Money Market Risk

Notmuchlonger said:
Well when you are getting 6% for your annuities you can throw out crazy things right.. :2funny:
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Just to set the record straight, I'm not sure where you are coming from. I do believe that if I buy a SPIA at age 53 and live to age 86 using current Vanguards payouts, I will be getting an IRR of 6%.

I could go back and show you a few older links where several people, even a few who are apparently not my friends anymore, confirmed that the IRR is 6% on that investment.

You, and my best friend, still don't believe it?
 
RockOn said:
Just to set the record straight, I'm not sure where you are coming from. I do believe that if I buy a SPIA at age 53 and live to age 86 using current Vanguards payouts, I will be getting an IRR of 6%.

I could go back and show you a few older links where several people, even a few who are apparently not my friends anymore, confirmed that the IRR is 6% on that investment.

You, and my best friend, still don't believe it?
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Whats with the personal attacks? :(
 
Notmuchlonger said:
Whats with the personal attacks? :(
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Just answer my question please, do you believe it or not?

P.S. I waited about 20 minutes, no answer. Maybe I've been purged, or just got put on another ignore list. SPIA annuities are not really a horrible investment. If you are risk adverse they are likely comparable to the return you can get from CD's or bonds with no volatility. You have Insurance Company Risk (and possibly increased inflation risk) though, don't forget that. For those who care, the IRR for a SPIA is around 6% if you take it out at 53 and live to 86. Many of you would have a similar IRR if you think you will live to the mid to late 80's. It goes up, peaking over 7% if you live long enough. If you die at the table age of around 78 or 79, it drops to about 5.25%. Why don't we just all agree that is true (or actually do something to prove it is not) and move on instead of dredging this up over and over again.
 
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RockOn said:
Just answer my question please, do you believe it or not?

P.S. I waited about 20 minutes, no answer. Maybe I've been purged, or just got put on another ignore list. SPIA annuities are not really a horrible investment. If you are risk adverse they are likely comparable to the return you can get from CD's or bonds with no volatility. You have Insurance Company Risk (and possibly increased inflation risk) though, don't forget that. For those who care, the IRR for a SPIA is around 6% if you take it out at 53 and live to 86. Many of you would have a similar IRR if you think you will live to the mid to late 80's. It goes up, peaking over 7% if you live long enough. If you die at the table age of around 78 or 79, it drops to about 5.25%. Why don't we just all agree that is true (or actually do something to prove it is not) and move on instead of dredging this up over and over again.
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I guess I, or this thread, must have been restricted because I get emails with responses but they don't show up here. Maybe the truth is too painful, too much.
 
lsbcal said:
Hopefully my WAMU account is safe since it's FDIC insured. I notice that the stock is under $5 so the stockholders are probably nervous. Looking at Indymac it took it about 2 months to go from $5 to near zero now. These are the times to understand the different risk levels for different financial instruments and who is taking on the most risk. A few months ago when Countrywide was in the center of the news, Larry Swedroe said he was advising a relative to put money into their CD's which were paying better then average because of the bad news. Apparently he viewed those insured CD's as extremely low risk. Perhaps the WAMU account is paying well right now for similiar reasons.
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Hmmm...maybe I was too confident, maybe I should panic? WAMU took a 35% drop today to $3.23 per share. I may need some hand holding :p. And we're going on a long vacation next week.
 
Back to the original focus of the thread...if an institution with the size and integrity of Vanguard ever breaks the buck (ie, fails to bail out a money fund whose net asset value has fallen below $1.00), I'd hope by that point to be long only canned goods and ammunition. That scenario is indeed a long way off, not to be fretted over today.

Tom
 
lsbcal said:
Hmmm...maybe I was too confident, maybe I should panic? WAMU took a 35% drop today to $3.23 per share. I may need some hand holding :p. And we're going on a long vacation next week.
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Your WAMU account is FDIC insured, right? I think that as long as you are under the $100K limit, you will be fine.
 
RockOn said:
Good call, the SP500 futures are up 11 points on the news.
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Too bad it didn't hold. SPX finished down almost 1%. I'm cashing in my change this week and sending it to the 401k. :)
 
For about 2 days last month I was a little concerned about some of Primes positions and whether they'd cut the dividend payout to cover any short to intermediate issues.

I'm not at all worried about them breaking the buck. But your xx% yield might drop a little bit if they have to eat some of the paper they're holding.
 
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Funny but I keep getting emails that either don't show up or are modified on this thread.

Mostly they have to do with annuities. I would like to show that taking a lump sum of money and buying an SPIA annuity from Vanguard (with the 6% IRR return I have talked about, assuming living to age 86) has the same investment result as taking exactly that same lump sum and buying a mutual fund with a 6% annualized return and also living to age 86. For some reason some just don't seem to want that to be true. I do not know why. Someone please enlighten me. I cannot figure it out. If I am wrong, please show me why with some real numbers.
 
Well lets see, I've explained to you three times (at least) why your well laid calculations are irrelevant.

Why would explaining it again produce a different result?

In the meanwhile, this is a thread regarding money market risk. While you were marginally baited about your one-note-wonder-tapping about annuities, since then you've elected to continue to invite off topic discussion under some guise of problems with 'email' whatever that has to do with anything. Very repetitively and without much interest shown.

Nobody is responding to you because a lot of people put you on ignore yesterday when your head spontaneously exploded.

If you'd like to have a discussion about your annuity concerns, please start a thread regarding them and enjoy yourself. I mean, its all about getting attention, right?

Seems to me its just more desire for "open and honest posting" about something you feel very strongly about.
 
cute fuzzy bunny said:
Well lets see, I've explained to you three times (at least) why your well laid calculations are irrelevant.

Why would explaining it again produce a different result?

In the meanwhile, this is a thread regarding money market risk. While you were marginally baited about your one-note-wonder-tapping about annuities, since then you've elected to continue to invite off topic discussion under some guise of problems with 'email' whatever that has to do with anything. Very repetitively and without much interest shown.

Nobody is responding to you because a lot of people put you on ignore yesterday when your head spontaneously exploded.

If you'd like to have a discussion about your annuity concerns, please start a thread regarding them and enjoy yourself. I mean, its all about getting attention, right?

Seems to me its just more desire for "open and honest posting" about something you feel very strongly about.
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Just facts.

Your explainations are lacking. You are not proving anything by saying it is irrelevant. It is relevant if I am using actual cash flow results. Saying I am doing it wrong or using the wrong methods doesn't change the fact that I can show you that annuities have the same investment outcome as any other 6% annualized investment. (With my age 86 assumption and Vanguards payouts). Why don't you take me on there with some facts instead of going on about why the IRR is an incorrect way to measure investments?

I understand the Thread is hijacked, but I didn't start it. I got insulted unfairly and didn't just let it go.

My email is actually jacked up or being edited, I do not know why.
I get emails with comments that are not showing up on the thread.

If I've been put on ignore I wish that didn't happened. When Nords refused to stop you from insulting me, I thought it was appropriate to push back. Awhile back Nords admitted I was correct on the 6% calculation, now he allows you to once again bash me about it. Hard for me to understand. In any case, I shouldn't have gone all out in my response.

I don't care about attention, I see this as entertainment with a chance to learn something. I do care if annuities are are good investment for me or others on the Forum. I don't see why that bothers you so much.

Lastly, what internal rate of return do you think annuity companies base their payouts on? The way you argue it, you must think it is 1% or something like that. I think 5.25% for the motality table age or 6% if your lucky enough to live 7 years longer feels about right. When it calculates to 6% for age 86, that looks like confirmation to me.
 
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