clifp
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Oct 27, 2006
- Messages
- 7,733
yes you did but you spent alot of words talking about the downside of annuities which could be implied as applying to SPIAs
Ok let me more concise. When you a purchase an SPIA (or any annuity) what you really are doing is buying a senior bond with a maturity equal to the rest of your life, from a single company. The bond is very illiquid, but safer than a typical corporate bond. Still the company you loaned money to could go out of business leaving your financial future in trouble if you aren't diversified.
Lots of folks who wouldn't be caught dead buying an individual corporate bond, are perfectly comfortable handing over 1/2 or more of their life saving to purchase an annuity from an insurance company. If people understand what they are doing and say that's cool XYZ insurance company will never go out of business my money is safe, than fine. My believe is very few including Rob do understand this.
the most probable risk with SPIAs is you dont get as big of a return as you MIGHT in the stock market, but unlike SPIAs recently people HAVE lost money investing in stocks. and i wouldnt be surprised if people lose money investing in stocks in the future before anyone loses money on an SPIA.
Well I am happy your crystal ball is able to confidently predict what will happen in the next 30 to 50 years. Mine has been shattered. Relying on the future to be pretty much like the past, coupled with out right dismissing improbable events (housing prices across the country will drop) has caused catastrophic damage to our economy.
A few people (Running Man in particular) were on the board a year or two warning about possible dangers with leverage and the housing market. I dismissed his warning as being too alarmist, to my great expense. I am doing the same thing about annuities, and government bonds defaults. I recognize that neither insurance companies going out of business in large numbers, nor Uncle Sam defaulting bonds or hyperinflating the debts, is a particularly likely event. But it is NOT the rantings of tin foil brigade member.