Most Humbling

[ziggy29]

Would anyone consider converting a percentage of their portfolio into a fixed annuity at the next top of the market? Convert just enough to cover your living expenses for somewhere really cheap, and manage the rest yourself?

I think it would depend in part as to why the market was near a top (or at least when it's already very richly valued). If it was due to factors that had a good chance of causing a systemic meltdown, then no way. If it was just a garden-variety overvaluation such as in the tech stocks in 1999, then perhaps so.

I'd also want to see which (if any) repealed Depression-era laws that firewalled community banks and investment banks and brokerages and insurance companies may be restored. I'd feel more comfortable with a strong insurer if there was less chance for cross-contamination with all the other financials. Right now if any one of these sneeze, all of them catch a cold together. Even strong insurers who have done everything right aren't immune.

Having said that, I could see myself possibly taking out an SPIA at or near retirement if interest rates go higher -- assuming the cross-contamination risks aren't there any more. Right now these are a terrible deal as their payout is typically based on very low long-term Treasury yields.

 

[W2R]

Would anyone consider converting a percentage of their portfolio into a fixed annuity at the next top of the market? Convert just enough to cover your living expenses for somewhere really cheap, and manage the rest yourself?

I had tentatively planned to get a fixed immediate lifetime annuity with 25% of my nestegg back when I was working towards a bare bones retirement plan, in 2007 and before. I changed my mind when I unexpectedly came into some money last year, since now I won't need to do it.

Right now, I think that depending on an annuity for would be pretty hair-raising, given the problems some insurance companies have been having in this recession.

 

[ls99]

Would anyone consider converting a percentage of their portfolio into a fixed annuity at the next top of the market? Convert just enough to cover your living expenses for somewhere really cheap, and manage the rest yourself?

If I knew it was the top of the market, and knew the a crash is imminent, why of course. Convert all to annuity with TIAA or Vanguard.

But unlikely that I'll ever know.

 

[CuppaJoe]

I was "afraid" of the market way back in November 2007, and in January 2008 I sold all my stocks and put everything in money market funds. I have been in money market funds since then.

Sounds like you bought the "buy and hold" mantra hook, line, and sinker. Sometimes it pays to be afraid of the market. This market gave plenty of warnings to those paying attention.

"Buy and hold" is OK during good times. These aren't good times. A year ago wasn't good times. There were plenty of warnings 18 months ago. Pay attention next time.

I thoroughly disagree with the advice, “pay attention next time.” Not only does it disregard the diversity and extreme awareness of people on this forum but IMO it is very bad advice. How am I to recognize “next time” before it decimates my PF?

My suggestion is to look at now, after all, it’s all we have. The equities in my PF may go to zero, but at the moment their percentage in the PF is low. My simplistic hope is that if enough people put in their play money, or more if it suits their overall financial situation, pretty soon it might look like there is a return to investor confidence.

 

[ziggy29]

If I knew it was the top of the market, and knew the a crash is imminent, why of course. Convert all to annuity with TIAA or Vanguard.

You know that the Vanguard "lifetime income" annuities are issued by AIG, right?

I might add USAA to this list for those who are eligible.

 

[ls99]

You know that the Vanguard "lifetime income" annuities are issued by AIG, right?

I might add USAA to this list for those who are eligible.

Now I know.

 

[REWahoo]

Now I know.

See what happens when you pay attention?