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Rule #1 - Do not lose money! Rule #2 - Never forget rule number 1! ( by: Warren Buffet )For comments or questions please email: : admin@equityresearch.com |
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AnnuitiesAnnuities are not for you. The annuity is an overpriced mutual fund that is marketed as having tax advantages. Here is the tax advantage to an annuity. You don't have to pay capital gains taxes on something that doesn't make any money.When I was a broker, many companies would recruit me and try and get me to sell annuities. Why? The annuity is what makes the broker a lot of money. There is no money in selling IRAs or discount brokerage services. That is why many investment professionals first recommend the annuity. What is an annuity?The annuity is basically a mutual fund investment that is also bundled as an insurance product. In other words, there is a guarantee that you can't lose your money. In exchange for this feature, you agree to pay very high fees and to forego any high return years. The way the annuity company makes their money is that during good stock market years they get virtually all the returns. During the lean years the small return that they promise is mostly all taken up in fees. In the end, you basically have a savings account that gets no interest. The only added benefit is that it is insured. Many people that could be on track to be a millionaire are monthly putting most of their check into an annuity. This should basically be against the law. Unfortunately, it isn't against the law to take money from a “sucker”. People fall for annuities because they are afraid the market may tumble. And, like any good insurance company, their actuaries have figured out how to make money off of you. They know that the few good years in the market make the majority of the money in a portfolio and that is the very thing they are taking away from you. If you are thinking about an annuity, don't. You can just put your money in a money market fund or a Cd and do better. |
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