Should I roll into an annuity?

[Golfnut2112]

I think agents are crazy if they don’t put money into indexed annuities each year. I’ve done it for years and now I’m getting closer and closer to my golden years and very happy with my decision.

Could I have accumulated more in the market? Possibly. But I left a LOT of money in the market for 20 years with an Edward Jones advisor. When I rolled it all out I basically had my principle.

After 20 years all you had was principal? Just curious what years were you invested?

 

[Newby]

After 20 years all you had was principal? Just curious what years were you invested?

That would have been from the years from 1996 to 2014. Started the account with just minimal and built it to $750,000 but it was entirely principle. There were some gains but the losses and their fees ate up the gains.

Annuities have done much better for me.

 

[Allen Trent]

That would have been from the years from 1996 to 2014. Started the account with just minimal and built it to $750,000 but it was entirely principle. T

Something is very wrong in either your calculations of whether you made money or not or the broker literally stole money from you. From 1996 to 2014, the S&P 500 index with dividends reinvested, returned 321% for an average of 8.455% during those years. The money would have doubled more than twice. 750k invested in 1996 would have over $3M in 2014.

Maybe you didnt mean it had 750k to start or maybe you took money out during those years or something. Regardless, unless it was churned by the broker, invested only in worldcom or Enron individual stocks or literally stolen, it should have averaged about 8.5% in returns, minus hopefully about 1-1.5% in fees during those years

 

[Newby]

Something is very wrong in either your calculations of whether you made money or not or the broker literally stole money from you. From 1996 to 2014, the S&P 500 index with dividends reinvested, returned 321% for an average of 8.455% during those years. The money would have doubled more than twice. 750k invested in 1996 would have over $3M in 2014.

Maybe you didnt mean it had 750k to start or maybe you took money out during those years or something. Regardless, unless it was churned by the broker, invested only in worldcom or Enron individual stocks or literally stolen, it should have averaged about 8.5% in returns, minus hopefully about 1-1.5% in fees during those years

No I didn’t start with $750,000. I started at ground zero. I started just putting money in each month from nothing. I was putting a lot more in in the later years than the early years. And the last year or so of it I moved it over to a cash account because I was deciding what I was going to move it to to quit having losses.

 

[Allen Trent]

No I didn’t start with $750,000. I started at ground zero. I started just putting money in each month from nothing. I was putting a lot more in in the later years than the early years. And the last year or so of it I moved it over to a cash account because I was deciding what I was going to move it to to quit having losses.

Ok, that makes more sense of why you may have not felt like it made anything. Listen, I own way more in safe fixed accounts(bank, annuity, WL/UL) than I do in more aggressive equities, but I just wanted to point out the average was indeed 8.4% during that exact timeframe. EIA issued at that time were nothing like they are today & you likely would have bought one that also made no real accumulation interest, but built up annuitization income buckets because many were 2 or 3 tier products that have since improved greatly after the regulatory pressure & class action lawsuits

 

[Life Hawk]

Would I do better to just stick it in the market or put it into annuities?

Are you willing to accept the risk?

To be very pointed, you have two issues to deal with. Age and market risk. You can use the rule of 100 to get a thumb print view of your risk tolerance and risk split, but that does not answer the question of how you "feel" about the risk. As you age forward (I'm not calling you old, but you don't look like a spring chicken ), protection of current assets and tax deferment is still KING.

Trade war winds are still blowing... and it's an emotional market.

 

[pfg1]

Are you willing to accept the risk?

To be very pointed, you have two issues to deal with. Age and market risk. You can use the rule of 100 to get a thumb print view of your risk tolerance and risk split, but that does not answer the question of how you "feel" about the risk. As you age forward (I'm not calling you old, but you don't look like a spring chicken ), protection of current assets and tax deferment is still KING.

Trade war winds are still blowing... and it's an emotional market.

I read an article last week that said the rule of 100 is now really the rule of 120.
I also read that Vanguard 2030 target date funds have 80% equities in them today. Just food for thought.

I feel like people should always consider being in equities, preferably very diversified, not just S&P. How much of a %? Well alot goes into determining that answer. I have clients all over the board, most of my younger clients (under 40) are aggressive. Many of my 50's clients are 75% some even 85% equities... they have a long time to go still.

The other thing to consider... when we "retire" we still have 20-30yrs of life expectancy. A prudent person would definitely still own some equities, technically you are still a long term investor. Having only annuities alone will likely crush your gains long term. Having some in annuities if that fits and gives you peace of mind is not a bad decision. my .02

 

[Life Hawk]

I read an article last week that said the rule of 100 is now really the rule of 120

Not sure what an additional "20" does for the rule? Just a generic yard stick to help clients see what are some guide lines to look at for green and red money.

I also read that Vanguard 2030 target date funds have 80% equities in them today. Just food for thought.

This is what happens when the market is in an uphill swing as it has been for some time now. Advisors adjust advice based on market conditions... reactionary advice. As this might be valid for younger folks who may or may not have time to recover from market corrections; it in no way addresses the "risk tolerance" or "emotional tolerance" of an individual client who wants to retire and not have nail biting sessions each time they turn on the business news.

You must forgive me as I am a no risk sales guy. I like looking at my clients in the eye and explaining how no one ever lost their principle taking my advice. I answered all my phone calls in '07-'08 and was able to offer reassurances rather than explanations of market cycles.

 

[Tahoe Ray]

Not sure what an additional "20" does for the rule? Just a generic yard stick to help clients see what are some guide lines to look at for green and red money.

Adding "20" to that rule weights older people (and everyone else for that matter) more heavily towards equities.

 

[HoosierLife]

Adding "20" to that rule weights older people (and everyone else for that matter) more heavily towards equities.

Now when you guys are saying Equities, are we talking some guy using his "superior" knowledge to pick the best stocks or just picking a good Mutual Fund with lower fees?

Edit: Equities within a mutual fund as opposed to bonds?

And where do Indexed funds fit into all this?