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Are Fixed Index Annuities A Good Investment?
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- Опубликовано: 10 авг 2024
- Fred is about a year away from retirement and he just purchased a fixed index annuity. He's heard some bad things about annuities, and he's worried he may have made a mistake. Wes helps Fred learn more about his investment and discusses what he should do next?
Original airdate: February 25, 2018 - Hour 1, Call 1.
Wes Moss is the host of MONEY MATTERS - the country’s longest-running live call-in, investment and personal finance radio show - on News 95-5FM and AM 750 WSB.
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Please note, this information is provided to you as a resource for informational purposes only and should not be viewed as investment advice or recommendations. Investing involves risk, including the possible loss of principal. There is no guarantee offered that investment return, yield, or performance will be achieved. There will be periods of performance fluctuations, including periods of negative returns. Past performance is not indicative of future results when considering any investment vehicle. This information is being presented without consideration of the investment objectives, risk tolerance, or financial circumstances of any specific investor and might not be suitable for all investors. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax, or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.
Very one sided advice. I bought my annuity 10 yrs ago. My 500,000 grew to 1,150,000 that will pay me 54,360 a year as long as either my wife or I live. That means in a little over 9 years I have all of my principal back at 69 years old and we both hope to live longer than that !
Robert Bass which company do you use?
Hi Jorge If nobody has reached out to you I sell excellent FIA email me please sbishop.transamerica@gmail.com
Robert, hate to break it to you, but you lost out on over $1M. If you would have invested that money in the US whole stock market instead, your $500K would have grown to $2.2M.
SurlyEngineer That’s just not true, especially if you’re talking about mutual funds. In 10 years he got a great return that would have been comparable to the stock market. How did you get 2.2M?
@@kevinderr8406 It certainly is true and a link to the proof is at the bottom of my reply. It shows a backtest against SPY (S&P 500 ETF), SWPPX (S&P 500 mutual fund), and VTSAX (whole US market mutual fund). They all started at $500K and ended up over $2.2M.
www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=4&startYear=2009&firstMonth=1&endYear=2019&lastMonth=12&calendarAligned=true&includeYTD=false&initialAmount=500000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=1&absoluteDeviation=5.0&relativeDeviation=25.0&showYield=false&reinvestDividends=true&portfolioNames=false&portfolioName1=Portfolio+1&portfolioName2=Portfolio+2&portfolioName3=Portfolio+3&symbol1=SPY&allocation1_1=100&symbol2=SWPPX&allocation2_2=100&symbol3=VTSAX&allocation3_3=100
All companies are not created the same. I think one should definitely be doing there due diligence. There are companies that are A+ rated which offer annuities better than a government 2% return.
You failed to mention that the FIA gives their investor a guaranteed Income for life once they start pulling out from it even if the original amount has been surpassed. Or are you just not aware that fixed indexed annuities are capable of that?
Nicholas Sahadi you have to purchase a Ryder to get the guaranteed income for life.....
Annuities are contracts, not investments.
FIAs can work to protect principal in retirement and act as efficient delivery system for an income rider.
They will not outperform the market but they are good for a portion of your portfolio
These weasels never mention the benefits; they perpetuate the "bad investment" myth, when an annuity - especially an FIA - isn't an investment.
Facts, advisors want to keep money under management
FIAs, look for uncapped with at least 50% S&P participation. Annual reset. Do NOT opt for any lifetime riders to eliminate fees. Access 10% without penalty. Avoid bonuses and riders. Keep it simple and you will be very happy. Half of the up and never any down. Seriously, who puts short term money in an annuity. What idiot “changes their mind”? With that logic even CDs would not exist with early penalties. C’mon Wes quit trying to suggest companies like Pacific Life are going to fail. That’s disingenuous.
excellent
I sell annuities and the ones hes referring to sound awful. Who would lock up their money for 10 year and only get 2-3% ? My products are only 5 years and the average return is 2.90 worst case scenario and 5-6% normally. You forgot the main reason people purchase them. Tax deferral. Your interest is triple compounding. Some annuities allow 20% free withdraw.
Harris Enerson could you give me more information about the annuity? With this bad market, I am thinking to put some of the money in annuity
I hate “advisors” like this who don’t know what they’re talking about, but they pretend like they do. It’s poison.
Had more on stock market than my annuity. Made money overall but when you pay tax on gains with a high income much of those gains go to the IRS !!
You can also purchase Treasury I Bond (savings bonds) instead of Treasury bonds. They have a similar return, which consists mostly of inflation protection. Unlike a CD or bank account interest, you don't have to pay tax on the interest until you redeem them, and the interest is state tax exempt.
There are times that annuities can be appropriate. However, it's always wise to have the ability to do a thorough contact analysis yourself or pay your estate planning attorney to evaluate the contract before giving up control of $500k or a million bucks in capital for a decade.
Two words: Opportunity cost. Personally, I've always done better than what an annuity would pay me over the same period of time after the annual fees they charge. Also, the lack of liquidity is a real negative. The insurance company is going to make money and the sales rep has to be paid a commission, so for some people an annuity can buy peace of mind and may be the right product. However, if you can afford to be self insured and eliminate the cost of the insurance company, annual fees and initial commission's, the math all but guarantees a higher rate of return at the end of 10, 20 years or longer in a self directed account vs the cost/ fees, lack of control and lack of liquidity of an annuity.
I’m trying to figure out if the US Government relies on strong business or strong business relies on the US Government
Wes needs to educate himself on FIA's principal protection...participation rates up to 120% against a 1% spread....penalties within the first 7-10 years only depending on product.....0% floor so no losses occur.....There are great fixed index annuities out there...
For the last 11 years, I've trained financial professionals on primarily annuities. This has to be one of the worst explanations on how fixed indexed annuities work. If Wes is a fiduciary, he's giving inaccurate advice which is not in the best interest of the caller and potential clients. Wes is baiting the caller with Fixed-Rate Annuity and switching to a Fixed Indexed Annuity which is 2 different products. Wes is switching a 12% surrender charge for a 12-year contract length. Wes is saying FIAs are only designed for 2% - 3% in annual returns. I own 3 fixed indexed annuity contracts personally, and I've received over 13% in one year. Wes states you are "handcuffed" in annuity contracts which can happen, but he doesn't mention that there are annuities that are 100% liquid with a Return of Premium benefit, or short term contracts as short as 2 years in length. I'd be nervous to give my money to a "radio personality" who talks at a generic or high level. I wish Wes would have asked the caller just a few more questions, but even then I would be skeptical. Some radio personalities pay people to call in for setup questions. Anybody can pay to be on the radio if you have money and airtime.
I just posted the most recent annual statement from my personal annuity. I've earned an 8.29% annual rate of return for the past 4 years. Check it: www.annuityexpertadvice.com/personal-finance-annuity-inaccuracy/
So many people misunderstand fixed rate annuities or confuse a fixed indexed annuity w some other annuity. I have most of my money at Vanguard but do have a small index annuity. If sold properly, a fixed index annuity can be an excellent conservative place for money. I have most of my money in the stock mkt but I PURPOSELY chose this fixed index annuity (knowing the 10 yr penalty for taking it out). There is NO other investment vehicle that I know of where I can NEVER lose money and probably make 4-5% no guarantee, but probably better than other fixed rate investments and definitely not worse....not stocks, not bonds, nothing. So for the 'right person' a fixed index annuity may be excellent. For others it is a horrible idea. This presentation totally missed the point of the reason for buying a fixed index annuity. If this caller bought this for retirement and if he wants 50% of his $$ in very conservative places...I would bet money his fixed index annuity would do better than bond funds w no downside. If sold properly (I know many times the salesperson lies) but if sold properly these are capped but has some upside growth. Mine w Nationwide is doing well. Again, I'd only say they are good 'if' a buyer needs a place for money w no loss and is willing to take modest returns. If there are sales folks saying 'get mkt returns' they are bad sales people or lying.
Lock up periods? This clown does not even know the correct terms.
Very unbalanced presentation. Typically, client can take out 10% a year free withdrawals, and 100% free withdrawals in case of death or serious disability. Further, with stocks starting to buckle after 10 year bull market, next major stock market event will be down big time! Indexed Annuity will protect you. This is sleep well money, and yes, you should not invest too large a % of assets in any long term investment.
Wow such false information
Shame on you, You're misleading your listeners regarding annuity charges on a Fixed Index Annuity. The annuity owner DOES HAVE LIQUIDITY. Money may be withdrawn PENALTY or WITHDRAWAL CHARGE FREE!! The insurance company typically allows a 10% free withdrawal each year. Only when the withdrawal exceeds the 10% does the ANNUALLY DECREASING withdrawal charge come into play.
Is that guy in a fish bowl
This guy is deeply misguided. "I dont like a product dictating my liquidity." Meanwhile home sales cost %6, liquidating IRA's cost a massive penalty. Liquidity penalties are normal. Opportunity cost is far less relevant to a retiree than guaranteed income for life.
Want to buy into an annuity? HELL NO.
this guy must not have been around on black monday 1987. or he does not care.
Where are your treasury bonds now? You are wrong.....
One sided and you haven't even mentioned IUL's. Treasure bonds get taxed and don't give you a high return anyway.
Very poorly done. One sided with only the negative parts. Disregard.
Why put money into anything you might have to get back out? I have done well with my Fixed Index Annuity.. Of course I knew I could get it without having to take it out early and yes it didn't care about the Markets.. Mine was 7 years and I now have a 5 year.. Much better than a CD...
extremely biased I can show you a index annuity that earned 12% based on a 80% participation rate. Also there are FIA with only 5 year period. You also don't talk about the effect of market down turn on stock investments. Not impressed with your advice at all
Please point me to a fixed index annuity with a 12% cap and 80% participation rate. I am in the market for one.
Thanks
So you dont like 401k's? 10% for early withdrawal. You dont like not losing any money? You forgot to tell the caller that you make 1 to 2% of of managed money even if the market goes down. Bonds cant give you lifetime income. You also act like you dont make commissions.
worst explaination of a Fixed Indexed Annuity I've ever heard! All your points are so off from why you would put your money into one and how you can access and grow the the money. Terrible advise!
Lol... who’s this clown?
Lousy misleading advice you have to do better