OT - Financial question

[WHCSC]

My wife and I went to a presentation last night about fixed index annuities. I went just for the free dinner, of course. But those things sound too good to be true which means they are.
You are all smarter and more educated than me so let me hear your opinions and insights on these.

 

[litespeedhuskerfan_rivals19671]

My wife and I went to a presentation last night about fixed index annuities. I went just for the free dinner, of course. But those things sound too good to be true which means they are.
You are all smarter and more educated than me so let me hear your opinions and insights on these.

What did you have for dinner and was there free booze?

 

[LBremser_rivals78367]

My wife and I went to a presentation last night about fixed index annuities. I went just for the free dinner, of course. But those things sound too good to be true which means they are.
You are all smarter and more educated than me so let me hear your opinions and insights on these.

Annuities are among the most profitable financial instruments out there - for the issuer not the buyer. Stay away from them, there are far better investments out there.

 

[WHCSC]

What did you have for dinner and was there free booze?

No free booze. Had salmon. It was good.

 

[salsa red]

There may be a place for them if you're already really well off. The fees are super high (how do you think they pay for the dinners and if they're so great why is there a need to market them). Otherwise roth ira is best along with other investments you choose (real estate, crypto etc)

 

[realHuskerDrew]

I worked for a big annuity/life insurance company way back when… most annuity accounts are actually moved/closed out and not actually annuitized… thus negating the locked in values etc.
That’s what happens when you have these products sold by financial advisors who are incentivized to move these accounts every 7 years or so.

 

[RBigredMax]

There may be a place for them if you're already really well off. The fees are super high (how do you think they pay for the dinners and need to market them). Otherwise roth ira is best along with other investments you choose (real estate, crypto etc)

Once traditional retirement accounts (401k and IRA) are filled, start a brokerage account with S&P 500 index fund and as you learn more about investing tailor your investments to your needs.

Agree with other posts regarding annuities, very expensive and guaranteed returns will not be favorable for you with regard to the open market over time.

 

[catch54]

My wife and I went to a presentation last night about fixed index annuities. I went just for the free dinner, of course. But those things sound too good to be true which means they are.
You are all smarter and more educated than me so let me hear your opinions and insights on these.

With an annuity, you are probably limited to a fixed amount monthly. Loss of control over your own money.

On a slightly related note, prepare well ahead of when you retire for whatever source of income you expect ... SSS, retirement pay, 401 (k), etc. It could take up to six months to receive some of these funds.

 

[Redscarlet]

I put some of my 401K money in a annuity and it’s so so..
Basically it’s risk management to stabilize market volatility ..

Think it takes many years to be in it to do any good ..

 

[Redscarlet]

There may be a place for them if you're already really well off. The fees are super high (how do you think they pay for the dinners and if they're so great why is there a need to market them). Otherwise roth ira is best along with other investments you choose (real estate, crypto etc)

Exactly.

 

[redwine65]

72nd and grover? some, btc before the blackrock etf is approved

 

[SonOfTrumplestiltskin]

My wife and I went to a presentation last night about fixed index annuities. I went just for the free dinner, of course. But those things sound too good to be true which means they are.
You are all smarter and more educated than me so let me hear your opinions and insights on these.

The word Annuity should
Make you run.

 

[schuele]

I always liked Ken Fisher's take on annuities:

"I would die and go to Hell before I sold an annuity"

 

[GretnaShawn]

Annuities only make sense if you are old and are looking for guaranteed cash flow or extremely risk adverse.

 

[cornhustler]

returns will not be favorable for you with regard to the open market over time.

^^^ this ^^^

 

[WHCSC]

72nd and grover? some, btc before the blackrock etf is approved

Umm......what?

 

[Bremser_rivals74172]

My wife and I went to a presentation last night about fixed index annuities. I went just for the free dinner, of course. But those things sound too good to be true which means they are.
You are all smarter and more educated than me so let me hear your opinions and insights on these.

Take Buffett's advice...index funds.

 

[WHCSC]

Take Buffett's advice...index funds.

Buffett is a putz, but a rich one

 

[MacDiddly]

Index annuities are perhaps the biggest scam out there in the financial world. They essentially promise that you will get a guaranteed return, neglecting to highlight that they cap your returns. So when markets are doing 30%, you’re actually getting 10%. I work in finance and have seen many clients we take on lose out on upwards of hundreds of thousands of dollars by doing index annuities. Stay away!

 

[RBigredMax]

Buffett is a putz, but a rich one

And that is why we can’t get half of his fortune for NIL.

 

[WHCSC]

Index annuities are perhaps the biggest scam out there in the financial world. They essentially promise that you will get a guaranteed return, neglecting to highlight that they cap your returns. So when markets are doing 30%, you’re actually getting 10%. I work in finance and have seen many clients we take on lose out on upwards of hundreds of thousands of dollars by doing index annuities. Stay away!

You're trading those high returns for not going negative when the market crashes, right?

 

[LouisK]

Buffett is a putz, but a rich one

What? I can tell you this. Buffett isn't investing in an annuity.

 

[WHCSC]

What? I can tell you this. Buffett isn't investing in an annuity.

He can control stock prices with a word so why would he waste time with an annuity?
He and I are not quite in the same situation.

 

[Dean Pope]

My wife and I went to a presentation last night about fixed index annuities. I went just for the free dinner, of course. But those things sound too good to be true which means they are.
You are all smarter and more educated than me so let me hear your opinions and insights on these.

Do not do it. High fees, lower return on your money. As a general rule, if someone is giving you a free steak dinner they are trying to make a lot of money off you. Annuities, time shares, etc.

 

[MacDiddly]

You're trading those high returns for not going negative when the market crashes, right?

Correct. Though there is often a -10% buffer or some other similar provision that says they will cover the first -10% of market decline, but then your account will still take a hit for anything past that amount.

 

[Huskers123456]

Buffett is a putz, but a rich one

He's a guy who has lived within his means and clearly knows investing. I have issues with some of the things he does but absolutely trust his investment advice. One of the main things I disagree with him about is his refusal to pay dividends while Berkshire is collecting millions in dividends. Let me worry about my taxes. Shouldn't be his concern.

 

[Dean Pope]

You're trading those high returns for not going negative when the market crashes, right?

That's their sales pitch, but read the fine print. If you are worried about the stock market, there are better ways to lower your volatility without paying someone else a small fortune to do it for you.

 

[WHCSC]

That's their sales pitch, but read the fine print. If you are worried about the stock market, there are better ways to lower your volatility without paying someone else a small fortune to do it for you.

Go on...

 

[Dean Pope]

He's a guy who has lived within his means and clearly knows investing. I have issues with some of the things he does but absolutely trust his investment advice. One of the main things I disagree with him about is his refusal to pay dividends while Berkshire is collecting millions in dividends. Let me worry about my taxes. Shouldn't be his concern.

Buffett seems to be doing OK with his present business model. There are a lot of other places to find decent dividends if that is what you are after-- SCHD, VYM, VIG...

 

[Huskers123456]

Buffett seems to be doing OK with his present business model. There are a lot of other places to find decent dividends if that is what you are after-- SCHD, VYM, VIG...

I've held Brk-b for years and have some VIG too. It's just something that irritates me when he brings up the double taxation on dividends. Because it's not always true if held in a Roth or a custodial. So he's pretty much blowing smoke. He could just leave it at that he thinks the shareholders are better off with him holding the cash and not bring up the taxes.

 

[LouisK]

He can control stock prices with a word so why would he waste time with an annuity?
He and I are not quite in the same situation.

Yet you call him the putz. Interesting. Stocks he buys usually get a short-term bump but you don't create Buffett wealth by investing in long-term loser investments. You must be a crypto guy.

 

[Dean Pope]

Go on...

I'm not a financial advisor and it's been a while since I stayed in a Holiday Inn Express. Are you looking for immediate income or more long term? Online high yield savings accounts are paying more than 4%, CD ladders are looking good. If you have a taxable brokerage account, there are several very low fee ETFs that would work quite nicely. Those are just a few simple ideas. I'm sure others can chime in.

One mistake that I made as a young man, and it has probably cost me about six figures, is that I invested through my insurance salesman. Never invest through your insurance company! I didn't know any better at the time.

 

[WHCSC]

Yet you call him the putz. Interesting. Stocks he buys usually get a short-term bump but you don't create Buffett wealth by investing in long-term loser investments. You must be a crypto guy.

He's obviously a genius investor. That doesn't mean he's not a putz too.

 

[TruHusker]

There are simply too many different types of annuities to make any blanket statements. Some have very high fees and a death benefit guarantee while others have a minimum they pay, i.e. 3% (example) and a max of 10%, they keep anything over a set amount for taking the risk. To compare and make assumptions without data is impossible.

I have a neighbor who swears by them, but then he hates banks and knows nothing about investing likes the words 'guaranteed'. He gets a guaranteed 7% or so he says. Look at surrender fees, length of time and tons of other things. Do you get your principal back? Who gets it if you die? There are tons of options and many questions to ask.

Some people use them as a hedge with their other investments. I have looked at them but have never taken the plunge, even at my age.

 

[Dean Pope]

There are simply too many different types of annuities to make any blanket statements. Some have very high fees and a death benefit guarantee while others have a minimum they pay, i.e. 3% (example) and a max of 10%, they keep anything over a set amount for taking the risk. To compare and make assumptions without data is impossible.

I have a neighbor who swears by them, but then he hates banks and knows nothing about investing likes the words 'guaranteed'. He gets a guaranteed 7% or so he says. Look at surrender fees, length of time and tons of other things. Do you get your principal back? Who gets it if you die? There are tons of options and many questions to ask.

Some people use them as a hedge with their other investments. I have looked at them but have never taken the plunge, even at my age.

You are right that there are many different types. It's a very complicated investment vehicle with lots of fine print. If somebody wants to buy an annuity, they better hire an attorney who will tell them exactly what they are buying. Insurance companies do not sell them in order to lose money.

 

[dinglefritz]

There are simply too many different types of annuities to make any blanket statements. Some have very high fees and a death benefit guarantee while others have a minimum they pay, i.e. 3% (example) and a max of 10%, they keep anything over a set amount for taking the risk. To compare and make assumptions without data is impossible.

I have a neighbor who swears by them, but then he hates banks and knows nothing about investing likes the words 'guaranteed'. He gets a guaranteed 7% or so he says. Look at surrender fees, length of time and tons of other things. Do you get your principal back? Who gets it if you die? There are tons of options and many questions to ask.

Some people use them as a hedge with their other investments. I have looked at them but have never taken the plunge, even at my age.

Whole or variable life and annuities are the most expensive financial products you can buy from an expense standpoint.

 

[MuskyHawk16]

Im an advisor at Merrill. We typically stay away from annuities because of the fees, lack of investment control, client confusion etc. However, certain low cost annuities sometimes make sense for specific clients looking for a stable income check monthly in retirement and nothing more. The key characteristic of them is there are 2 silos in an annuity, the cash value side which fluctuates based on the investment performance and the annuitized side which always guarantees the higher of a fixed floor return annually (say 6%) or the investment return, whichever is higher. The annuitized side will never decrease in value and will grow exponentially over time. However, once you “annuitize and turn on the income stream for life based on the higher annuitized side”, you are giving up the cash value for the guaranteed income stream until death. Yes there’s a secondary market to sell it if you want to get out after you annuitize but I wont get into that.

 

[Husker.Wed._rivals]

I just changed out four rotors and brakes on my SUV and saved at least $400 if I would have had a shop do it. The whole thing took me a couple hours. But I understand most people don't have the tools or desire to do their own car work. Many people don't have the skill or desire to buy stocks, bonds, track dividends, etc. For us we like to put money in balanced funds and forget about it. I converted a modest 401K to a 10-year deferred annuity 12 years ago after people on this very board told me I was ruining my life by doing so. While some of the annuity earnings were tied to the S&P, I'm sure I could have done better in the market over those 10 years (and did with two other 401Ks). And as Musky says, when we turned on the money the principal diminishes over time. But damn, it sure is nice that money hits the bank every 8th of the month and is inflation protected by the CPI up to 12% a year for the rest of both our lives. For us it has worked nicely as one income stream we don't have to manage or think about.

 

[LouisK]

He's obviously a genius investor. That doesn't mean he's not a putz too.

Oh, is it that he has a 'D' as the first letter of his political registration? I hate to say it but if you think he's a putz just because of the 'D', that's pretty stupid. His vice-chair is Charlie Munger who has an 'R' for his party. Do you think Charlie is a putz too? Charlie must not think Buffett is too much of a putz despite their opposite political affiliations. The people who propagate the whole "I'm a Republican or Democrat and everyone else is an idiot stuff" for any reason is ruining our country. It's the reason we are going to get the idiot, Biden, versus the embarrassment, Trump, again.

 

[WHCSC]

Oh, is it that he has a 'D' as the first letter of his political registration? I hate to say it but if you think he's a putz just because of the 'D', that's pretty stupid. His vice-chair is Charlie Munger who has an 'R' for his party. Do you think Charlie is a putz too? Charlie must not think Buffett is too much of a putz despite their opposite political affiliations. The people who propagate the whole "I'm a Republican or Democrat and everyone else is an idiot stuff" for any reason is ruining our country. It's the reason we are going to get the idiot, Biden, versus the embarrassment, Trump, again.

You're assuming quite a bit