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  #31  
Old 07-15-2015, 09:54 PM
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Annuities in this low interest rate environment are terrible deals. When they tell you that you will make money if the S&P 500 goes up and you can't loose money find out the details of that part tied to the S&P 500. It usually does not include stock dividends and is capped at .5%-1% increase per month. This means if the S&P 500 goes up 15% in one year and lets say 4% of that is dividends and in July and August the market goes up 20%, but in december it goes down 5% and the rest of the year is flat. You will make 1% in July and another 1 % in August, but you will loose 5% since there is no downside cap in December. Now since you have a rider saying that you can't loose money you will end up flat for the year while the market is up 15%. This is not an untypical market spurt as the market rarely goes up 1% per month.

The only ones making money on annuities in the current environment are the salesman and the insurance companies. Stay clear.

I invest in Vanguard using the Boglehead's 3 fund portfolio. It takes me all of 30 min. a year to rebalance. I keep 2 years cash in a short term bond fund and the rest is spread 70/30 equities to bonds. If the balance increases after one year I add cash to replenish the 2 year stash. If the balance goes down I don't replenish. Usually we don't have 2 consecutive down years so not a problem.

This is what I do, but I am not an advisor so I don't make any claims that this will be right for you.
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  #32  
Old 07-16-2015, 04:37 AM
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Quote:
Originally Posted by Maxman View Post
Annuities in this low interest rate environment are terrible deals. When they tell you that you will make money if the S&P 500 goes up and you can't loose money find out the details of that part tied to the S&P 500. It usually does not include stock dividends and is capped at .5%-1% increase per month. This means if the S&P 500 goes up 15% in one year and lets say 4% of that is dividends and in July and August the market goes up 20%, but in december it goes down 5% and the rest of the year is flat. You will make 1% in July and another 1 % in August, but you will loose 5% since there is no downside cap in December. Now since you have a rider saying that you can't loose money you will end up flat for the year while the market is up 15%. This is not an untypical market spurt as the market rarely goes up 1% per month.

The only ones making money on annuities in the current environment are the salesman and the insurance companies. Stay clear.

I invest in Vanguard using the Boglehead's 3 fund portfolio. It takes me all of 30 min. a year to rebalance. I keep 2 years cash in a short term bond fund and the rest is spread 70/30 equities to bonds. If the balance increases after one year I add cash to replenish the 2 year stash. If the balance goes down I don't replenish. Usually we don't have 2 consecutive down years so not a problem.

This is what I do, but I am not an advisor so I don't make any claims that this will be right for you.
Maxman - I would be very interested in the exact funds you refer to and the percentages into each fund. Would you also tell me the approx returns you have experienced. Thx, Jimie
  #33  
Old 07-16-2015, 08:12 AM
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They put on a great meal at Harbor Hills.
  #34  
Old 07-16-2015, 09:29 AM
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They put on a great meal at Harbor Hills.

Parady Financials🏻
  #35  
Old 07-16-2015, 11:30 AM
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Quote:
Maxman - I would be very interested in the exact funds you refer to and the percentages into each fund. Would you also tell me the approx returns you have experienced. Thx, Jimie
Check out this link.
Three-fund portfolio - Bogleheads

This link on the boglehead forum goes into great detail on this approach. I have only been doing this for around a year, previous to that I had an advisor who did a similar couch potato portfolio, but charged me a .5% annual fee. Now my fee structure is around .08%.

https://www.bogleheads.org/forum/vie...p?f=10&t=88005

Let me know what you think
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  #36  
Old 07-16-2015, 12:22 PM
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Originally Posted by Maxman View Post
Check out this link.
Three-fund portfolio - Bogleheads

This link on the boglehead forum goes into great detail on this approach. I have only been doing this for around a year, previous to that I had an advisor who did a similar couch potato portfolio, but charged me a .5% annual fee. Now my fee structure is around .08%.

https://www.bogleheads.org/forum/vie...p?f=10&t=88005

Let me know what you think
Thanks for the info. What's your opinion wrt the Vanguard Balanced Index Fund?
  #37  
Old 07-16-2015, 02:54 PM
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Thanks for the info. What's your opinion wrt the Vanguard Balanced Index Fund?
That is a great choice. The admiral shares carry a very low .09% expense ratio. It invests in passive index funds at a 60/40 equities to bonds ratio. I think over the long run passive beats actively managed funds over 85% of the time.
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  #38  
Old 07-16-2015, 03:07 PM
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That is a great choice. The admiral shares carry a very low .09% expense ratio. It invests in passive index funds at a 60/40 equities to bonds ratio. I think over the long run passive beats actively managed funds over 85% of the time.
Thanks! We were in Wellington for a very long time, and after comparing numbers are in process of moving into Bal Index primarily because of the admiral expense ratio. Feel like a traitor bailing out of Wellington. It's like an old friend and has been good to us.
  #39  
Old 07-16-2015, 03:16 PM
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Annuities can be tricky and very different. Most financial advisers do not recommend them but they can be a part of your investment strategy just not a large part. They do offer some security of sorts. But if the annuity company goes under you could loose your money. Get different opinions. I believe there is a Morgan Stanley office in the Villages and my adviser is with MS in Orlando. I have been with him for a long time and he has done a good job. If you are interested just PM me.
  #40  
Old 07-16-2015, 03:45 PM
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What are your thoughts on using Vanguards Financial Advisors for 0.3% fee of the money under their management? Thanks for your insight.

Quote:
Originally Posted by Maxman View Post
Annuities in this low interest rate environment are terrible deals. When they tell you that you will make money if the S&P 500 goes up and you can't loose money find out the details of that part tied to the S&P 500. It usually does not include stock dividends and is capped at .5%-1% increase per month. This means if the S&P 500 goes up 15% in one year and lets say 4% of that is dividends and in July and August the market goes up 20%, but in december it goes down 5% and the rest of the year is flat. You will make 1% in July and another 1 % in August, but you will loose 5% since there is no downside cap in December. Now since you have a rider saying that you can't loose money you will end up flat for the year while the market is up 15%. This is not an untypical market spurt as the market rarely goes up 1% per month.

The only ones making money on annuities in the current environment are the salesman and the insurance companies. Stay clear.

I invest in Vanguard using the Boglehead's 3 fund portfolio. It takes me all of 30 min. a year to rebalance. I keep 2 years cash in a short term bond fund and the rest is spread 70/30 equities to bonds. If the balance increases after one year I add cash to replenish the 2 year stash. If the balance goes down I don't replenish. Usually we don't have 2 consecutive down years so not a problem.

This is what I do, but I am not an advisor so I don't make any claims that this will be right for you.
  #41  
Old 07-16-2015, 04:55 PM
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Originally Posted by tuccillo View Post
What are your thoughts on using Vanguards Financial Advisors for 0.3% fee of the money under their management? Thanks for your insight.

If you can buy into Maxman's 3 fund system, what additional advice would you need? Just asking.

We've been investing largely through indexing, and don't mean to be arrogant, but we don't see how "advice" could have improved our results. Maybe I'm wrong and would certainly like to hear the opinions of others. I'm no expert but have taken the time to educate myself.
  #42  
Old 07-16-2015, 07:37 PM
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Originally Posted by naneiben View Post
If you can buy into Maxman's 3 fund system, what additional advice would you need? Just asking.

We've been investing largely through indexing, and don't mean to be arrogant, but we don't see how "advice" could have improved our results. Maybe I'm wrong and would certainly like to hear the opinions of others. I'm no expert but have taken the time to educate myself.
I agree. Vanguard does not charge much for this service, but it is unnecessary unless you need the handholding or are adverse to doing anything having to do with your portfolio. The effect on a 20 year $1000000 portfolio averaging 6% rate of return using the Vanguard service over doing it yourself would be a cost of $174,217.39. This assumes no withdrawals.
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  #43  
Old 07-16-2015, 07:40 PM
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Are annuities a bad investment?
Not for the company that sells them.
  #44  
Old 07-16-2015, 07:58 PM
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There is a place for annuities. Remember SS is basically and annuity. If you want some of your portfolio in a safe low interest environment you could set up an annuity with Vanguard. Their fees are considerably lower. I researched Parady and I figured they make 7% from the insurance company when you give them your hard earned money.
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