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  • Fixed indexed annuity

    Obviously advisors probably do not want you to buy them, but are they good conservative retirement investments as you cannot lose principal
    you garner a portion of the stock mkt returns yearly, after fees of course

  • #2
    No, these are products sold by agents. Lots to beware of:
    https://www.fidelity.com/viewpoints/...exed-annuities
    If they have surrender charges you can lose principal.

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    • #3
      I believe you want fixed annuities or deferred annuities or no annuity at all.

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      • #4
        Originally posted by GasFIRE View Post
        No, these are products sold by agents. Lots to beware of:
        https://www.fidelity.com/viewpoints/...exed-annuities
        If they have surrender charges you can lose principal.
        This is false.

        I’ll try to find it but I listen to another financial podcast, animal spirits and there is a new company that advisors pay for to properly service their clients. It is very low fee to the client annuities where the numbers make a whole lot more sense.

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        • #5
          https://www.fiphysician.com/good-annuities/
          The right annuity for the right account. It will be based on the life and interest rates. NOT the market. This is not an "investment" for gains, this is a guaranteed payment stream, an actuarial deal. The company will win with the pool, but for a small price. Not really tradable. No benefit to the insurance company. You will be temped to add bells and whistles. It will cost you.

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          • #6
            Annuities are not investments, they are insurance contracts. You give the company your money and they agree to give it back to you with interest or not at all if you die first. At what terms they return the principle and interest is determined by the type of contract, fixed or variable. In order to do this they charge a fee which needs to be large enough to turn a profit. So what you get is a guarantee return of your money if you dont die first minus their profits. The only annuity I have some faith in is Social Security, and my faith in that is starting to wain.

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            • #7
              I know we used to refer clients to Jefferson Monument to service their annuities until they could surrender them. Nationwide acquired them several years ago. I would recommend this solution (or similar) only for someone who wanted to move to a lower-cost option until they could get out without high surrender fees. (We received no compensation, of course, this was primarily a means to an end.)

              They used to solicit individuals, too, but I could not understand whether that is still an option or you have to go through a FA.

              in general, the only flavor of annuity I would recommend, at least to more sophisticated clients (or those who may be looking for a solution for their parents), is a SPIA.

              Count me fine with Social Security. Just plan on the payout and taxability rules to continue changing as the population ages and the government continues to move toward benevolent benefactor status.
              Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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              • #8
                Originally posted by GasFIRE View Post
                No, these are products sold by agents. Lots to beware of:
                https://www.fidelity.com/viewpoints/...exed-annuities
                If they have surrender charges you can lose principal.
                Originally posted by Ekanive23 View Post
                This is false.

                I’ll try to find it but I listen to another financial podcast, animal spirits and there is a new company that advisors pay for to properly service their clients. It is very low fee to the client annuities where the numbers make a whole lot more sense.
                This is not false. Not only is everything that Fidelity said 100% correct, but so is GasFIRE. Not only can you lose principal due to surrender charges, but a Fixed-Index Annuity's "guarantees" are typically based on 85% of your principal. So it is possible to lose 15% plus any surrender charges.

                Also, why has the SEC and FINRA issued alerts to investors to avoid Fixed Index Annuities (AKA Equity-Indexed Annuities*).

                *The insurance industry changed the name to protect the guilty. Equity-Indexed Annuities had such a stained reputation, sales plummeted. Notice they picked the "Fixed" name to mislead investors, because fixed annuities are one of the good ones along with deferred annuities and immediate annuities.

                You should find a different podcast to listen to if they are promoting fixed index annuities.

                P.S. "first, do no harm." Doctors don't let other doctors buy Fixed Index Annuities.

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                • #9
                  do they sell inflation indexed annuities any longer? Don't know if I would want a non-indexed annuity with the risk of high inflation

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                  • #10
                    Immediate payout annuities are ok. Rest are crap.

                    WCI:

                    https://www.whitecoatinvestor.com/annuities-101/

                    clark Howard:

                    https://clark.com/personal-finance-c...is-an-annuity/

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                    • #11
                      Originally posted by triad View Post
                      do they sell inflation indexed annuities any longer? Don't know if I would want a non-indexed annuity with the risk of high inflation
                      FYI, FIxed-Index and Equity-Indexed annuities have nothing to do with inflation indexing. Not to derail the thread on a tangent, but some simple analysis.

                      With inflation indexing you are asking risk adverse insurance companies to take on unknown risk. What you though were inflation indexed annuities were far more likely fixed escalation clauses (e.g. 3%/year).

                      The reason you don't hear much about them. Is because they were niche products and not cost effective. It is generally far more cost effective to ladder SPIAs or deferred annuities. This takes advantage of increased mortality credits from survivorship at increased ages.

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