Attention: Djjeffries /KVB and financial gurus!

[flyingillini]

Interesting topic here. Many swear by them and many hate them and would never do it. @KVB @djefferis , @jjgold what’s your take on annuities? The age people should start / take them. Or are they a bad deal all together. I know people who love them and hate them.

 

[jjgold]

over 70 and no family to leave money too only scenario

 

[flyingillini]

over 70 and no family to leave money too only scenario

Let’s see what @KVB and @djefferis have to say about this.

 

[Tanko]

Interesting topic here. Many swear by them and many hate them and would never do it. @KVB @djefferis , @jjgold what’s your take on annuities? The age people should start / take them. Or are they a bad deal all together. I know people who love them and hate them.

I know you didn't ask me but, I'm giving my $0.02 worth anyway.

I would consider annuities as a potential part of your financial planning and only to cover a portion or all of your basic needs.

Here is a very summarized version of financial planning.
You need two types of money to retire on:

• Necessities: House, food, car, etc....
• Disposable Income: Movies, Eating out, Gifts, Travel, gambling etc....

If you know the amount required for necessities, you should make sure it is sourced from guaranteed incomes (Soc Sec, Pensions, Annuities). That way, no matter what happens to your investment portfolio, you will always have money to live on.

All of your other assets, can be invested and grown and help pay for Disposable Income items. If the market tanks and your assets drop, you cut back on those disposable items and vice/versa.

My financial advisor has been trying to sell me on annuities for years. I've always said no because

1. I know the payback on them is questionable (it depends on the type of annuity you get but you could die next week and your investment is gone).
2. You can't go backwards. Once you have invested in the annuity, your money is tied up forever (unless you get a special kind of annuity).
3. The commission for her selling these is high so she pushes them even though she is a fiduciary.
4. My fixed income sources cover all my Necessities for the rest of my life without an annuity so why tie up my money in something I have no control over.

There is a lot more to this but that's the summary.
GL

 

[flyingillini]

I know you didn't ask me but, I'm giving my $0.02 worth anyway.

I would consider annuities as a potential part of your financial planning and only to cover a portion or all of your basic needs.

Here is a very summarized version of financial planning.
You need two types of money to retire on:

• Necessities: House, food, car, etc....
• Disposable Income: Movies, Eating out, Gifts, Travel, gambling etc....

If you know the amount required for necessities, you should make sure it is sourced from guaranteed incomes (Soc Sec, Pensions, Annuities). That way, no matter what happens to your investment portfolio, you will always have money to live on.

All of your other assets, can be invested and grown and help pay for Disposable Income items. If the market tanks and your assets drop, you cut back on those disposable items and vice/versa.

My financial advisor has been trying to sell me on annuities for years. I've always said no because

1. I know the payback on them is questionable (it depends on the type of annuity you get but you could die next week and your investment is gone).
2. You can't go backwards. Once you have invested in the annuity, your money is tied up forever (unless you get a special kind of annuity).
3. The commission for her selling these is high so she pushes them even though she is a fiduciary.
4. My fixed income sources cover all my Necessities for the rest of my life without an annuity so why tie up my money in something I have no control over.

There is a lot more to this but that's the summary.
GL

You are way too young Tankster. Thanks for your input. I didn’t know you were such a good writer !

 

[Franz555]

I think Tanko made plenty of valid points regarding annuities. I have similar feelings and would include " Reverse Mortgages " as a bad idea.
My father always told me that he only believed in 2 things that would always appreciate over time....Gold and Real Estate.
I chose the latter as a primary investment vehicle. An income property can provide a set monthly stipend to suit your monthly / annual needs. In addition you will reap the benefits of market appreciation without any further investments.
I worked for 20 years in the financial Industry and thought future planning was essential to provide my kids with an proper education etc. It was only after I left the industry ( and became an empty nester ) that I truly made headway in creating a decent retirement income. My wife and I bought our 1st investment property with only $ 11,000 Cdn including all closing costs. It was a $220k house that needed plenty of TLC. 14 years later , we have no car payments or mortgage. We bought a rental property that provides a regular income and our primary residence is now worth $1.1mill approximately.
I'm not trying to brag or boast , I just wanted to explain how much greater the return on Real Estate can be, regardless of personal needs. With a good tax accountant , you can also establish a 3 tiered Company that disperses costs and minimizes any Capital gains taxes on the back end.
I realize my name wasn't mentioned, just thought I would throw in my 2 cents. Besides , I'm killing time in a Munich Airport awaiting boarding.

BOL to all

 

[BigJay]

My father always told me that he only believed in 2 things that would always appreciate over time....Gold and Real Estate.
I chose the latter as a primary investment vehicle.

 

[BigJay]

I'm killing time in a Munich Airport

 

[str]

As a rule of thumb, if an investment company is offering an amount of money to you, they have a fiduciary obligation to make sure their is the proper value in it for their clientele.

That typically means there is NO value in the deal for you. There are some exceptions but I would explore every avenue before going down that road.

One scenario is that you could get a home equity loan amount that will cover your run over run needs for the next X amount of years easily. Yes, you pay some interest but only on what you have taken out of it. NOT the entire amount. Further, the value of the property will in most cases appreciate enough to offset a portion if not all of those interest costs. And home equity lines are free. Factor in the costs one will expect to pay in order to GET that annuity deal done, that is, lawyers, etc.

I was always told to never consider an annuity but some people do have circumstances that might make it ok to pursue.

If you are serious about it, Measure twice...cut once. Good luck.

 

[flyingillini]

Me personally would never get an annuity. I was told to make a good financial post with some discussion. So far it’s been a dud. Let’s get more posts in here and more discussion.

 

[BigJay]

If an investment company is offering an amount of money to you, they have a fiduciary obligation

 

[JDS]

over 70 and no family to leave money too only scenario

Yeah strange he would even ask you, did your father leave you anything when he passed ?

 

[flyingillini]

Yeah strange he would even ask you, did your father leave you anything when he passed ?

I asked him as well as any other financial gurus because JJ is a financial genius. I saw it first hand at HSBC in Montreal.

 

[jjgold]

Yeah strange he would even ask you, did your father leave you anything when he passed ?

No
He was a gambler end up broke like everyone here final result

 

[JDS]

No
He was a gambler end up broke like everyone here final result

So you think it’s in my best financial interest to stop gambling now and leave this forum forever ?

 

[Franz555]

Me personally would never get an annuity. I was told to make a good financial post with some discussion. So far it’s been a dud. Let’s get more posts in here and more discussion.

A Dud ?

Fly , thought I provided some valuable insight. Also thought Tanko offered plenty of valuable info.

Lesson learned

 

[djefferis]

Sorry - been away a few days.

My thoughts on annuities are simple - some are decent, some are absolute duds and are far more favorable to the issuer/salesperson. None are the absolute best option for everyone and overall there
are better options for many.

The ones with a high front end load / extended commitment are absolute rip offs. To me - many annuity offerings are comparable to the sports betting apps that flooded the market. They make things “simple” and have slick ad campaigns. They show their target audience loving life and reaping financial rewards - when reality is you probably could have made more going elsewhere with your money. But they make it easy to buy and you’re paying for convenience.

For some situations - they make sense. For example - when my parents were making estate plans, they converted my sisters share of inheritance into an annuity on death - partiallly to “restrict” her access to funds and partially for ease of planning. Unfortunately - this one wasn’t restrictive enough and she managed to liquidate it I heard (at a substantial penalty). But when you’re leaving a few hundred thousand to someone and don’t want to see it gone in a spending spree - they can make sense.

Likewise - leaving things to a charity via annuity can make sense. It provides a steady payment to a charity - while restricting their ability to spend it all at once. All it takes is one or 2 corrupt or inept people in a charity to overspend/overspend a bequest to ruin things.

A professionally managed investment manager is better - but again your probably going to need 7 figures before they find you “profitable” - when your investing 100-500k - and have no knowledge of the markets or financial planning - annuities can be a decent fit for the need - much in the way betting apps and their offering fits the need of a gambler depositing 50-200 dollars into an app hoping to win big - too small for offshore to care about but fits the customer need. Yea your betting into a 30 cent line - but to get access to those dime lines you got to step up your investment.

 

[flyingillini]

A Dud ?

Fly , thought I provided some valuable insight. Also thought Tanko offered plenty of valuable info.

Lesson learned

You provided great information. I mean I’m general the thread is a dud.

 

[flyingillini]

Sorry - been away a few days.

My thoughts on annuities are simple - some are decent, some are absolute duds and are far more favorable to the issuer/salesperson. None are the absolute best option for everyone and overall there
are better options for many.

The ones with a high front end load / extended commitment are absolute rip offs. To me - many annuity offerings are comparable to the sports betting apps that flooded the market. They make things “simple” and have slick ad campaigns. They show their target audience loving life and reaping financial rewards - when reality is you probably could have made more going elsewhere with your money. But they make it easy to buy and you’re paying for convenience.

For some situations - they make sense. For example - when my parents were making estate plans, they converted my sisters share of inheritance into an annuity on death - partiallly to “restrict” her access to funds and partially for ease of planning. Unfortunately - this one wasn’t restrictive enough and she managed to liquidate it I heard (at a substantial penalty). But when you’re leaving a few hundred thousand to someone and don’t want to see it gone in a spending spree - they can make sense.

Likewise - leaving things to a charity via annuity can make sense. It provides a steady payment to a charity - while restricting their ability to spend it all at once. All it takes is one or 2 corrupt or inept people in a charity to overspend/overspend a bequest to ruin things.

A professionally managed investment manager is better - but again your probably going to need 7 figures before they find you “profitable” - when your investing 100-500k - and have no knowledge of the markets or financial planning - annuities can be a decent fit for the need - much in the way betting apps and their offering fits the need of a gambler depositing 50-200 dollars into an app hoping to win big - too small for offshore to care about but fits the customer need. Yea your betting into a 30 cent line - but to get access to those dime lines you got to step up your investment.

Thank you. Spoken like the pro you are !

 

[flyingillini]

As a rule of thumb, if an investment company is offering an amount of money to you, they have a fiduciary obligation to make sure their is the proper value in it for their clientele.

That typically means there is NO value in the deal for you. There are some exceptions but I would explore every avenue before going down that road.

One scenario is that you could get a home equity loan amount that will cover your run over run needs for the next X amount of years easily. Yes, you pay some interest but only on what you have taken out of it. NOT the entire amount. Further, the value of the property will in most cases appreciate enough to offset a portion if not all of those interest costs. And home equity lines are free. Factor in the costs one will expect to pay in order to GET that annuity deal done, that is, lawyers, etc.

I was always told to never consider an annuity but some people do have circumstances that might make it ok to pursue.

If you are serious about it, Measure twice...cut once. Good luck.

Great post