They are sold to compete with CDs not the stock market.
You'll have to look very carefully at the fine print in the actual annuity contract, which will likely be many pages long (the last one I looked at in detail ran more than 70 pages). The fees will be sprinkled within the contract and paid whether or not the gains exceed targets - although the payments may go up if exceeded. Commissions won't be mentioned as they are paid from the fees.Wahoo, how and when are the fees and commissions paid. From what I can gather they are paid from the expected gains above what the given annuity is set for.
So then in retirement years or approaching years is it best to tool into cd and more secure investments rather then lock up funds with FIA?
From what I do understand is they pay what the index return is (S&P) up to a certain max and the insurance company gets the amount above that. But it is protected if the market goes down.
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So if the S&P does 10% for the year and the annuity is FIA is 5% the annuity is taking the 5% . Is that where the fees and commission are coming from or is there some hidden print in the 50 pages that says they take it up front every year ?
Also what is the average commission that is being paid to the so called advisor that is trying to sell them.
So if the S&P does 10% for the year and the annuity is FIA is 5% the annuity is taking the 5% . Is that where the fees and commission are coming from or is there some hidden print in the 50 pages that says they take it up front every year ? Also what is the average commission that is being paid to the so called advisor that is trying to sell them.
The catch in nearly all (maybe all?) of any product linked to an index value is that they often EXCLUDE dividends. Considering that the dividend yield for an index could be 2%+, you are losing 2% of the total return of the index to the insurance company. .
The problem is "they" can refer to multiple products, each with it's own participation ratio, cap, re-set, or what ever the ins company calls the various numbers within the contract.I don't fully understand them which is why I'm asking the question. From what I do understand is they pay what the index return is (S&P) up to a certain max and the insurance company gets the amount above that. But it is protected if the market goes down.
What I'm trying to understand is what the catch is where and act are the hidden costs that seem to be difficult to find .
My portfolio does have cd and mutual funds but was looking to protect some of it when the market does make a downturn.
Absolutely true. I am putting together an intro investing class for the local school district and in the interests of field research I accepted a free steak dinner (quite good actually) in exchange for sitting through a huckster's pitch for indexed annuities.Wow! You are serious about that statement? I don't question your integrity, but that is so outrageous that I have a hard time believing it. ...
...what AA would be best.
Yes. Put simply, he is lying to you.... So basically my so called "Friend/FA" is looking at his bottom line by telling me there are no up front fees or commissions but some where in the annuity they are costing me ...
That's easy: the AA with the best return for the risk level you are comfortable with.
Thanks for all the insight from everyone. So basically my so called "Friend/FA" is looking at his bottom line by telling me there are no up front fees or commissions but some where in the annuity they are costing me more then changing my AA.
This brings me to my next question with retirement hopefully within the next 5 years and trying to protect my nest egg what AA would be best.
Thanks for all the insight from everyone. So basically my so called "Friend/FA" is looking at his bottom line by telling me there are no up front fees or commissions but some where in the annuity they are costing me more then changing my AA.
This brings me to my next question with retirement hopefully within the next 5 years and trying to protect my nest egg what AA would be best.
Yes. It is very easy for any of us to theorize about our tolerance. It may be quite different when tested though... And make sure you can change [your allocation] when you find you were wrong about your risk tolerance. ...
I understand they need to make money and a portion of my investments are a source of income. But being a friend and someone who I would have hoped would put my money to work best for me makes me second guess anything he reccommends.
When I asked the question about fees and commissions and he was a little vague , that alone puts up the red flags.
I have never been one that liked annuities especially variable annuities is why I asked here. When I asked hm what other AA I could make to do the same thing without the fees he said there wasn't any that gave the protection from declines