We're Saved! Buy Variable Annuities

[2B]

What limited credibility Ben Stein had with me is totally gone. To save us from the mental rigors of investing when we age, he suggests variable annuities.

http://finance.yahoo.com/columnist/article/yourlife/7314

I guess if my simple asset allocation with ETFs gets beyond me I could always get a balance fund that has the allocation already programmed in. But wait! Then I wouldn't be supporting the people paying ol' Ben to say idiotic crap like that.

 

[REWahoo]

Interesting that today's Scott Burns column is entitled "Annuity Bait Gets Fewer Bites" and once again takes variable annuities to task:

The enthusiasm of the sales force continues. But the investing public is having second thoughts. Yep, you guessed it: The topic is my favorite useless investment product, the variable annuity.


My favorite way to benchmark this [varaible annuity performance], which I've been doing for years, is to race a simple no-commission, no-penalty, low-cost investment in the Vanguard 500 Index fund against the entire stable of comparable variable annuity accounts.

In the entire stable of the 1,743 large-blend variable annuity accounts with 10-year track records, only 37 beat the simple, out-of-favor index.

That's the equivalent of a 50-to-1 long shot.

 

[cute fuzzy bunny]

Monkey and a dartboard could do better.

Did Stein really just say "the US economy is about to run into a hole, so run to your financial planner and buy a variable annuity so when you're old and stupid and everythings frigged up, you might still have money coming in"?

 

[alphabet soup]

Ben Stein is just a paid shill for the insurance industry and anyone else who will write him a check.

He's been hawking products for years. Why does he have any more credibility in finance than, say, Kirty Alley?

 

[2B]

Monkey and a dartboard could do better.

Did Stein really just say "the US economy is about to run into a hole, so run to your financial planner and buy a variable annuity so when you're old and stupid and everythings frigged up, you might still have money coming in"?

CFB,

You'll have to read the article to get any complete context but I read that when you're too old to be able to understand how to invest your own money you'll be glad you bought variable annuities.

Now, my FIL has several annuities and one of them is a variable. I can assure you that even though he is only 85 he has no idea how stupid is decision was to buy that variable annuity. That's one of the benefits of Alzheimer's.

 

[Ed_The_Gypsy]

I just read Scott Burns' article, printed it out and e-mailed it to family members.

OK, the variable annuity is a dog, and Ben Stein must be a shill. (I still like some of the things he says, though.)

 

[dex]

I never understood the benefit of variable annuities. If you put your money into Vanguard High Yield bond fund you get a better income stream and have you principal available to you. Am I wrong? Seriously Vang. High Yield Bond fund is paying about 7.5% interest right now.

 

[brewer12345]

I never understood the benefit of variable annuities.  If you put your money into Vanguard High Yield bond fund you get a better income stream and have you principal available to you.  Am I wrong? Seriously Vang. High Yield Bond fund is paying about 7.5% interest right now.

VAs are generally guaranteed in some way by an insurance company, junk bonds are not. But you pay so much fr the guarantee and the management fees that it is a majorly losing proposition.

 

[unclemick]

I'm with Brew

VA's are too high a price to play defense for most posters to this forum. Most have done the math to get to - or are in ER.

Variable annuities may have place for reasons other than just financial(think emotional) but it ain't in the numbers.

heh heh heh - I looked into VA's offered by Vanguard in the 1990-2 period and passed for my situation. And they were (I thought) the most competitive fee wise at the time.