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Sunday, June 16, 2013

An Excellent Explanation of a Variable Annuity

When I drive around on Saturday morning, I listen to investment advisor radio programs.  One I find interesting promotes variable annuities.  Granted that they may be a fit for some super risk-adverse investors, but most of the people buying them are not getting what they think they are paying for!

The promoters make them sound like the best thing since sliced bread as they tout guaranteed rates and the avoidance of market risks.  I even want to call their hot line as I listen to their hype and get one, AND I KNOW WHAT'S WRONG WITH THEM!

But (here's a news flash) everything isn't always what it seems in the world of investing.  If you are considering a variable annuity, you'll want to read this excellent short analysis first:
Variable Annuity with a 5.5% Guaranteed Growth Rate? by Mike Piper.

As you read it, keep in mind that the investment advisors on the radio tack on an advisors fee.

If you need an income stream, it is usually best to purchase a single premium immediate pay annuity. Do your research, and understand the protection in the event the insurance company has financial difficulties.

1 comment:

  1. Even the term annuities for some reason sounds shady - like 'reverse mortgage'! I've never heard one person say taking out either of these was a good decision.