Should You Consider An Annuity?
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- Опубликовано: 27 апр 2024
- Considering an annuity for your retirement planning? In this video, we dive deep into the world of annuities to help you determine if they're the right choice for your financial future. We'll break down what annuities are, how they work, and the different types available, including fixed, variable, and indexed annuities. You'll learn about the pros and cons.
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Chapters
00:00 Intro
What is Annuity?
Types of Annuities
How does an Annuity work
Pros
Cons
When should I consider it
Where to buy Annuities in Australia 
Развлечения
What do you think about Annuity? 📈 Manage your portfolio on Sharesight and get 10% off your annual payment: portfolio.sharesight.com/refer/BRK22
Didn't even know that this type of financial vehicle exisited. Thanks for making me wiser
I am considering converting a large part of my superannuation as an annuity when I retire. 1. To cover the costs in retirement and 2. The annuity gives me a consistent inflation protected income where as superannuation requires me to increase my withdrawal amount as I age which increases risk of running out of money at the worst possible time.
I think in Australia, annuities will always be a select niche considered by very few people - in my view the superannuation systems makes annuities redundant for all but a very few scenarios.
Hey thks for all your trouble and explanation. Very helpful. You’re from China living in Melbourne or Sydney ?
I'm based in Melbourne.
@@IreneZhu nice me too. South bank. Although also residing in Singapore for half the time. Trying to maximise the best of both worlds in terms of tax minimisation is quite tough. Cpf vs Super very different. Cpf used to be account based but now more like an annuity through an insurance company.
😀Trying to get FI soon, so that we can relocate back to China soon, probably HK as the tax rate is lower.
I'm wondering whether it would be better to put the amount ( say $200k ) into an ETF and let it ride...?
If tracking an index you minimize cost but in a way throw caution to the wind unless you time it. Buffet was always a fan of this as he is so old and bought the s&p when it was nothing. If you wanna peruse this avenue, timing is important. So what I am trying to do is with some of my super is wait till the next major correction then dollar average it in over time. Of course this all depends on your age and appetite for risk amongst other things
I think annuity is less flexible than a pension income stream account upon retirement. At least lump sump can be taken out and choice of investment profiles. With annuity I feel like handing over a lump of money, the company invest and profit from it, only to take back a relatively low return. Furthermore if they send out a hit squad to shorten the clients' life they get to pocket more :)
What you need to consider is the real or effective rate of return. So npv or net present value all the payments from your average life span and any lump sum payout in terms of when you expect to die. Take an average. Only then can you see whether it’s more beneficial to stick the money into a fixed deposit which is 5 pct before tax. With insurance companies don’t forget the dealer always wins. Don’t forget these guys are actuaries. Way beyond our pay grades :). Good luck
Hi I'm only in my 40s and looking to supplement my income. I have 500k to invest and am looking for a cash flow investment. If I were to take out an annuity with a fixed term of 10 years, do I get my 500k back at the end of the term? Providing I only opt to take the interest as an income?
Hello. The term annuity usually operates similar to a term deposit, so you would get your capital back. However I just looked at Challenger's 5-year term annuity, the rate is only 5.3% at the moment and it's not liquid. You can research more banks (pay monthly, interest accured daily), which you get higher rates, and the money is accessible anytime as long as you meet the criteria:
- Me Bank's HomeMe Savings Account: 5.55% p.a up to $100k
- ING Savings Maximizer: 5.5% upt to $100k
- Macquarie: 5.35% for the first 4 months, then 4.75% up to $250k
- AMP: 5.4% up to $250k.
At least these bank accounts are covered by the Australian Government's Financial Claims Scheme - $250,000 per account holder per bank.
@@IreneZhu thank you
Thankyou Irene.. i was considering an Annuity investment but as USUAL you have come through with your usual great , informative and easy to understand videos...i think i will stick to market ETF.. Wish you were my financial advisor
Thank you, Tony! Yep, annuity sounds better than it is.