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Started By
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re: Annuity or Lump? Updated for 1.6 Billion
Posted on 10/19/18 at 12:29 pm to Thib-a-doe Tiger
Posted on 10/19/18 at 12:29 pm to Thib-a-doe Tiger
quote:Only after 30 years.
you will also go broke with a billion dollar annuity
2
Posted on 10/19/18 at 12:31 pm to Thib-a-doe Tiger
quote:
If you have no preference in annuity vs lump sum: if you go to a financial professional and they tell you to take the annuity, fire them immediately
Eh, from a behavioral finance standpoint, it has some merit. We know it's not the best financial decision, but we also know people are highly emotional. I have little doubt that the majority of people would be better off with the annuity.
Posted on 10/19/18 at 12:31 pm to ell_13
quote:AND bankruptcy or some shite that prevents you from getting your full payout.
the lack trust in future taxes.
Posted on 10/19/18 at 12:31 pm to ell_13
It’s happened. There’s lottery winners that get their annual payment and spend the bulk of it repaying debt that they took out at extreme interest against it
Posted on 10/19/18 at 12:32 pm to castorinho
quote:Wait... you're worried about bankruptcy getting 11-44 million a year?
AND bankruptcy or some shite that prevents you from getting your full payout.
Posted on 10/19/18 at 12:32 pm to ell_13
I think he means whatever entity guarantees the annuity
Posted on 10/19/18 at 12:33 pm to Thib-a-doe Tiger
quote:At the 800k level, I could see that.
There’s lottery winners that get their annual payment and spend the bulk of it repaying debt that they took out at extreme interest against it
Posted on 10/19/18 at 12:33 pm to Thib-a-doe Tiger
quote:Gotcha.
I think he means whatever entity guarantees the annuity
Posted on 10/19/18 at 12:35 pm to Thib-a-doe Tiger
quote:
:facepalm:
FACEPALM ALL YOU WANT TO, MAYBE YOU SHOULD EDUCATE YOURSELF ON ANUITIES AND THE FEE STRUCTURES THEY HAVE
sorry, damn caps lock
any way, the fees for annuities are wide ranging and they take fees off the top for managing the annuity for you
do you think the lottery annuities are structured for the state to make more in fees then an average annuity or less???????
just like brokerage fees you can find annuities that take anywhere from 2% - 8% off the top before you get a return
if you are facepalming over annuities in general, i can understand that sentiment, but having a portion of your investment portfolio in annuities is a good strategy. some in annuities, some in CDs, some in treasury bonds, so its spread out over many safe platforms to earn interest without risk
Posted on 10/19/18 at 12:37 pm to slackster
I think the biggest benefit of the annuity, at least for a few years, is you could tell all the people who come out of the woodwork that you “only” made 12mm that year so you have to be careful with the money
I’m OT poor now, and I tell people to frick off now. I can’t imagaine I wouldn’t get even better at it when there are no repercussions to me
I’m OT poor now, and I tell people to frick off now. I can’t imagaine I wouldn’t get even better at it when there are no repercussions to me
Posted on 10/19/18 at 12:38 pm to keakar
quote:Telling someone in the financial sector that he needs to educate him on finance is peak OT.
MAYBE YOU SHOULD EDUCATE YOURSELF ON ANUITIES AND THE FEE STRUCTURES THEY HAVE
quote:I'd blame the backspace button, if I were you.
sorry, damn caps lock
quote::facepalm:
if you are facepalming over annuities in general, i can understand that sentiment, but having a portion of your investment portfolio in annuities is a good strategy. some in annuities, some in CDs, some in treasury bonds, so its spread out over many safe platforms to earn interest without risk
This post was edited on 10/19/18 at 12:47 pm
Posted on 10/19/18 at 12:38 pm to ell_13
quote:
Only after 30 years.
30 years is a long time to learn from mistakes that's for sure
If you can't get it figured out by year 30 you're one crazy MFer
Posted on 10/19/18 at 12:38 pm to keakar
quote:
FACEPALM ALL YOU WANT TO, MAYBE YOU SHOULD EDUCATE YOURSELF ON ANUITIES AND THE FEE STRUCTURES THEY HAVE
I’ll try to look into them, thanks
Posted on 10/19/18 at 12:39 pm to ell_13
quote:
The annuity isn't the worst thing in the world and certainly not as bad as people make it out to be for the reasons they site. (ETA: And negative returns would impact the lump greater than the annuity since less would be personally invested and the yearly 5% increased investment is constant)
Sequence of return risk would be the main issue on the lump sum, but when you consider the fact the annuity isn't level ($14.6MM year one and $60MM year 30), the reliance rate on the lump sum minimizes the keeps that risk lower than it otherwise would be.
The biggest "risk" between the two options, by far, is discipline. Even if you don't blow the money, watching $300MM go down $30MM between statements would be tough for most to stomach. 10% is 10%, but when you put it in real terms like that, people panic.
Posted on 10/19/18 at 12:39 pm to keakar
I missed it before, but you don’t think treasuries have risk?
ETA: and annuities?
ETA: and annuities?
This post was edited on 10/19/18 at 12:43 pm
Posted on 10/19/18 at 12:41 pm to ell_13
Why claim after Nov 7th?
Posted on 10/19/18 at 12:42 pm to keakar
quote:
earn interest without risk
No such thing, but I get your point.
Posted on 10/19/18 at 12:42 pm to TigerFox
quote:
Why claim after Nov 7th?
News cycle dominated by mid-terms
Posted on 10/19/18 at 12:43 pm to Tiger Prawn
Lump. Simply put. $1 today is worth more than $1 tomorrow theoretically speaking. You could invest living on the interest and never touch the principle for decades. Your grandkids would be set.
Posted on 10/19/18 at 12:44 pm to slackster
I’d like to commend you and Ell for your work in here. I’m too busy pricing yachts to be running monte carlos
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