- 582
Can you expand on this? I'm just now starting to learn about annuities, but if a 25 year old took 250k and placed it in a fixed rate annuity for a 10 year contract, then rolled it into another 10 year, and then one more he would be right at retirement age and wouldn't he now have a ton of money from the annuity?
Unless I'm missing a piece of the puzzle it seems like a 25 year old could benefit greatly from investing in an annuity. In terms of living off the interest or taking withdrawals or anything like that no, an annuity wouldn't work at all. But as just a place to put money for big returns over a 30 year period aren't annuities a slam dunk?
- 1,271
- 582
From the mouths of the babes shall the truth be uttered!
Haha, umm ok if I remember correctly that means I said something VERY right and truthful!
Well that's good cause like I said I am only a few months into really learning about annuities but from what I can tell they are freaking fantastic and I have no clue why people don't choose them over traditional crap like 401k (boy that has bitten some of us on the ass eh?).
The only "negative" is you can't touch it or borrow against it or withdraw from it before retirement age. Unlike other retirement funds like 401k where you can actually borrow against it or withdraw early. But I do not in any way consider that a negative. It's truly for retirement and if you are committed to it being that then there is no issue.
- 1,473
It's okay sure you got excited about the 1 mil annuity u fell off your chair. (:-
- 8,707
The annuity will have the same penalties as your 401K for early withdraw so the only really difference is the inability to take a loan from it like you can from a 401K,403B or 457 assuming those plans have included a loan feature in the plan document.
- 1,271
"Hey, why don't you invest in a partial ownership of this business that you know nothing about for a hundred dollars?"
"Oh yea? How much is it netting?"
"3 dollars, sometimes 4."
"????? Why would I want to pay $100 for a business that earns $3????"
"Because some other sucker will pay $200 for it in future."
"What if there are no suckers who will pay more than $100?"
"That's impossible. There always have been suckers who were willing to pay more in the last 30 years. Haven't you ever heard of a saying 'there's a sucker born every minute'?"
"How much did the original owners pay?"
"Nothing. They borrowed money to start and as soon as suckers showed up, they all sold."
"Hmm ... what if the business goes belly up?"
"Not to worry. You can buy a hundred of them at the same time."
"What if the whole economy goes bad and all of them lose money?"
"That's why this is a long-term investment. You've got to wait long enough in order to find real big suckers in the future."
"What if I lend them some money instead and make a little bit of interest on it and let it compound for a long time? Wouldn't that be more safe?"
"Yes, it would be but at your age that would be completely unethical."
"?????????????????????????????"
"Oh yea? How much is it netting?"
"3 dollars, sometimes 4."
"????? Why would I want to pay $100 for a business that earns $3????"
"Because some other sucker will pay $200 for it in future."
"What if there are no suckers who will pay more than $100?"
"That's impossible. There always have been suckers who were willing to pay more in the last 30 years. Haven't you ever heard of a saying 'there's a sucker born every minute'?"
"How much did the original owners pay?"
"Nothing. They borrowed money to start and as soon as suckers showed up, they all sold."
"Hmm ... what if the business goes belly up?"
"Not to worry. You can buy a hundred of them at the same time."
"What if the whole economy goes bad and all of them lose money?"
"That's why this is a long-term investment. You've got to wait long enough in order to find real big suckers in the future."
"What if I lend them some money instead and make a little bit of interest on it and let it compound for a long time? Wouldn't that be more safe?"
"Yes, it would be but at your age that would be completely unethical."
"?????????????????????????????"
I say that this is definitely unethical if you are working in an advisory capacity for the client and making this a recommendation. The reason is that this Fixed Annuity is an ultra conservative investment for that doesn't allow much growth or flexibility, I mean come on this 25 year old has 30 years right (that's what your saying right)? This guy has enough money to create a portfolio of just stocks and bonds and need not include retail financial products. If you're a skeptic of stocks and bonds due to the recent markets, keep in mind this guy's time horizon is 30yrs. Find someone who owns stock DRIP accounts and look at their statements over the past 30 years or even just 20, you may be surprised.
- 10,708
To say thats its definitely unethical is a stretch.
You have no basis to know whats ethical and what isnt without knowing his risk tolerance, investment horizon, and investment purpose.
If the RoR of an IA meets his need for return, then recommending the stocks which risk his principle, would be an unethical recommendation...
