to blast them. For your information, just so you don't look quite so foolish in the future, there is no such thing as an "annuity salesman". In order to sell a VA, you must pass the Series 7 and Series 63 tests (at the very least). These people are known as financial consultants and the very people who you advise others to consult with as opposed to taking your own advice.
I'm guessing that you will not, and have never taken a test as difficult and complete as the Series 7. Unless of course you are a CPA or medical doctor. Of course you still haven't told us about your own occupation.
You must be a gas at parties. Are you the guy off arguing with the bartender about how he doesn't know how to mix drinks?
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Old 11-06-2007, 11:13 AM   #40
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...........My background is no concern of yours. Either my information interests you or it doesn't. If it doesn't then why don't you just ignore me. I'm guessing other people would rather know the pros and cons.
Art, I'm sure you are sincere, but I think you have misjudged the tone of this forum. Transparency brings a certain amount of credibility - I think that is human nature. Many here know that I retired from a US auto company, so when I defend US automakers, I'm sincere, but I also certainly want my pension to continue!

If you look at the number of posts that any member has made, you can roughly judge how much they have divulged about themselves. So, I think it is reasonable for people to want to know more about you to evaluate your arguments in context.
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