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Opinions on fixed-index annuities...
Posted on 1/16/13 at 5:49 pm
Posted on 1/16/13 at 5:49 pm
I understand that your principle is not subject to losses in the market in down years and when the index is up say, 13% you may only get a 6% return on your money. But, if it's included as one facet of a portfolio that has a 401k and other IRA's, what's the downside? Is it not a good choice to provide a foundation for retirement income?
What about including a "guaranteed income for life" rider that costs about 0.5%-0.7% per year based on the value of the account?
What about including a "guaranteed income for life" rider that costs about 0.5%-0.7% per year based on the value of the account?
5
Posted on 1/16/13 at 7:27 pm to Jake88
They are a decent way to invest your safe money that is not needed for liquidity. Not sure you will be able to find an annualized cap as high as you stated, but nonetheless, they provide you with a guaranteed return and some upside. As long as it is not viewed as a growth position, it can serve a purpose in the investment portfolio.
Posted on 1/17/13 at 9:52 am to Jake88
They have tax advantages, but not I'm a fan unless you're within less than 10 years of retirement. I'm not investing in them until after maxing out my ROTH and SEPP IRA's, it's just not worth tying up my money for mediocre returns.
This post was edited on 1/17/13 at 1:50 pm
Posted on 1/17/13 at 2:14 pm to Jake88
quote:
Opinions on fixed-index annuities...
They have their place. A lot of people are quick to criticize them for being expensive, but with a small piece and in the right situation they make sense. You have to be cautious of those FA's, agents, reps, or whatever selling them to everyone. They draw a lot of interest because of their healthy commission.
Posted on 1/17/13 at 2:15 pm to Jake88
quote:
But, if it's included as one facet of a portfolio that has a 401k and other IRA's, what's the downside?
that's the best way to think of it. everyone has a different risk tolerance, some people would like to have a percent of their portfolio guaranteed. im going to wait around a few years until interest rates rise and see if i can lock in at a guaranteed 4%. when i get older it'd be nice to stash some money at 4% no matter where rates are.
ETA: im talking a fixed annuity
This post was edited on 1/17/13 at 2:16 pm
Posted on 1/17/13 at 8:31 pm to Jake88
Be careful with the surrender period (try not to go out too far) and if you are not close to retirement there is no need for an income rider. If your annuity becomes due then you can simply roll it to another one in a few years Probably with better options... so keep the expenses down unless needed
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