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Old 01-10-2011, 10:06 AM   #21
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Can anyone tell me if a fixed index annuity is a good thing? I want it for hopefully 10 to 12 or more years from now, when I figure I will take out some $ every month to help with whatever I need some extra $ for.
The one my financial guy recommends is a guaranteed 8%, with a 10% bonus for getting into it. The amount in this cannot go down no matter what the market does, only up....but it may not go up as quickly or as much as the stock market. But, that is fine with me....as long as I don't lose any $. Actually, he said, if the market was to drop, there is no downside for me....my account would only go up, when the market rises, without having to make up for the money I lost, because I would not have lost any money.
I did do a little reading on these fixed index annuities, and the only people that did not like them seem to be people that cannot sell them to you.
We need a new perpetual thread for the FAQ archives: "Should I learn how to manage a diversified investment portfolio of passively-managed index funds, or should I just pay someone to sell me a fixed index annuity?"

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Thanks LOL... you bring up an interesting point. I felt the balance was fairly diversified, but as instruments such as MLPs and Hedge/PE funds are concerned, as it was explained to me they do offer a level of diversification, and the opportunity for higher returns. MLPs in particular have a low correlation to other parts of the portfolio (which seemed to make sense to me at the time).
Yes but.

Instead of relying on some other guy's explanation, including ours, you might want to page through Larry Swedroe's "The Only Guide to Alternative Investments You'll Ever Need". It's subdivided into "The Good, the Flawed, the Bad, and the Ugly".

MLPs aren't mentioned, perhaps because they can invest in a number of different assets, but the book gives one a good framework to evaluate investments for more than just their lack of correlation between assets.

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You bring up an interesting point though, which is how much risk should I take, given that I could probably do OK with modest gains. Food for thought...!
"I have more than I need, so I don't need to take any risk."
"I have more than I need, so I might as well try for a moonshot with the excess."

I don't have a good answer to this conundrum either. But I believe that investment returns are generally correlated to an investor's level of effort to educate themselves and to do their own due diligence. So if you have more than you need, you may find that you're not necessarily willing to work that hard to pile up even more...
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Old 01-10-2011, 11:49 AM   #22
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v5200, if I were in your shoes, I would set aside the bulk of my portfolio for someone like Evanson Asset Management - Main Page or the like. For money I wanted to lose, I would go with hedge funds, angel investing, MLPs, etc. But money I wanted to keep in the family and not have to mess with would go to a very low-cost DFA funds advisor (but not a high cost advisor). There are a few of them out there. You don't need "magic investing" just because you are a whale.

Some more links for you:
ETF Investing Guide: My Broker's an Honest Fox - Seeking Alpha
Blaine Lourd Profile - Executives - Portfolio.com

And you might as well read the entertaining "Liar's Poker" by Michael Lewis although there are many books about ripping off rich people by Wall Street.
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Old 01-10-2011, 12:06 PM   #23
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If you're in the realm of "accredited investor", then you can save yourself at least 2% in fees and 20% of your unrealized cap gains per year in this part of your portfolio by joining an angel investor's club. But the real reason you'd be interested in joining the club would be to (1) be a better investor, (2) be a business mentor to other entrepreneurs, and (3) apply what you've already learned from the private equity guys... but this time for your benefit.

Oh, and it's hugely intellectually stimulating.
What's an angel investor's club?
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Old 01-10-2011, 12:14 PM   #24
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Congratulations! That seems like a good way to wrap up a career and transition out.
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Old 01-10-2011, 02:02 PM   #25
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What's an angel investor's club?
A group of investors who fund early-stage companies. Many of them are entrepreneurs like OP.

http://www.angelcapitalassociation.o...AQ%202009R.pdf
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Old 01-10-2011, 03:20 PM   #26
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Congratulations on your retirement! Retirement for me is amazing - it's been my best career choice by far.
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Old 01-10-2011, 04:31 PM   #27
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Skype--regarding fixed index annuities--read the February 2011 issue of Money Magazine. It provides great insight into how the annuities are structured and it will answer your question very clearly.
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Old 01-16-2011, 07:25 AM   #28
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V5200
You done quite well getting yourself their in fine fashion and I would highly value yourself as knowing your weaknesses and strengths in making decisons, especially money matters. Keep doing it as you have, is some fine advise I believe.

I would not be no where close into the % you are in on munis with state budgets, but sure there was a tax consideration that helped get you into 25% munis ( alot of state debt and recently muni fund NAV's have been plunging alot and don't look to be good investments any time soon, maybe next 5 years.

The best mutual fund managers of the past have started their own hedge funds so I would say they must be above average investments plus they can short or be all cash if they do not like the looks of the markets, where as a mutual fund would be lucky to be more than 20% cash at any time........ Most Hedge funds have high water marks so only get the extra up to 20% if they surpass your previous highs.


I think I have a similar life to what you have been may not of been as blessed but alright with things being in my mid 50's, single for well over 10 years and children
are 30's, so no pressure there.

I have all but my cash money market into hedge funds and dabble with my cash account a bit when I think I have a quite good short term gain possibility. I would
stay diversified in type of hedge funds, steady eddy and high flyer in prospective.
I believe what you may have said is that you re in funds of hedge funds by your adivisors review and advise/selection that fits your particular needs.

I do like getting the monthly reports how we are (performance reports) how they done it and what they are doing for at present and future. Then again as markets change they can change on a drop of hat and go into preserve mode.

So much of the market is computer trades and the last couple days from reports I read they estimate 70% of trades on U.S. markets are computer trades and many times on a few cents one way or the other.

Anyways keep on doing what you have done in the past, it seems to have worked well. I have done Central American, North America, Europe, Middle East and Asia in last 5 months and and made more in the markets in 2010 than if I would of stayed with my 6 figure job in 2010.

All The Best
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