Posted by Ray on April 15, 2008 under Main | 
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.
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Posted by Ray on April 13, 2008 under Main |
When talking about annuities the media is dumb. They never let the public know what type of annuity they are talking about or the fact that there are many different types of Annuity contracts in the marketplace. This story was NOT about variable annuities, instead it was about equity index annuities.
The problem with major media outlets is the fact that they try to tell a story in an hour or less. While the agents “caught” on the show looked like they were trying to pull a fast one, and some were, Dateline never let them finish their sales pitch. While Annuity IQ agrees that equity index annuities are not good investments, we also all agreed that the story was not telling the whole truth about the products. They also did not tell their viewers that the sales people were selling specific companies index annuities. More than likely the agents were selling Allianz, Midland National and Aviva equity index annuities, most of those products are not good for investors.
The bottom line is variable annuities were not discussed and many facts were not disclosed. Equity index annuities need to be regulated more and the industry needs to be cleaned up. While Variable annuities have their faults, they do offer much more than equity index annuities with a few differences. Variable annuities offer real upside potential for investors, shorter surrender schedules and better guarantees and liquidity. While equity index annuities offer long surrender schedules, limited, very limited, upside potential, limited liquidity and extremely high commissions to the agent.
Be very careful when selecting any annuity product and use Annuity IQ to identify the best variable annuity products.
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Posted by Ray on June 26, 2007 under Main |
Money Magazine and Mr. Updegrave have written another mind numbing article where he made a startling revelation to his readers. Whether or not they saw the revelation is another story, but it is right there in print.
In this article Mr. Updegrave said, “For example, I’m fine at tinkering with retirement calculators and monitoring investments – though I’m careful to keep my wife informed. She’s good at the big-picture stuff.”
The part of the quote I want to comment on is the, “She’s good at the big-picture stuff” because this is his overall problem. He is fine with ‘tinkering’ with calculators, but is poor with the big picture stuff, both of these admissions run dangerously close to self admitted lack of knowledge and imagination.
As an expert shouldn’t you do more than just ‘tinker’ with things and shouldn’t you have a grasp of ‘the big picture’? You would think so, but apparently this stuff does not matter to him. Financial advisers do more than just ‘tinker’ with calculators and peoples financial well being and try to match the investment selections for their clients to their goals, risks and objectives while keeping ‘the big picture’ in mind.
Since Mr. Updegrave does not get ‘the big picture’ and only likes to ‘tinker’ with peoples financial well being it should be a red flag to his readers. Those words, as subtle as they were, in my opinion, were an admission of the truth. He simply does not understand the common problems of investors and likes to ‘tinker’ with the advice he gives and he does not worry about ‘the big picture’.
Tinkering with people’s money and investments is horrible and an insult to people who take him seriously. Do you see doctors tinkering with people’s health? Of course not, but I guess it is OK to tinker with peoples financial health. You can not do a financial plan on a calculator because there is more to it than simple calculations.
I believe this is why his advice is so generic and cold, it is simple repetition and it always goes like this; “Invest in the S&P 500 index fund and forget other advisers advice”. When I read those recommendations all that flashes through my head is HAL, from 2001: The Space Odyssey, saying those words in his cold computer voice…am I giving away my age here?
Since he admittedly does not grasp the big picture and only likes to tinker around with calculators it is painfully obvious why he does not like variable annuities. You need independent thought to understand the product and how it works and where it fits into the big picture of retirement security.
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