Quote:
Originally Posted by billethkid
Are they bad because "...they are NOT an investment..."?
If an annuity is paying the annual earned interest one is expecting, let's say 6.5%....and it preserves their principal....and the client is happy.....why are they labeled bad.....by some folks?
(separate issue  ) |
An annuity is a life insurance policy, not an investment. If you can get 6.5 percent with an annuity, and not lose principal, you can get a higher return by investing the money yourself because of the high annuity management fees. Also, any money you make with an annuity is taxed as ordinary income, not at the lower capital gains tax rate. There are also high surrender fees if you want your money back early.
But, for me, there are two things that should tell you that annuities are bad. First, the salesperson makes a huge commission of about 10 percent upfront for selling an annuity. And, second, the salesperson will not allow you to read the annuity contract before you sign it.