I am early 50’s, still employed, with moderate inheritance. Sibling pushing me to invest at least 50% in annuity. Doesn’t this limit me to interest only of my own money? What % would you suggest, if any.
are annuities best investment vehicle for most of assets?
19
Feb
Annie
February 19, 2010 at 1:29 pm
First, what kind of annuity?
With a couple exceptions, annuities are very expensive.
What you need to do, of course, is LEARN about annuities, and thisa is not the place.
Try this:
https://flagship.vanguard.com/VGApp/hnw/FundsAnnuity?gh_sec=n
(Vanguard has very low costs and are often recommended for annuities)
http://www.sec.gov/investor/pubs/varannty.htm
http://www.thestreet.com/p/_rms/rmoney/davidmerkel/10127047.html
Never, ever buy anything that you do not completely understand. Never. Especially if someone is trying to sell it to you.
And, why not put your money into a low-cost Target Retirement Fund?
PK
February 19, 2010 at 1:55 pm
Yes, it depends on what type of annuity your sibling is speaking about. You are still years from the average retirement age and in most cases, annuities charge very high fees to maintain (insurance fees, administration fees).
It sounds like you are asking about a fixed annuity where you invest a lump sum upfront and in return, you are paid a fixed amount over time until death. These are used for current income and you would not be able to access the lump sum you invested.
Given that you are still employed and relatively young, there are better and more efficient (lower cost) ways to invest. Also, have you considered putting money aside in an IRA with mutual fund investment options? An IRA grows tax free, so you can maximize the compounding effect of your investment.
slavaret2
February 19, 2010 at 2:24 pm
They are the worst.
There are only two types of assets – stocks and bonds – i.e. equity and debt. First, there is a commission when you buy/sell. If these assets are inside a mutual fund, there is a management fee. If a mutual fund is inside an annuity, the insurance company charges more fees.
Annuity peddlers play up the tax and guarantee sides while milking you. The hardest part is not the tax or some post-mortem guarantee – it’s makig the $$.