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  #11  
Old 04-02-2018, 07:11 AM
collie1228 collie1228 is offline
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While I appreciate the concerns expressed about annuities and their high sales commissions, people should be careful stating that they are not for most people. I have a pension from a Fortune 500 company, which is an annuity. And a pretty good one at that, fully funded and secure. So not all annuities are necessarily "bad".

  #12  
Old 04-02-2018, 10:55 AM
biker1 biker1 is offline
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In your original post you stated "zero diversification". I am glad to see that you walked that back. As I already suggested, I doubt many people have all of their money in annuities so they should have some diversification.

There are annuities with survivor benefits so stating that the heirs will receive zero is not necessarily true.

How exactly did you come up with the conclusion that "Probably less then [sic] 1% of the retired population should be in an annuity." ?

I personally neither buy into the concept nor choose to characterize people I don't know as possibly suffering from a gambling issue or possibly being too incompetent to manage their money simply because they have elected to use an annuity. I know several people who don't suffer from either characterization and have an annuity as part of their overall strategy (which also includes mutual funds, ETFs, individual stocks, cash, and bond funds). Again, they don't personally float my boat but I do accept that there is a place for them in a well thought out strategy.


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Originally Posted by l2ridehd View Post
So I divide my funds by 4 and get 4 annuities. That is still VERY limited diversification. Any decent mutual fund will have 30 to 100 stocks and the same number of bonds. Take 100K and one puts the money in an annuity and the other into say Vanguard Wellington fund. Person A has one, maybe two insurance companies. Person B has 50 plus stocks and even more bonds. Look at the rate of return for both products over the past 30 years. Pretty close. And the person in Wellington leave 100K plus to his heirs where the person with annuity has zero. And in my opinion, Wellington by itself is no where near diversified enough.

I personally see almost no situation where an annuity is a good option for anyone except the person selling it. Again, a gambler, someone not capable of managing any money, or someone who has a family history of over 100 year old relatives. There just is no good case to be made for them. Probably less then 1% of the retired population should be in an annuity.

Last edited by biker1; 04-02-2018 at 12:22 PM.
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  #13  
Old 04-02-2018, 12:56 PM
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l2ridehd l2ridehd is offline
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Quote:
Originally Posted by biker1 View Post
I personally neither buy into the concept nor choose to characterize people I don't know as possibly suffering from a gambling issue or possibly being too incompetent to manage their money simply because they have elected to use an annuity. I know several people who don't suffer from either characterization and have an annuity as part of their overall strategy (which also includes mutual funds, ETFs, individual stocks, cash, and bond funds). Again, they don't personally float my boat but I do accept that there is a place for them in a well thought out strategy.
I guess that is how things are taken out of context. I NEVER characterized the folks who buy annuities as gamblers or incompetent. I did say those are the only type of people who SHOULD be using annuities. Huge difference.

To each their own. I personally believe that almost no one should be using this investment vehicle. There are so many better investment strategy's available. And I also consider a single annuity which most people who buy them have, to be zero diversification for that part of their investments. I guess we just have to agree to disagree.
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  #14  
Old 04-02-2018, 01:03 PM
biker1 biker1 is offline
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You actually never used the word "SHOULD". I don't believe anything was taken out of context. The meaning seemed pretty clear to me, although it is now a moving target as you walk things back. I noticed you never answered my question. Whatever ...

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Originally Posted by l2ridehd View Post
I guess that is how things are taken out of context. I NEVER characterized the folks who buy annuities as gamblers or incompetent. I did say those are the only type of people who SHOULD be using annuities. Huge difference.

To each their own. I personally believe that almost no one should be using this investment vehicle. There are so many better investment strategy's available. And I also consider a single annuity which most people who buy them have, to be zero diversification for that part of their investments. I guess we just have to agree to disagree.
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  #15  
Old 04-02-2018, 09:29 PM
Wiotte Wiotte is offline
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Quote:
Originally Posted by collie1228 View Post
While I appreciate the concerns expressed about annuities and their high sales commissions, people should be careful stating that they are not for most people. I have a pension from a Fortune 500 company, which is an annuity. And a pretty good one at that, fully funded and secure. So not all annuities are necessarily "bad".


Actually what you have, is a defined benefit plan. Mine is through a Dow Industrial, I’ve never considered it an annuity, simply a pension.
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  #16  
Old 04-02-2018, 09:33 PM
Wiotte Wiotte is offline
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  #17  
Old 04-03-2018, 12:38 AM
retiredguy123 retiredguy123 is offline
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Most people don't know that an annuity is a life insurance policy issued by an insurance company. The salesperson who sells you an annuity makes about 10 percent of the sales price in commission. If you have an annuity, you have no direct ownership in any investment products. No stocks, bonds, or cash. All you have is a contract with an insurance company where they promise to pay you money in the future. If they go broke, you don't get any money back. This is very different from a mutual fund where you have ownership in the investment products held in the fund. I don't like annuities because they have high management fees, and they are very difficult to get out of without paying additional fees. Also, the salesperson will not give you a copy of the complete annuity contract to read in advance of purchasing it. And, most salespeople will not even tell you that you are buying a life insurance policy. That should tell you something about their product. You can achieve better results by holding a diversified portfolio of stocks, bonds and cash.
  #18  
Old 04-03-2018, 07:24 AM
Carla B Carla B is offline
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So, on a $400k annuity, the commission would be $40k. No wonder there is money for philanthropy.
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