<sheellah[at]aol.com> wrote
snip but concerns read; I agree with them, FWIW
- quote -

Vanguard is an "investment management company" which offers mutual funds,
stock brokerage, annuities, retirement planning services. It's one of the
largest in the world. It started as a mutual fund company, and was the first
such company to offer a mutual fund indexed to the S&P 500. For many years,
this fund had one of the lowest, if not thee lowest expense ratio, for such
a fund around (and no other significant or hidden costs). You may have heard
of John Bogle. He ran Vanguard for decades and is a proponent of index
funds. See
https://flagship2.vanguard.com/VGApp...ard/AboutVangu
ardWhoWeAreContent.jsp for an overview.

Vanguard's site discusses its annuity offerings at
http://flagship2.vanguard.com/VGApp/...tirement/ATSAn
nuitiesOVContent.jsp

Vanguard's sites are very user friendly, at least as an introduction to its
products.

As far as I know, tax deferral is the only advantage of holding mutual funds
in an annuity vs. holding them outright.

But again, I do not mean to hold myself out as an expert in annuities. I am
a Do-It-Yourself-er. My impressions on annuities are only rough ones. So I
encourage others to respond further. I also encourage studying Vanguard's
site, and then maybe talking to a Vanguard rep (at their free 800 number),
or maybe 800 reps at some other large investment companies and seeing if you
think they have services to offer you to help in deciding between an annuity
and/or perhaps construct a conservative, low risk fixed income portfolio
that may satisfy your income needs but give you more control over your
assets. Also, this is a good place to continue to ask specific questions
about, say, portfolio construction, choosing a mix of mutual funds for
retirement (or semiretirement), etc. There are other online sites that have
free guidelines and calculators for constructing portfolios for retirement
etc. (I have a list of these sites, so just ask some time if you're
interested.) These are good education tools and, at a minimum, prepare the
individual investor for meetings with future financial advisors. At a
maximum, altogether, you could become well-prepared to manage your own mix
of conservative, fixed income investments, which may or may not include
another annuity.

You don't have a financial advisor if he is working for the company. Be sure
you are working with an independent planner.

Pacific Life, John Hancock, ING, Jackson National, US Allianz, Security
Benefit, Nationwide are all solid companies that have a variety of products
that would seem to fit your needs.

What may work best for you is to split your funds between 2 different
annuities and get the advantages for your short term and long term needs.

<sheellah[at]aol.com> wrote in message
news:1128699540.549439.177690[at]g43g2000cwa.googlegroups.com...
- quote -

Thanks once again for your help. I'm not happy with my advisor, nor am
I happy with the whole way advisors are paid, as it creates a conflict
of interest. One always has to wonder if what is being sold is the best
deal for them or the best deal for the advisor. I think that all
commissions should go to the firm, and then be divied up based on
dollar amount sold, not on which product was sold. This would create
more trust between advisor and client, and remove conflict of interest
issues. I would feel more comfortable if it were done that way.

What type of fund is Vanguard? Other than tax deferral, what iare the
advantages of a variable annuity holding mutual funds, over buying a
mutual fund directly?

<sheellah[at]aol.com> wrote
snip but comments read
- quote -

I wouldn't say all variable annuities or all indexed annuites are bad. I am
urging caution in general, though, based on general reading on the net.

Hopefully someone very pro-annuity (as a product suitable and appropriate
for certain people in certain situations) will comment, so you can hear more
sides. Plus, my experience in annuities is minimal.

I am bothered, though, that the sales literature on annuities is so often so
bloody complex. I feel comfortable with stocks, bonds, and portfolio
allocation.

I understand the basic idea behind an annuity. But on what conditions each
particular annuity rests seems to me to demand a lot of difficult reading.
This makes the customer vulnerable to making a mistake or not getting what
he/she thinks he/she is getting. Sure, one should be careful with any
investment, but... An annuity salesperson can dismiss my comments as someone
just not willing to dig in. Whence I can respond that's his product's fault
as much as it is mine. A product that can't sell itself, all by its
lonesome, and has to be explained and re-explained is highly suspect and
demands a wary eye. It's the perfect product for sharks to sell little
goldfish customers.

- quote -

Can you explain what you mean by 'until I get my money back'?

Do you mean 'until I get the principal back'?

So say you pay $100k for this annuity. The annuity thus pays $7k a year for
about 100/7 = 14.3 years. Then what happens?

Because you could store your $100k in, say, a very safe money market account
or a ladder of CDs or a ladder of treasuries and take out $7k a year, and it
will last longer than 14.3 years. Invested at 3% after taxes a year in a
ladder of CDs (or a money market account averaging 3%), it will last about
18 years.

I use little calculators like that at
http://www.smartmoney.com/retirement...tory=moneylast to make
quick comparisons like the above. I put in $100,000, an after-tax return of
3% and 0% inflation and played with the years number until about $7k a year
came up.

I'm sure I'm missing something, re the annuity you describe. Annuities are
not necessarily easy to understand, but the above description approximates
where I started having my doubts when I investigated annuities last year for
myself. (Though again, there are annuities I might consider when I'm much
older.)

- quote -

Just my opinion, but I think you're taking another look at CDs is good. A
ladder of CDs and some other conservative instruments might suit your needs
for low risk, give you more control, and give you more money, too.

www.bankrate.com is an excellent resource for checking CD rates.

OTOH, I do not mean to dismiss annuities entirely with this statement.

- quote -

But they're not all in a fixed annuity. I don't know a person who wishes
they hadn't done something a bit different with their money at some point.

Four percent inflation for the long run is as good a figure as any. It's
been a bit lower in the last ten years, and was higher in the 1970s, IIRC.

- quote -

Sure you're allowed to ask. How he answers may say a lot.

When I make this sort of inquiry (and I have, usually with the various
brokerages I've had over the years, when one of the reps is trying to sell
me something) I'm just very blunt and straightforward, but IMO reasoned,
concise, and hopefully charming :-) . I tell the sales person/planner
something like:

"I want to understand the whole picture to help in my decision-making,
because I want to feel good about my purchase. I'd like to know what sort of
biases might be present such that I can be assured what you are trying to
sell me is the best deal in town or very nearly so. How do you make your
money on this deal?'

It's not a crime to be paid on commission. A good salesman will say
something like, "I am paid on commission for this particular product. So
yes, it's true, selling this product pays me. On the other hand, if you are
dissatisfied with this product and tell your friends not to consider it,
then I won't get future commissions. Or you won't buy anything else using
me. So it pays for me to be straightforward and thorough with you and get
you what you truly desire."

If the guy gets huffy or doesn't give you a straightforward answer or his
answer is incomprehensible or he treats you with condescension or rudeness
or otherwise makes you uncomfortable, find another sales person.

I liked the suggestion from Joe about shopping around at Vanguard a little,
'cause they're kind of king of the fair deal in many ways. Maybe call them
and say you want to compare this plan from X, Y, Z company to theirs. If
they're not utterly charming and thorough and helpful, then call Fidelity.
If Fidelity is a disappointment, ask here or try some other company.

If you do try Vanguard, I'd love to hear an update about how it compared
with your current salesperson and the plan he's offering.

Disclosure: I have never had an account with Vanguard but would consider
one, based on general reading and relatives' experience. I have been with
Fidelity mutual funds for over 20 years; brokerage for around five.

Thanks much for your help. I'm using caps to make my replies more
visible. Don't mean to shout.

- quote -

I think the key words here are "as much as."

WELL, HE DIDN'T EXACTLY PROMISE THAT TO ME, HE JUST TOLD ME IT WAS A
POSSIBILITY IN A MORE AGGRESSIVE STANCE BASED ON PRIOR PERFORMANCE.

One cannot get that kind of return for any notable period of time right
now
without gambling. And you say you're not a gambler. Maybe more
annuities are
right for your situation, and no doubt there is at least another fixed
one
that will suit your needs. But I suggest proceeding with great caution
with
this offer in particular and with annuities in general.


- quote -

Ask the guy selling it to you. If he can't explain things so you
understand
and feel comfortable, find another financial advisor.


There are warnings on the net about annuities, particularly variable
ones.
Google, or ask if you want some citations. The Securities and Exchange
Commission has even recently leapt into the fray, strongly cautioning
investors to carefully study and understand the terms of any annuity
being
offered them, since customers are being scammed (sometimes legally;
sometimes not, apparently).

IS THE PROBLEM JUST WITH INDEXED ANNUITIES, OR ALL VARIABLE ANNUITIES?
I WOULD FEEL COMFORTABLE WITH THE HARTFORD FUND, KNOWING THAT I CAN
TAKE 7% OUT UNTIL I GET MY MONEY BACK EVEN IF MY PRINCIPAL GOES REALLY
DOWN.

- quote -

You say you're worried about the taxes on CD interest, and, again, you
say
you don't want to gamble. Which brings you to annuities which do have
tax
advantages for some people. Mind elaborating a bit, as a double check
on
your reasoning?

I'M NOT REALLY WORRIED ABOUT THEM, I JUST WANTED TO AVOID THEM IF
POSSIBLE. JUST FOUND OUT THERE'S NO TAXES EVEN IF DEFERRED, IF ONE
ANNUITY IS EXCHANGED FOR ANOTHER. I ALSO JUST FOUND OUT I CAN GET 4.1%
ON A CD, AND 3.1 ON A TAX DEFERRED ONE.


In what tax bracket are you?

I'VE HAD TO TAKE CARE OF MY MOM, SO I HAVE VERY LITTLE INCOME COMING IN
NOW. I'M IN A SITUATION THOUGH WHERE I DON'T HAVE TO WORRY ABOUT TYING
UP FUNDS.

Are you retired?

SEMI


Have you estimated how much you need each year in retirement?

DOESN'T APPLY


Are you aware of the effects of inflation on one's retirement?

I'VE JUST BEEN TOLD IT WAS AS MUCH AS 4% AT PRESENT. I WOULDN'T HAVE
TIED UP SO MANY FUNDS IN A FIXED ANNUITY HAD I REALIZED THAT.

Can you tell the group the fee structure of your advisor? There is some

routine advice given on this subject here that should help a person
avoid
being ripped off.

ARE YOU IMPLYING THAT I'M ALLOWED TO ASK MY ADVISOR HOW MUCH COMISSION
HE RECEIVES, OR JUST HOW MUCH HE CHARGES ME FOR HIS SERVICES? SERVICES
ARE AT NO CHARGE TO ME, BUT WOULD LOVE TO KNOW HOW MUCH COMISSION HE
GETS.


I am a 40-something "do it yourself investor." I never had an annuity
but
researched getting one last year. I didn't like it because the setup
was
simply the company took my money, then gave it back to me slowly each
year.
I didn't like giving up that control. I thought I could do better
investing
and drawing down from it as needed, all on my own.


On the other hand, were I in my 70s, I would consider an annuity. It's
peace
of mind, particularly when combined with some other investment
strategies.

THANKS SO MUCH FOR TAKING THE TIME TO HELP ;-).

Good, that extra info helps. You are being played. Anyone
who even hints that you can get anything like 11-12% on
guaranteed principal is dishonest.
The benchmark for AAA investments is the U.S. government
bond, whose rates are around 4%. Anything promising much
more *has* to involve more risk.
Whoever runs an annuity must make the money they pay you
by investing in the same market available to you (mostly), and
there is no magic secret cache of 10% safe investments.
How long an invesment horizon do you have for this money?
If you really want an annuity, call Vanguard. They at least offer
no-load, low-fee annuities so you're not being ripped off for the
commissions and high fees that most other annuities contain.
Joe

<sheellah[at]aol.com> wrote
- quote -

I think the key words here are "as much as."

One cannot get that kind of return for any notable period of time right now
without gambling. And you say you're not a gambler. Maybe more annuities are
right for your situation, and no doubt there is at least another fixed one
that will suit your needs. But I suggest proceeding with great caution with
this offer in particular and with annuities in general.

- quote -

Ask the guy selling it to you. If he can't explain things so you understand
and feel comfortable, find another financial advisor.

There are warnings on the net about annuities, particularly variable ones.
Google, or ask if you want some citations. The Securities and Exchange
Commission has even recently leapt into the fray, strongly cautioning
investors to carefully study and understand the terms of any annuity being
offered them, since customers are being scammed (sometimes legally;
sometimes not, apparently).

- quote -

You say you're worried about the taxes on CD interest, and, again, you say
you don't want to gamble. Which brings you to annuities which do have tax
advantages for some people. Mind elaborating a bit, as a double check on
your reasoning?

In what tax bracket are you?

Are you retired?

Have you estimated how much you need each year in retirement?

Are you aware of the effects of inflation on one's retirement?

Can you tell the group the fee structure of your advisor? There is some
routine advice given on this subject here that should help a person avoid
being ripped off.

I am a 40-something "do it yourself investor." I never had an annuity but
researched getting one last year. I didn't like it because the setup was
simply the company took my money, then gave it back to me slowly each year.
I didn't like giving up that control. I thought I could do better investing
and drawing down from it as needed, all on my own.

On the other hand, were I in my 70s, I would consider an annuity. It's peace
of mind, particularly when combined with some other investment strategies.

I wanted to add that I wanted to purchase annuities to get a safe
return on a considerable amount of money. I'm in my fifties. The banks
have a very low interest rate, CD's are taxable, and the stock market
scares me. I'm not a gambler, and have very little risk tolerance. I
have one fixed annuity and one that varies based on the interest rates.
I wanted to buy some where the principal is secure and they are
variable with only the interest at risk. These would be based on real
estate investments and an investment portfolio. I was told I could get
as much as an 11-12% return. I'm just looking for a safe place to put
the money with a better rate than the banks. I will also have other
more liquid funds. The brokers commission is paid by the annuity
though, not me?

I am also open to any other types of safe AAA investments. Thanks.

There are so many annuities available and this is what my advisor is
recommending. I don't have the knowledge to know if there is anything
better out there. You always wonder if what they select is the best for
you or for them ;-). I also wonder when they recommend their own
products. I really would appreciate any feedback from someone who has
no vested interest. Thanks much!