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A teetotaling
beer aficionado
Picture of NavyGuy
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There are many different kinds of annuities beyond those that you simply put cash in and get paid monthly with it ending when you die. There are those with terms (5, 10, 15 years etc) where you accumulate interest and/or take yearly/monthly payments. At the end of the term if you're still living you get what's left. You can also have such policies with survivor benefits so if you die, the proceeds all go to the designated person. These of course pay less interest. It's a risk reward type of thing.

I would never put a large portion of my portfolio into such an instrument, but there might be a place for one in a balanced portfolio instead of CD's or bonds.



Men fight for liberty and win it with hard knocks. Their children, brought up easy, let it slip away again, poor fools. And their grandchildren are once more slaves.

-D.H. Lawrence
 
Posts: 8907 | Location: Fort Worth, Texas | Registered: February 07, 2007Reply With QuoteReport This Post
I believe in the
principle of
Due Process
Picture of JALLEN
posted Hide Post
quote:
Originally posted by NavyGuy:
There are many different kinds of annuities beyond those that you simply put cash in and get paid monthly with it ending when you die. There are those with terms (5, 10, 15 years etc) where you accumulate interest and/or take yearly/monthly payments. At the end of the term if you're still living you get what's left. You can also have such policies with survivor benefits so if you die, the proceeds all go to the designated person. These of course pay less interest. It's a risk reward type of thing.

I would never put a large portion of my portfolio into such an instrument, but there might be a place for one in a balanced portfolio instead of CD's or bonds.


There are indeed, a bewildering array of choices and combinations, which makes them even more imponderable to evaluate unless you are an actuary and investment analyst, and not certain then. I believe it is impossible to figure which will work out best in the unknowable future.

The best investments are usually very simple, requiring nothing much beyond 4 function calculators and knowing what all those numbers really mean.




Luckily, I have enough willpower to control the driving ambition that rages within me.

When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson

"Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown
 
Posts: 42616 | Location: Texas hill country | Registered: July 04, 2005Reply With QuoteReport This Post
Member
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Some general advice. Up to the day you retire you will be confident you have invested well and wisely. The first day of your retirement you will be positive you haven't saved enough and retirement was a big mistake. Went through it, I have since recovered and retiring was the best decision for me.
--------------------------------------------------
This sounds like me, it fits my personality dynamics. Being self employed I am hedging my bets by trying to work less and enjoy life more. This is not easy because there are always work demands.

No one has yet mentioned the status of health, which to me is huge factor. A long period of disability with ongoing medical expenses can be pretty challenging even with Medicare. I guess this is the unknown variable in the equation.

I am glad to get this information on Annuities. My Dad was very proud that the OUTLIVED his annuity. I heard this repeatedly before his death.
 
Posts: 2512 | Location: MS GULF COAST | Registered: January 02, 2015Reply With QuoteReport This Post
The Velvet Voicebox
Picture of Cliff
posted Hide Post
I see there is a difference in fee based financial advisor and fee only financial advisor's. Any pro's or cons in either?



"All great things are simple, and many can be expressed in single words: freedom, justice, honor, duty, mercy, hope."

--Sir Winston Churchill

"The world is filled with violence. Because criminals carry guns, we decent law-abiding citizens should also have guns. Otherwise they will win and the decent people will lose."

--James Earl Jones



 
Posts: 6463 | Location: Northern Virginia | Registered: August 31, 2002Reply With QuoteReport This Post
Just because you can,
doesn't mean you should
posted Hide Post
Short version, stay the hell away from annuities and the “investment advisors” that recommend them.
They are looking out for their future, not yours.
 
Posts: 3401 | Location: North GA | Registered: August 22, 2002Reply With QuoteReport This Post
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quote:
Originally posted by Pipe Smoker:
He charges me ~1.25% percent per annum for funds under management. The cost of trades he makes to adjust for changing conditions is covered by his fee. Generally speaking, the larger your account, the lower the rate.


Glad that works for you.

Personally - no way I would pay that for those services . Way too much money for little in return.

For $1M under mgmt that would be over $1K / month just for paper pushing on your behalf.

Mix of appropriate no-load funds with Vanguard. On-Line access. Fees on their index funds are typically two-TENTHs of one percent.

-------------------------------------


Proverbs 27:17 - As iron sharpens iron, so one man sharpens another.
 
Posts: 5987 | Location: Eastern NC | Registered: September 20, 2004Reply With QuoteReport This Post
I believe in the
principle of
Due Process
Picture of JALLEN
posted Hide Post
quote:
Originally posted by Sig209:
quote:
Originally posted by Pipe Smoker:
He charges me ~1.25% percent per annum for funds under management. The cost of trades he makes to adjust for changing conditions is covered by his fee. Generally speaking, the larger your account, the lower the rate.


Glad that works for you.

Personally - no way I would pay that for those services . Way too much money for little in return.

For $1M under mgmt that would be over $1K / month just for paper pushing on your behalf.

Mix of appropriate no-load funds with Vanguard. On-Line access. Fees on their index funds are typically two-TENTHs of one percent.

-------------------------------------


At some account/net worth size, it is legal to charge in the basis of performance.

In 1956, Warren Buffett set up his first investment partnership.

quote:
I got half the upside above a four percent threshold, and I took a quarter of the downside myself. So if I broke even, I lost money. And my obligation to pay back losses was not limited to my capital. It was unlimited.


So the partners got the first 4% each year, and split everything over that with Buffett. If the result was less than 4%, Buffett was on the hook. That concentrates the mind and aligns the incentives, doesn’t it?




Luckily, I have enough willpower to control the driving ambition that rages within me.

When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson

"Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown
 
Posts: 42616 | Location: Texas hill country | Registered: July 04, 2005Reply With QuoteReport This Post
Member
posted Hide Post
quote:
Originally posted by JALLEN:


So the partners got the first 4% each year, and split everything over that with Buffett. If the result was less than 4%, Buffett was on the hook. That concentrates the mind and aligns the incentives, doesn’t it?


Yes it does! But I doubt that is the arrangement typically offered to the 'man on the street'. Big Grin

In fact - quote those terms to the vast majority of financial advisors and I bet you would get laughed out of the building.

And guys like Warren Buffett and Bill Miller are rare birds indeed.

------------------------------------------


Proverbs 27:17 - As iron sharpens iron, so one man sharpens another.
 
Posts: 5987 | Location: Eastern NC | Registered: September 20, 2004Reply With QuoteReport This Post
I believe in the
principle of
Due Process
Picture of JALLEN
posted Hide Post
quote:
Originally posted by Sig209:
quote:
Originally posted by JALLEN:


So the partners got the first 4% each year, and split everything over that with Buffett. If the result was less than 4%, Buffett was on the hook. That concentrates the mind and aligns the incentives, doesn’t it?


Yes it does! But I doubt that is the arrangement typically offered to the 'man on the street'. Big Grin

In fact - quote those terms to the vast majority of financial advisors and I bet you would get laughed out of the building.

And guys like Warren Buffett and Bill Miller are rare birds indeed.

------------------------------------------


It's actually illegal for accounts less than a couple of million. I forget the exact minimum.

I owned a Registered Investment Advisor briefly until my declining health forced me to retire.

We were forced by regulations to charge a fee, forbidden to charge on the basis of performance for most accounts. I did identify several of my prior real estate colleagues and legal clients who could have qualified, and was eager to offer performance based fee based on increase in account value annually, but ended up closing the operation before setting up any of those accounts.




Luckily, I have enough willpower to control the driving ambition that rages within me.

When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson

"Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown
 
Posts: 42616 | Location: Texas hill country | Registered: July 04, 2005Reply With QuoteReport This Post
I believe in the
principle of
Due Process
Picture of JALLEN
posted Hide Post
In thinking about these things it occurs to me that an important question to ask a prospective salesman/“adviser” is where he puts HIS money.

You wouldn’t be comfortable eating at a restaurant if you knew the chef ate elsewhere, would you?




Luckily, I have enough willpower to control the driving ambition that rages within me.

When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson

"Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown
 
Posts: 42616 | Location: Texas hill country | Registered: July 04, 2005Reply With QuoteReport This Post
Member
posted Hide Post
If you are still intent on an annuity - you could always explore your options with Vanguard. Excellent company.

Was surfing around their site and found this:

https://investor.vanguard.com/annuity/

--disclaimer-- I have had great experience with Vanguard over 25 years but don't own any annuities through them.

------------------------------------------------


Proverbs 27:17 - As iron sharpens iron, so one man sharpens another.
 
Posts: 5987 | Location: Eastern NC | Registered: September 20, 2004Reply With QuoteReport This Post
The Velvet Voicebox
Picture of Cliff
posted Hide Post
I appreciate this guys. Now I'm researching things I was not aware of before.



"All great things are simple, and many can be expressed in single words: freedom, justice, honor, duty, mercy, hope."

--Sir Winston Churchill

"The world is filled with violence. Because criminals carry guns, we decent law-abiding citizens should also have guns. Otherwise they will win and the decent people will lose."

--James Earl Jones



 
Posts: 6463 | Location: Northern Virginia | Registered: August 31, 2002Reply With QuoteReport This Post
I believe in the
principle of
Due Process
Picture of JALLEN
posted Hide Post
quote:
Originally posted by Cliff:
I appreciate this guys. Now I'm researching things I was not aware of before.


Be careful. The only incentive for innovation in the finance field is to glom onto more fees.

Whatever you do, deal with established, prosperous nationally known firms. Watch out especially for the local whiz kid who has gotten rich as an adviser, investment manager who is generously accepting a privileged few to join him in earning outsized returns with virtually no risk. Unless you want to be a TV star, that is, on “American Greed!”

Stick with the bigs. Schwab, Vanguard, Fidelity and that crowd. Even then, try to learn about what you are being told to do. Read, investigate. Scepticism is a valuable trait to develop.




Luckily, I have enough willpower to control the driving ambition that rages within me.

When you had the votes, we did things your way. Now, we have the votes and you will be doing things our way. This lesson in political reality from Lyndon B. Johnson

"Some things are apparent. Where government moves in, community retreats, civil society disintegrates and our ability to control our own destiny atrophies. The result is: families under siege; war in the streets; unapologetic expropriation of property; the precipitous decline of the rule of law; the rapid rise of corruption; the loss of civility and the triumph of deceit. The result is a debased, debauched culture which finds moral depravity entertaining and virtue contemptible." - Justice Janice Rogers Brown
 
Posts: 42616 | Location: Texas hill country | Registered: July 04, 2005Reply With QuoteReport This Post
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