I am thinking about opening up a Roth IRA. I am 28 years old should I consider a bonus index annuity??

Question

I am a somewhat conservative investor.

Answer 1

If you are working for a company that matches your 401k investment, you should maximize that first. Once you have the maximum match, then think about a Roth IRA. Generally, annuities are not a good retirement investment. They are generally better for things like where to put a windfall like an inheritance or a severance package.

I would recommend talking to a financial adviser about the pros and cons of a annuity and other investments. You could go over more of your financial details and desires with them.

Answer 2

No way! You shouldn't have any annuities at your age, let alone an annuity in an IRA or Roth IRA. Forget mutual funds and index funds. You should be in stocks - great stocks at the right price so that you DON'T LOSE MONEY and get a great return over the years,

If you are scared of, confused by or intimidated by stocks, I recommend you learn the difference between buying stocks and trading stocks. The three absolute, hands-down best books out there, in order of reading from novice to advanced, are "Rule #1", "Buffettology" and "The Warren Buffett Way". These three books will give you what you need to know to buy great stocks at attractive prices and how to NOT LOSE MONEY over the long term.

You should demand, and be able to achieve, a 15% or more average annual return which would double your money roughly every 5 years. And you should do it with little risk. It is absolutely possible with only 20 minutes or so a week. Don't want to spend the time or trust yourself to do it? Find an investment adviser that follows those three books. They are few and far between, and often mocked by the majority of Wall Street players, but their clients often end up much better than investors at the large firms.

Or, settle for average, buy a mutual fund or two, and wonder how you could have done things differently so many years down the road.

Answer 3

I-bonds will out perform an annuity and at your age, you should be thinking of blue chip stocks found in the SP 500 or buy SPY (an ETF that tracks the SP 500. An annuity will have you about 4% compound interest, an I bond changes but right now it's over 6% and the SP 500 has historically given a 12% returns after all the ups and downs.

If you are totally confused, try timed funds with multiple names (life style, life time, life cycle). The number after it will have the target date about when you want to retire. As it gets closer, the new money you put in it will shift from more stocks to more bonds. So a Lifestyle 2040 fund means the expected retirement date is 2040. You can be more aggressive by picking a fund that is further away than your retirement date. For instance instead of picking Lifestyle 2040, you could pick Lifestyle 2050.

Answer 4

Gregory has his terms a bit mixed up. They are called Target Retirement funds, their allocation to stocks and bonds change. There is also such a thing as lifestyle funds, also a mix of stocks and bonds, but it is a constant non-changing mix.
In answer to your question: 3 words NO NO NO. You buy shoes from a shoe store. You buy insurance from an insurance company. Buy investments (and an annuity is part investment, part insurance product) from an investment company (brokerage house, mutual fund company). The annuity is expensive, you won't get the full upside return of the index it follows, and the "guarantee" of not losing any money is not worth the cost. With 40 years until retirement, there has not been a 40 year period where you would lose money. As one responder said, average gain is 12% per year (since 1926). Plus with an annuity, you pay taxes at your income rate when you take the money out, I believe even if in an IRA. There is only one reason to put an annunity into a IRA, that is if you want your heirs to get the money in equal annual payments over their projected lifetime.

Answer 5

Better hurry up you're 28, better get your stuff in gear.