My Ameriprise financial advisor is recommending an annuity . But what is advantage of an annuity as opposed to putting lump sum in CD and/or savings account with good interest? Seems like I can still take the interest plus I can continue to contribute to principle?....Thanks to any who respond.
2006-11-11 04:30:39 · 7 answers · asked by coastynav 1 in Business & Finance ➔ Personal Finance
99% of the people don't need an annuity. The commissions are hefty (5-10%) of your money upfront and then 1% per year in maintenance fees. The only value is to the financial advisor because of the commission he/she gets. If you want tax-deferred savings, go with an IRA. Anything over the max contribution, put in S&P 500 exchange traded funds as an inflation hedge as well as laddering CDs to get interest.
This is getting kudos from the financial community.
From the Dilbert Guide to Investing:
Make a will.
Pay off your credit cards.
Get term life insurance if you have a family to support.
Fund your 401(k) to the maximum.
Fund your IRA to the maximum.
Buy a house if you want to live in a house and you can afford it.
Put six months' expenses in a money market fund.
Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker, and never touch it until retirement.
2006-11-14 06:05:49 · answer #1 · answered by Steve R 6 · 0⤊ 0⤋
The advantage-your advisor isn't make any money on your savings account and very little on CDs. Formerly in the financial business, I have to say the majority of annuities are sold because the advisor makes fat commissions and don't have much benefit for the client at all. There's always a nice upfront commisssion of 5% or so and then mutual fund trails (another 1%) during the life of the annuity. Penalties for "early" withdrawal. Find out exactly what the annuity is (the name the term, etc) and research it. Yahoo Finance, MSN Money are a good place to start. There's a million types of annuity products and some are even appropriate but I'd be careful.
2006-11-11 09:28:53 · answer #2 · answered by Middleclassandnotquiet 6 · 0⤊ 0⤋
The advantage to the annuity is that you will not have to pay capital gain taxes until you take the money out. Is this money currently in an IRA? The other important question is how old are you?
2006-11-11 04:36:03 · answer #3 · answered by Ryan T 2 · 0⤊ 0⤋
The PV of an Annuity Due of 3,500, N 10, R 6% is 27,306. That's its value 5 years from today. Its PV today, N 5, R 6%, is 20,405.
2016-05-22 05:22:11 · answer #4 · answered by ? 4 · 0⤊ 0⤋
Annuities gain money tax deferred. They also make a ton of money to the person who sells them though. If you get one don't plan on cashing it out any time soon.
2006-11-11 04:41:36 · answer #5 · answered by Nelson_DeVon 7 · 1⤊ 0⤋
There are anniuties that allow multiple contributions. Most CD's require a minimum $10,000 deposit, annuities can be less than that.
2006-11-11 05:01:53 · answer #6 · answered by Mike R 5 · 0⤊ 0⤋
Get free rates
2015-02-05 04:05:16 · answer #7 · answered by Francisca 1 · 0⤊ 0⤋