Should I roll into an annuity?

[Tahoe Ray]

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?

EFTs are traded like stocks whereas indexed funds are mutual funds.

Both have pros and cons and while I can't speak for everyone else, I'm talking about asset allocation via both (small/large, growth/value, domestic/international, etc.), not some genie picking "the best" stocks.

Three main components of an investment portfolio are equities, fixed income, and cash. Bonds are a fixed income option. So yes, equities vs. bonds. IUL and FIAs can be a great alternative/complement to that bond %.

 

[Life Hawk]

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?

Now your asking the right questions. Your a smart guy... so evaluate the answers based on your personal risk tolerance not that of your advisor.

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

My point exactly... up markets cause advisors to lean toward greater risk.

 

[Tahoe Ray]

My point exactly... up markets cause advisors to lean toward greater risk.

I was just answering your question.

I've seen 3 huge bull markets and 2 nasty bear markets in my 20+ years in financial services.

Good advisors don't do that. You chase return, you get burned. The saying "bulls eat, bears eat, pigs get slaughtered" comes to mind.

I will agree with everything that you said about investor emotion, fear, etc. Most investors don't make rational decisions. That's why you see so many people lag the market as a whole.

A pretty foolproof strategy is to set an allocation based on time horizon/goals/risk tolerance and then just invest money every month in that strategy. Up, down, sideways, doesn't matter.

Dollar-cost averaging and low-cost ETFs/index funds are the best friends of the DIY investor.

If one needs a little help but still wants to DIY, seek out an hourly planner. They can give you some advice on how to get started and are not compensated by assets under management or commissions. They will not be cheap but you also won't need to sit down with them all of the time.

You can find one here: Financial Planners Directory - Find Financial Planners but there are also other options.

 

[pfg1]

My point exactly... up markets cause advisors to lean toward greater risk.

The slide up of 20yrs is due to people living longer and longer, not someone advocating for more risk due to a good market cycle. If you are age 65 today, there is a very real chance you make it to 90 or longer. More and more folks are turning 100. We have to be invested in equities (to some degree) to keep up with inflation for 30 or 40yrs of retirement. (IMO)

 

[HoosierLife]

I was just answering your question.

I've seen 3 huge bull markets and 2 nasty bear markets in my 20+ years in financial services.

Good advisors don't do that. You chase return, you get burned. The saying "bulls eat, bears eat, pigs get slaughtered" comes to mind.

I will agree with everything that you said about investor emotion, fear, etc. Most investors don't make rational decisions. That's why you see so many people lag the market as a whole.

A pretty foolproof strategy is to set an allocation based on time horizon/goals/risk tolerance and then just invest money every month in that strategy. Up, down, sideways, doesn't matter.

Dollar-cost averaging and low-cost ETFs/index funds are the best friends of the DIY investor.

If one needs a little help but still wants to DIY, seek out an hourly planner. They can give you some advice on how to get started and are not compensated by assets under management or commissions. They will not be cheap but you also won't need to sit down with them all of the time.

You can find one here: Financial Planners Directory - Find Financial Planners but there are also other options.

Well that's where I keep coming back to. Seems like I could just pick some Vanguard Index funds and some funds based on my retirement date.

Why do I need a financial planner? They rarely, if ever, beat the market anyway right?

No offense.

 

[Life Hawk]

Well that's where I keep coming back to. Seems like I could just pick some Vanguard Index funds and some funds based on my retirement date.

Why do I need a financial planner? They rarely, if ever, beat the market anyway right?

No offense.

The monkey throwing darts does just as good.

No offense.

None taken my friend. I'm cut from the old "safe money" cloth. Want to keep my rolaids consumption low.

I migrate toward life sales because of the known quantities. I leave the sophisticated stuff to you and pfg1.

 

[Tahoe Ray]

Well that's where I keep coming back to. Seems like I could just pick some Vanguard Index funds and some funds based on my retirement date.

Why do I need a financial planner? They rarely, if ever, beat the market anyway right?

No offense.

None taken!

You can definitely do it yourself but I would read up on asset allocation as a whole and just some basic tenets of investment management.

Plenty of people do their own taxes too. Some use a CPA, some use H&R Block. You get the drift...different strokes.

Plus, I would run from any advisor that is telling you they can "beat the market". An hourly planner is going to focus on your goals and the best way for you to get there. They don't even get paid for recommending different options.

 

[pfg1]

Well that's where I keep coming back to. Seems like I could just pick some Vanguard Index funds and some funds based on my retirement date.

Why do I need a financial planner? They rarely, if ever, beat the market anyway right?

No offense.

You are right, you don't need an advisor.
The goal isn't to beat the market, its to get what the market gives. Most don't come close, and especially those that do it themselves. Statistical research shows that. In fact, the ones who try to beat the market usually do the worst.

 

[HoosierLife]

Thanks everyone, so the consensus is, based on my risk assessment, to.... I still don't know.

Oh yeah, the original question was if putting a $100k into an annuity/including my commission would that beat sticking it into the market.... assuming I would put it into a Vangaurd Indexed fund?

I'm fine with sticking it in the indexed fund for the next 25+ years as far as risk tolerance goes. But if it would work out to around the same number with less risk in a growth annuity (with my commissions tacked on), that would be fine too.

 

[Tahoe Ray]

I'm fine with sticking it in the indexed fund for the next 25+ years as far as risk tolerance goes. But if it would work out to around the same number with less risk in a growth annuity (with my commissions tacked on), that would be fine too.

Spoiler: It won't.

The indexed companies invest your premiums in FIXED INCOME (bonds, real estate, and other stuff). Since they're buying options to get you notional exposure to whatever index you're tied to, they still need their general account investments to perform well to offset those purchases and operating costs (like your commission).

If there was truly a way to get equity returns without risk, every single person would be crazy not to do it. It doesn't exist.

That being said (and others and I have mentioned this in other threads), there isn't any harm to diversifying products. If you have a long (25+) year runway, you should still be heavily invested in equities but you could certainly take a chunk (25%) and dump it into a growth FIA. That would be your "fixed income allocation" (and would actually look good if interest rates ever go back up...).

I recommended that you talk to someone because you seemed confused about your direction. My point was that you just sit with someone once and let them give you pros and cons. Then you can at least be confident in whatever you do moving forward.