Annuity IQ

The hottest trend for investment firms is planning for income distribution for the Baby Boomers. As the Boomers age they are seeking investments that will provide income for their retirement needs. The insurance industry has had a lock on the guaranteed income angle for the better part of 200 years through annuities.

Now, mutual fund firms are trying to get in on the action. The hottest trend, besides ETF’s, are income replacement funds which will allocate the investors money and then start to pay a stream of income after a set number of years. The income is derived from income paying securities, dividends and good old fashion withdrawals. The big question is will these products work?

Well the jury is out because all of these products are brand new and have zero track record. With the existing strategies it seems feasible that they will work if the market only goes up and interest rates increase, but then again all investments look good in that scenario. The truth is only time will tell.

They can as part of a diversified portfolio, but not as a stand alone solution. Like investing at any point in a persons life diversification is key and having guaranteed income mixed in with mutual funds can make perfect sense. In a recent article a person from Morningstar was even quoted as saying that for guaranteed income the variable annuity, with living benefits, makes much more sense than just income replacement funds.

While some annuities are less than appealing, EIA’s for example…huh, hum, Steve, a variable annuity with a living benefit can provide guaranteed income along with inflation protection by keeping money invested in equities. As with any type of investment a variable annuity should be considered an asset class and not as a stand alone solution. By using mutual funds and an Annuity the investor will reduce their risk and improve long term returns, Ibbotson has proven this.

The only thing is how do you know what variable annuity is good and which ones are below par? Sign-up for Annuity IQ to find out.

The existing variable annuity contract data has been updated. However, there are still a few minor updates that need to be addressed, like purging companies we are dropping. There are also going to be new contracts added to the database. Genworth, Amperiprise and Lincoln are on deck to be added in the very near future.

Annuity IQ is working with FRC, Financial Research Corporation, to complete an adviser survey to help the variable annuity industry create products and services to improve the industry.

If you are a financial adviser take a few minutes, literally 10 minutes, to complete the survey. You may reach the survey via this link: Survey Link

Please only complete it if you are a financial adviser. Thank you.

It is with deepest concern and sympathy that Annuity IQ reports that it’s founder, Scott DeMonte, was diagnosed with a rare cancerous tumor which was successfully removed almost 3 weeks ago.

While the cancer was rare the doctor’s do expect a full recover, but the type of cancer is recurring and his fight will more than likely continue for many years to come. Scott was diagnosed with a Myxoid Liposarcoma, which is a deep tissue tumor that usually strikes the victim’s extremities such as legs and arms.

Scott has requested that a portion of all sales be donated to the American Cancer Society to help others fight and survive all types of cancer. Going forward for the rest of the year Annuity IQ will donate 10% of all profits to the American Cancer Society.

Our best wishes for a speedy recovery goes out to Scott and his family.

Today is the last day to mail your taxes and as many people now know their investments also come with tax liabilities. Many people will tell you that investing in mutual funds is a better idea than using a variable annuity because of the long-term capital gains treatment. The irony is that the long-term tax treatment is only relevent to sales of your mutual funds that are more than 12 months old and only on a portion of your total mutual fund distributions.

The vast majority of your distributions from your mutual fund account was probably short term income distributions. That means that the gains from this account will be taxable at your ordinary income tax bracket, not the famed 15% long-term capital gains rate that many claim you will be taxed at.

With turnover rates of mutual funds hovering around 100% annually it is highly unlikely that you will pay long-term capital gains on your investments in the future, unless you sell your fund. To add insult to injury the sub-prime meltdown has handed investors hefty losses on their mutual funds and now they owe taxes on a fund that lost them money.

With a variable annuity you would have circumvented both of these situations. The tax deferral would have shielded the investor from taxes and a living benefit would have preserved the investors income or principal, depending on what type of benefit they bought. To find out what type of benefit is right for you go to Annuity IQ to find out more.