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Variable Annuities? Worth it?
Old 04-20-2007, 02:11 PM   #1
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Variable Annuities? Worth it?

Hey guys!

Can anyone tell me what I should look for, and look out for when it comes to Variable Annuities?

I'm thinking about putting $100k into a VA, I have 30years or so to let it grow tax free, sounds like a great addition to the $50k I already have in my 401k plan.

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Re: Variable Annuities? Worth it?
Old 04-20-2007, 02:17 PM   #2
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Re: Variable Annuities? Worth it?

Stay away. Generally a bad idea.
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Re: Variable Annuities? Worth it?
Old 04-20-2007, 02:21 PM   #3
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Re: Variable Annuities? Worth it?

Hi Breitling,

Do a search on "variable annuity". The past posts devoted to this topic should keep you busy for awhile. You will find a lot of contradictory passion devoted to this subject. You will also probably be able to generate a new passionate thread once you know the players and the buttons to push.

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Re: Variable Annuities? Worth it?
Old 04-20-2007, 02:40 PM   #4
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Re: Variable Annuities? Worth it?

Quote:
Originally Posted by Breitling
Hey guys!

Can anyone tell me what I should look for, and look out for when it comes to Variable Annuities?

I'm thinking about putting $100k into a VA, I have 30years or so to let it grow tax free, sounds like a great addition to the $50k I already have in my 401k plan.

2B will be here shortly to yell at you.
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Re: Variable Annuities? Worth it?
Old 04-20-2007, 03:03 PM   #5
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Re: Variable Annuities? Worth it?

Put your cash in the equivalent vanguard tax managed index fund and save yourself some cash and headaches.
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Re: Variable Annuities? Worth it?
Old 04-20-2007, 04:42 PM   #6
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Re: Variable Annuities? Worth it?

Thanks guys, I'll do some more reading and searching right after I post this.

I created an intro thread that tells more of my situation here: http://early-retirement.org/forums/i...?topic=13458.0

I'll give you guys the numbers, and maybe you guys can give me an idea of what I need to research further.

To recap my intro thread, I just sold a business I owned, after taxes I came out with $600k. I'm going to put $100k into my new business venture, this will cover my initial inventory, start up costs and 24 months of living expenses. I'm hoping that the business will take off and cover all our expenses before the startup cash runs out. If not, we are both prepared to take on part time jobs to cover our expenses for the next 10 years, until we retire-retire.

That leaves me with $500k to invest for my early retirement income, and I have about 10 years to before I want tap into it.

I'll go research tax managed index funds right now.

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Re: Variable Annuities? Worth it?
Old 04-20-2007, 07:24 PM   #7
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Re: Variable Annuities? Worth it?

Breitling, unless you are a masochist you are not likely to enjoy discussing variable annuities on this forum.

Ha
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Re: Variable Annuities? Worth it?
Old 04-20-2007, 07:43 PM   #8
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Re: Variable Annuities? Worth it?

Quote:
Originally Posted by HaHa
Breitling, unless you are a masochist you are not likely to enjoy discussing variable annuities on this forum.

Ha
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Re: Variable Annuities? Worth it?
Old 04-20-2007, 08:04 PM   #9
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Re: Variable Annuities? Worth it?

Here's an article from Scott Burns:

Variable annuities not for all

and

Dr. William Reichenstein's analyses www.finance.baylor.edu/Reichenstein/research.htm+william+reichenstein&hl=en&ct=clnk&cd =2&gl=us]annuities vs. mutual funds[/url]

- Alec
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Re: Variable Annuities? Worth it?
Old 04-21-2007, 05:02 AM   #10
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Re: Variable Annuities? Worth it?

I am not a fan of VA for wealth accumulation... especially with the current tax laws. It might make sense for certain individuals if the cap gain/div tax laws expire.

Pay attention to the fees... that is where it can go painfully bad. Plus you are usually locked in with a backend load for several years.

Bottom line, if the VA has some reasonable fund choices and fees are low... you are paying a little extra for the defered tax benefit. Do you need to defer taxes?

All of the additional insurance components on these things seem to be of little benefit and add to the cost. If you need life insurance, select a good term policy.
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Re: Variable Annuities? Worth it?
Old 04-21-2007, 05:46 AM   #11
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Re: Variable Annuities? Worth it?

they have a place but require careful examination and a reason why. im starting to look at some low cost ones not as my stock investment bucket but as a way of increasing my income bucket.

i could use bonds or money markets soley but a way to kick the yield is to combine that with both an index linked annutiy with a capital preservation guarantee and one with a min rate guarantee thats market linked. while the downside is protected and can serve as a bond proxy the upside potential is greater in up market years after expenses than the bonds alone.
they are crappy proxies for stock investments but work just great to enhance income.
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Re: Variable Annuities? Worth it?
Old 04-22-2007, 08:03 PM   #12
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Re: Variable Annuities? Worth it?

Quote:
I'm thinking about putting $100k into a VA
This is a joke, right?
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Re: Variable Annuities? Worth it?
Old 04-22-2007, 08:38 PM   #13
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Re: Variable Annuities? Worth it?

If your insisting on annuities look very closely at the costs.
Some are so bad they should be illegal !!
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Re: Variable Annuities? Worth it?
Old 04-22-2007, 08:53 PM   #14
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Re: Variable Annuities? Worth it?

Has anyone looked into a Vanguard Fixed Annuity?

https://flagship.vanguard.com/VGApp/...iewContent.jsp

Their new rate is nothing to get excited about:

Quote:
The annual effective interest rate, as of 04/16/2007, for the Vanguard Single 5 is 4.30%
Same with Ebonds and Ibonds. New rates will be released 1 May but I believe they will be lower. Based on:
Quote:
[The next I bond inflation component will be 2.42%, down from the current 3.10%.
http://www.savings-bond-advisor.com/...bond-alert-029
Who has nailed it since I started reading his site.

Ebonds - 30 year fixed, I have given up on until their rates are much higher.
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Re: Variable Annuities? Worth it?
Old 04-23-2007, 09:58 AM   #15
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Re: Variable Annuities? Worth it?

I feel dirty for reading this thread...
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Re: Variable Annuities? Worth it?
Old 04-23-2007, 10:56 AM   #16
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Re: Variable Annuities? Worth it?

Quote:
Originally Posted by Mwsinron
I feel dirty for reading this thread...
Go buy some Vanguard Index soap and take a nice hot shower...........
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Re: Variable Annuities? Worth it?
Old 04-23-2007, 10:58 AM   #17
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Re: Variable Annuities? Worth it?

Quote:
Originally Posted by FinanceDude
Go buy some Vanguard Index soap and take a nice hot shower...........
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Re: Variable Annuities? Worth it?
Old 04-23-2007, 11:28 AM   #18
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Re: Variable Annuities? Worth it?

Ah clean again! Sort of
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