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Variable annuities
Posted on 3/29/11 at 9:39 pm
Posted on 3/29/11 at 9:39 pm
Is there ever any reason to invest in one of these? From the data I've seen, the annual fees (2-4% on most of them i've seen) and taxation of withdrawals as ordinary income outweigh any risk mitigation benefit you could hope to see.
This post was edited on 3/29/11 at 9:42 pm
3
Posted on 3/29/11 at 9:40 pm to GeneralLee
Posted on 3/29/11 at 9:52 pm to GeneralLee
quote:
Is there ever any reason to invest in one of these?
Yeah, you really like the guy who is selling you the annuity and want to give him money.
Posted on 3/30/11 at 7:11 am to TheHiddenFlask
I've got a Vanguard VA. I think I had a reason when I got it.
Posted on 3/30/11 at 7:29 am to bovine1
For clarification, there are some reasons for it, but that represents about .1% of the people who get it for those reasons. However, in all cases I can think of, virtually the same results can be achieved at a lower cost with a little effort.
They are probably good for people who aren't super savvy in finance and would be likely to do something wrong when doing it for themselves. I often forget the words of wisdom that my strategy teacher told me: "you're not normal and you can't assume that you are a good population sample".
They are probably good for people who aren't super savvy in finance and would be likely to do something wrong when doing it for themselves. I often forget the words of wisdom that my strategy teacher told me: "you're not normal and you can't assume that you are a good population sample".
Posted on 3/30/11 at 7:43 am to TheHiddenFlask
quote:
virtually the same results can be achieved at a lower cost with a little effort.
What are these options? Buying out of the money puts? Buying term-life insurance?
Posted on 3/30/11 at 7:45 am to bovine1
quote:
I've got a Vanguard VA. I think I had a reason when I got it.
How has it performed for you? Looks like the Vanguard VA has about .7% annual fees, much lower than other funds but looking through their prospectus I don't see any 5% compounding death benefit that other funds offer.
Posted on 3/30/11 at 7:56 am to GeneralLee
quote:
Buying out of the money puts?
That was the first thing that popped in my mind, but from my understanding of VA's, they could require a few combinations of financial derivatives to replicate. A plain vanilla VA could easily be done this way, assuming you remember to roll your options.
With VA's you are paying a very heavy commission for a company to do a very simple set of financial transactions.
quote:
Buying term-life insurance?
Likely a more expensive version of a VA, but I don't know enough to rip on TLI.
Posted on 3/30/11 at 9:06 am to TheHiddenFlask
quote:
Yeah, you really like the guy who is selling you the annuity and want to give him money.
This, years ago some were good. We have some that were bought 7 years ago and were paying in the 6%'s.
Posted on 3/30/11 at 9:09 am to LSUDad
quote:
This, years ago some were good. We have some that were bought 7 years ago and were paying in the 6%'s.
I assume you are talking about fixed annuities paying in the 6% area.
Posted on 3/30/11 at 9:28 am to saint308
quote:
I assume you are talking about fixed annuities paying in the 6% area.
Yep........
Posted on 3/30/11 at 9:41 am to LSUDad
quote:
Yep........
Yeah, that is pretty solid. 6% with no annual costs. I assume these have now re-adjusted? What was the floor 3%?
Posted on 3/30/11 at 10:12 am to GeneralLee
If you can find a VA product that charges less than 1% in M&E fees with a good lineup of mutual funds, it could turn out to be a good deal.
The tax deferral of VA accounts is the main selling point.
The tax deferral of VA accounts is the main selling point.
Posted on 3/30/11 at 11:15 am to Dr Rosenrosen
quote:
The tax deferral of VA accounts is the main selling point.
Not today. I think it could be appropriate to invest retirement dollars (rollover money) into a VA for the living benefits. Having a guarantee of 5% withdrawals for the rest of your life seems to be appealing to some folks.
Posted on 3/30/11 at 11:40 am to Broke
I'm happy with it. I bought it years ago before Roths so I could sock a little more money away that would grow tax deferred. As I understand it the death benefit is limited to what you put in but it's been a long time since I researched it.
This post was edited on 3/30/11 at 1:26 pm
Posted on 3/30/11 at 11:43 am to bovine1
quote:
How has it performed for you?
I'm an advisor. It isn't a place for all money. And it isn't a 5% compounding death benefit but I could be wrong. Each annuity and insurance company is different. And on newer death benefits, most will lock in once per year and if it's at a higher amount than what you put in, you'll get the higher amount.
Posted on 3/30/11 at 11:52 am to Broke
I have a Lincoln Financial VA that has done very well the past 2 years that I've had it. I will probably get the Prudential VA in a couple of years.
Posted on 3/30/11 at 12:27 pm to Broke
quote:
I think it could be appropriate to invest retirement dollars (rollover money) into a VA for the living benefits. Having a guarantee of 5% withdrawals for the rest of your life seems to be appealing to some folks.
It gives a lot of folks a peace of mind. If that is what lets them sleep at night then I think they have a place in a portfolio.
Posted on 3/30/11 at 12:29 pm to tiger perry
quote:
I have a Lincoln Financial VA that has done very well the past 2 years that I've had it.
The Lincoln annuity has a real cool distributoin feature that works real well for NQ contracts. We don't use VAs that often but when we do it is generally Lincoln and Jackson.
Posted on 3/30/11 at 1:09 pm to saint308
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