Heard of Equity-Indexed Annuities?

[go4reward]

Has anybody personally invested in Equity-Indexed Annuities? This concept looks quite interesting. What if the insurance goes belly up? Would the annuity still guarantee by Uncle Sam?

[BAEVentures]

I've added a link below to some more info about them. I have not personally invested in any but would assume based on my little bit of reading that it would follow the same guidelines as a standard annuity if the insurer was to go belly up.

http://www.annuityadvantage.com/equityindexed.htm

BAEVentures

[go4reward]

I've added a link below to some more info about them. I have not personally invested in any but would assume based on my little bit of reading that it would follow the same guidelines as a standard annuity if the insurer was to go belly up.

http://www.annuityadvantage.com/equityindexed.htm

BAEVentures

What do you mean by standard insurer goes belly up? Are those insurance back by Uncle Sam or something similar to FDIC? If that is the case, there is no guarantee of income, one example of belly up is AIG.

[BAEVentures]

"When you buy an annuity, the bank or insurance company invests your money and agrees to pay you back according to the annuity's contract terms. The annuity can be part of a long-term savings plan for retirement. Like mutual funds, they are not insured by the U.S. government or by the bank where you buy them."

Quote taken from http://www.frbsf.org/publications/consumer/products.html .

BAEVentures

[go4reward]

SO the guarantee is only by the insurance company. If they invest in bad debts, investors will toasted. I would rather invest myself then.

[BAEVentures]

I would always prefer to invest my own money. The problem with letting a "fund" invest your money is that they move waaaaay to slow. Most funds nowadays are required to be 90-95% invested regardless of market circumstances. This means that when the shit hits the fan (like Sep-Dec 2008) these money managers aren't even allowed to bail even though they know hey are going to lose your money hand over fist. Additionally, when trading a multi-billion dollar fund, it could take weeks to establish a position or exit a position in a given company. As an individual investor, if you take the time and care with your investments, you should easily be able to outperform virtually any mutual fund out there.

BAEVentures

[go4reward]

I agree. Only my 401K is untouchable by me. The rest is invest solely by myself. I was wonder if "Equity-Indexed Annuities" is another alternative for me. Heard of "Indexed based CD"? But with FDIC backing.

[sosocratic]

I would always prefer to invest my own money. The problem with letting a "fund" invest your money is that they move waaaaay to slow. Most funds nowadays are required to be 90-95% invested regardless of market circumstances. This means that when the shit hits the fan (like Sep-Dec 2008) these money managers aren't even allowed to bail even though they know hey are going to lose your money hand over fist. Additionally, when trading a multi-billion dollar fund, it could take weeks to establish a position or exit a position in a given company. As an individual investor, if you take the time and care with your investments, you should easily be able to outperform virtually any mutual fund out there.

BAEVentures

Yet so few people do.

Even the pro's have a hard time beating an index (and seldom do).

The reasons you state along with the above two facts are why I think most people should be in low load index funds. The few that are willing and able to do better should go on their own.

[go4reward]

Just buy ETFs, such as SPY, that will at least stay the same as the market.

[BAEVentures]

Actually, it won't. ETF's all have brokerage fees associated with them. The annual fee of SPY is roughly 0.5% or 10 points. While that doesn't seem like much, add it up over a several year period and you will see it is costing you a few points. Investing in ETFs is a reasonable option in my opinion if you really don't know where to have your money but are sure that you are in a bull market. Personally, I use ETFs as short term trades to capture gains off specific commodities or market sectors and hate getting caught in them long term because they will depreciate relative to the market over time.

BAEVentures

[go4reward]

I actually do not mind paying the extra, just think of it as commission fees. That way you will capture the market ups and downs without worrying about under performing the market.