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Understanding:

 

You say that the safest way to invest in the market is through annuities. That is what annuity salespeople say again and again to sell their products. That degree of "safety" comes at a huge cost to the investor.

 

If an investor saving for retirement is concerned about safety, they can simply invest in a low cost no load bond mutual fund, up to 100% of their asset allocation. Here's an example:

 

Vanguard Total Bond fund (expense ratio .19%)

vs.

AIG Valic Strategic Bond Fund (variable annuity wrapper fee 1%, plus mutual fund ER of .89%, equals 1.89%, plus a 6% surrender charge on top of that)

 

The AIG Valic variable annuity is typical of most annuities, and some companies charge even higher surrender charges, etc.

 

Please explain to me why anyone would want to pay 10 times as much for an investment, espcially over the course of many years. And that's not even including potential surrender fees.

 

Annuities don't make sense for the majority of investors.

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Understanding's comments reflect what every company works to create through marketing, CUSTOMER LOYALTY. Customer loyalty is usually blind and not based on being rational. Its like the old Chevy/Ford versus foreign cars argument. Some folks will continue to drive their favorite brand no matter how bad the repair history or gas mileage is. Basically they are in denial.

 

 

When I clearly pointed out the fact to many of my not so bright colleauges that Vanguard was a better choice than say their NEA endorsed annuity, did they weigh my comments rationally? No they got defensive when I said they were overpaying and it was costing them their future. Instead they lashed out at me and called me all sorts of names.

 

 

Corporate America has done its job folks. brainwashed people into thinking they are really standing by them. The same individuals who bashed me for asking them to take a closer look at their retirement savings are the same folks who will drive all over town trying to find the lowest price gas pump or the cheapest loaf of bread. They just don't see the big picture and they never will.

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Understanding? Are you there? Please give us the reading material -- preferably unbiased -- that favors annuities. I am interested.

 

JudyS

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Well that's not entirely true Jarhead. It seems to me that you hate annuities but don't really understand them.

 

I am a pretty accomplished investor that owns several properties, mutual funds, and annuities. I also believe that all products are great (mutual funds, annuities, etc),

 

I think that this website is just a blog for people to slam annuities without a real understanding of what they can do. Please correct me if this seems wrong.

 

The idea that this website believes that ALL annuities are BAD and ALL NO LOADS is good is probably the most rediculous thing I have ever heard in my life.

 

I was under the impression that this was an intelligent site to discuss different investing methods. I did not realize that this was a site slam annuity companies. If that is all that this site is, then I'll go back to intelligent conversations with my network of investors!!

 

1) Merely because someone hates annuities doesn't mean that the person understands them. Quite the contrary, in fact. Often times the more one understands these, the more one hates them.

 

2) A reading of the threads over time would contradict your second point above.

 

3) I don't recall anyone saying all no loads are good. Again, quite the contrary. Many here point out the advantages of low cost no loads like Vanguard and Fidelity. I don't see a lot of support for some of the high cost no loads.

 

4) If you feel this way about the site, by all means look elsewhere for advice.

 

5) I suspect that your reaction to the site is defensive because it calls into question the emphasis you have placed upon annuities. This is a natural reaction. It is not pleasant to learn that what you have been investing in for years may not have been appropriate. Many of us, however, were in the same boat, and at one time invested in such poor products. We have since learned the wisdom of investing in other ways.

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Guest Sierra

Understanding said: "From what I understand, if she put that money in a no-load, with market being the way it is, if she did not have that annuity and were to die this year, then I would have a major problem in terms of buying out her share of the house."

 

Apparently, you are unaware of the fact that the investment marketplace offers a whole lot more than mutual funds of stocks. Was investing the lump-sum loan in a fixed annuity the only choice your AXA rep suggested? If alternative courses of action were presented please furnish them to us.

 

This is my third post asking you to respond---you have yet to do so---why are you walking away from the discussion?

 

Joel L. Frank

 

 

 

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Sierra,

 

 

Do you think understanding is an agent posing as a real person? I hope not. I hope he responds and defends his assertions. I am willing to listen just like everyone else on this thread. If he really believes we are thje bad guys he needs to enlighten us.

 

 

 

Understanding where are you?

 

 

Tony

 

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I had the feeling that Understanding was an Insurance Salesman in his first post, but regardless, I think a nice thread to learn about VA's has been created for those interested in learning. Keep up the good work everyone.

 

 

 

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Bruce,

 

 

I find it impossible to believe that Understanding will find any backup information on annuities being a good investment in the accumulation stage.

 

 

Bruce, good to have you on this board. Please stick around. and continue to contribute. Keep enlighting folks up there in New Jersey!!

 

 

 

Tony

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Hi,

I would agree with you guys that understanding is probably a sales rep. I find it too much of a coincident that he shows up just at the time when AXA is being trashed in two different posts. Who else but a sales rep who makes money off of unsuspecting victims is going to defend VAs. I hope you got a chance to take a look at the link I posted. I don't know if it has been posted here before, but it is worth keeping handy when the next sale rep shows up defending VAs. Best Wishes.

 

Joe

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Guest Sierra

 

 

Because of her agent she was able to put a new deck on her house, make more money, and help my wife and I with her 403b. And this agent also worked for AXA. So, while your stories sound interesting, I just can't help believing that her agent is doing the best for her and us. Please explain to us where we had gone wrong.

I am just starting to learn financial resposibility (better late than never) and how to invest wisely by frequenting this forum and reading recommended books. I just got through reading "Teach and Retire Rich" and started on "The Random Walk Guide To Investing" by Burton Malkiel. Everything I have read so far, including the current book, say to stay way from annuities unless you have maxed out on all your other retirement accounts (401k, IRA, etc).

Your grandma may have built a new deck with annuities, but with no-load mutual funds may have built a new deck and a new house.

 

 

Well that's not entirely true Jarhead. It seems to me that you hate annuities but don't really understand them. I am a pretty accomplished investor that owns several properties, mutual funds, and annuities. I also believe that all products are great (mutual funds, annuities, etc), and also that there is no safer way to invest in the stock market than through the use of variable annuities. If necessary, I will provide alot of citations. For average people that do not have the ability to self insure, an annuity can be a great investment because it is able to guarantee a ceratin level of income regardless of what happens in the market. I have seen too many friends get burned with no load funds because they were working with people on the other end of a 1-800 phone number. When the market took a dip a few years ago my friends were nervous to retire because they knew that they may potentially run out of money if they were to start taking distributions from their account, so as a result they are still working.

 

With regard to my grandmother's annuity, she needed income badly, and the only place for her to get money was through her home equity. So, she took a reverse mortgage and put the money in an AXA product called a Retirement Income For Life. She is collecting a guaranteed level of income (35,000 to be exact) no matter what happens in the market. She also has a death benefit that will pay me when she passes so that I will be able to buy out her share of the house. From what I understand, if she put that money in a no-load, with market being the way it is, if she did not have that annuity and were to die this year, then I would have a major problem in terms of buying out her share of the house.

 

I think that this website is just a blog for people to slam annuities without a real understanding of what they can do. Please correct me if this seems wrong.

 

What I failed to mention earlier is that I am a retired police officer that has taken many courses in financial planning. The advantages of certain variable annuities are huge. The idea that this website believes that ALL annuities are BAD and ALL NO LOADS is good is probably the most rediculous thing I have ever heard in my life. I think you guys need to do some more research before reading a few books and making assumptions.

 

I was under the impression that this was an intelligent site to discuss different investing methods. I did not realize that this was a site slam annuity companies. If that is all that this site is, then I'll go back to intelligent conversations with my network of investors!!

 

 

Understanding:

 

Let's see if we got this right. GM needs a regular source of income so rather than take out a reverse mortgage where the monthly payments are tax-free (this IS a fixed annuity), her grandchild ("Understanding") convinces her to take out a reverse mortgage in a lump-sum payment (first commission is generated) and then sign over the title to the lump-sum to AXA in return for a fixed lifetime annuity (second commission is generated).

 

Moreover, in order to guarantee that the grandchild (Understanding) is able to buy GM share of the house upon GM demise "Understanding" convinces GM to take out a life insurance policy naming "Understanding" the beneficiary. Man, there is a terrible smell in the room!

 

"Understanding", are you the AXA salesperson who has done soooo well by your GM? I bet the insurance and banking regulators of the state where GM resides would like to talk to you to find out how many other GM you have swindled?

 

Understanding: There is a special place in hell for people like you!

 

Joel L. Frank

==================================================================

 

After all is said and done: GM has lifetime income without any capital to draw upon. Should she decide to sell the house she still must payback the reverse mortgage plus accrued interest---this will reduce the amount of proceeds she winds up with (AS WELL AS FUTURE INCOME) before she finds other living quarters she can afford. With malice of forethought, "Understanding" has made GM for all practical purposes a lifetime occupant/prisoner of her house when her personal choice may very well be to sell and move.

 

"Understanding" asserts he/she is a retired cop. Assume he/she is age 50 and there is 25 years between each generation. This makes GM age 100 and GGM age 125. Is there anyone out there that believes they could find a life insurance company that will issue a fixed lifetime annuity to someone past the age of 100?

 

To all: Please take note that there are thousands of "Understandings" out there 24/7/365 that are prospecting among the elderly hoping to make a "killing". MAKE SURE YOU ARE NOT VICTIMIZED!!!

 

===================================================================

Many people 65+ have very little capital outside of their home. Enter the reverse mortgage broker. On paper a good person selling a worthwile product. But you still must understand what a reverse mortgage is and what it is designed to do. It is designed to generate tax free income for the rest of your life so long as you remain in your home. The amount of money you can take out in monthly payments or lump-sum of cash or a combination of the two is based on your age and market value of your home. The amount you take out is considered a loan so is income tax-free. It must be paid back with interest upon your death or sale of your home whichever comes first.

 

Most "problems's" are solved with a monthly tax-free check while others may need to fix the roof or buy a new heating system; this is why the vendors offer income payments as well as lump-sum amounts.

 

HAVING SAID ALL THAT, AT ONE EXTREME PLEASE DO NOT INVEST THE LUMP-SUM IN THE STOCK MARKET INASMUCH AS THE STOCK MARKET IS NOT DESIGNED TO PROVIDE FIXED MONTHLY INCOME.

 

AND AT THE OTHER EXTREME DO NOT INVEST IN AN IMMEDIATE PAYOUT FIXED ANNUTIY BECAUSE THIS PRODUCT REQUIRES YOU TO TRANSFER YOUR TITLE TO THE LUMP-SUM YOU BORROWED TO THE INSURANCE COMPANY IN RETURN FOR A LIFETIME FIXED INCOME AND THE INTEREST PORTION OF THAT LIFETIME INCOME IS FULLY TAXABLE WHICH GOES AGAINST THE VERY ESSENCE OF TAKING OUT A REVERSE MORTAGE IN THE FIRST PLACE. PURCHASING AN IMMEDIATE PAYOUT FIXED INCOME ANNUITY WITH THE LUMP-SUM LOAN IS A PERVERTED USE OF THE REVERSE MORTAGE PRINCIPLE/CONCEPT!

 

FOR MOST, THE BEST THING TO DO IS TO BUY LIFETIME MONTHLY INCOME PAYMENTS THAT ARE TAX FREE AND USE ANY LUMP-SUM PAYMENT TO FIX UP THE HOUSE.

 

Peace and hope,

Joel L. Frank

Pension Columnist

The Chief-Civil Service Leader

277 Broadway

New York, NY 10007

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Joel, Bruce, Joe, Tony and others,

 

I am shocked, SHOCKED!!!!!!! that Understanding has not returned to this thread to offer information that will help us understand his position. Tsk, tsk, tsk. I am plodding through Four Pillars and was hoping that he would have something a little lighter.

 

Disappointed, but not surprised,

 

JudyS

 

 

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Dear Understanding,

 

Thank You very much for starting a conversation that enlighted any potential newbies to the false assertions that you made against the regular posters on this board. Your inability to continue an intelligent conversation speaks volumes. You are undoubtedly a commission based agent who places unsuspecting indidividuals in annuities. It's nice to see that you are concerned how this board could adversely affect your commissions which prompted you to post but unfortunately it back fired on you.

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Understanding has made me realize why I frequent this board so much and have such an unwavering desire to expose the insurance annuity industry for what it is. All these products do is keep teachers poor. They are using our profession to fill their pockets at our expense. These industries don't want to advise. They want to keep us stupid. Its easier to control and minipulate us that way.

 

To all of you out there who think I 'm just running my mouth I can tell you I have seen unbelievable superior growth in my retirement portfolio since abandoning these insurance products and going with 403(B) 7 products from Vanguard and Fidelity. I was fortunate enough to be able to transfer all my assetts

over to Fidelity and Vanguard before the 90-24 transfer was nixed by the IRS. I was also fortunate to get Vanguard as a provider so now all I do is invest with them and barring any further changes I will continue to do so until I retire. My total portfolio expenses both retirement and non retirement is now down to .50

basis points. At one time I was paying 2.5% a year to an insurance company, didn't know it, and was constantly wondering why my money was not growing.

 

I do it on my own, without a salesrep, and I am doing just fine Thank-You

 

 

 

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Thank goodness there is a place where any teacher can come to seek information about 403b plans. Most teachers are clueless about investing and whether they are even contributing to an annuity.

 

The worst advice I ever got was from fellow teachers I worked with and trusted in the past. Most of them were in the dark just like many are. Because of the internet and wider availability of information, one can find the truth. The annuity salespeople will be the last ones to explain to teachers the devastating effect annuities can have on a person's financial well being, especially if they start contributing at a young age.

 

 

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