Investing options?

Question

My husband just qualified for VA benefits and is going to have an extra $250 a month coming to him. We are wanting to invest this money every month and was hoping some of you could give us ideas as to what our options are and what you think would be the best. We were thinking some type of annuity.

Answer 1

Where and how you invest should depend on your financial situation, age, and risk-tolerence. I would advise against a fixed annuity, period. Unless you are currently maxing out a Roth IRA or a qualified retirement plan, I would not suggest a variable annuity either. The fees are too high and surrender fees, also, make it undesirable. A mutual fund strategy, with at least 3 types of funds, at least some global exposure, will offer the best return for the least risk. When properly set up by a qualified broker, your portfolio will almost always have some part of it doing well, as different sectors alternate which one performs best, each year. For now, I am recommending a tweaked version of Franklin Templeton's Founding Fund Strategy, which can offer great returns, a lower risk profile than the S&P index, and unprecedented diversification for all but the larger investors.

Answer 2

Annuities are nice, especially tax-advantaged ones to help you build up money without immediate tax consequences. Prudential, New York Life, and the like have long experience with quality annuity products--but you've got to keep a firm, really firm, leash on the conversation or they will sell you a lot of life insurance that you might not need or really want. I mention these because they aren't the sleazy snake-oil-salesman types, so if you cave in and buy more than an annuity, you will still likely have a quality product, something you won't be embarrassed by.

I used to sell for a venerable old company that went bankrupt a couple of decades ago. I almost cost a friend his life's savings by using a life insurance product to finance a business buy-out. He would have lost it all when the company when broke. Still, not a single penny of the insurance company's annuity money was lost--they had to handle it separately and much more conservatively. The folks at Pru and NY Life are like that too, they don't play with the annuity money. Since you appear to be in a low risk mode, the older and better insurance companies are the best bets for safe havens in their annuity products.

Answer 3

If you don't already have an IRA established for both of you, I suggest doing so. You can each put in $5000 per year. If you don't have enought to fund both, then start 1 this year and the other in a couple of years.

Most mutuals have a $500 minimum, so you'll need to shop around til you find one that fits. I'd start with an S&P500 index fund.

Look at Fidelity or Schwab to see who will give you the lowest IRA fee. I think they're around $25 per year til you get to a certain level of investments funds in your account, then that should be waived.
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Answer 4

Annuities are expensive. You pay for a death benefit you may not need. Also when you take out the money, all of it is taxed at your normal income rate, not at the lower long term capital gains rate you would get with a "normal" mutual fund.
Most of the mutual funds that have a $500 minimum also have front loads. When you buy those funds, up to 5.75% of your money gets taken away and given to the broker who recommended them. Most no low, low cost mutual funds have a $2500 minimum (Vanguard has a $3,000 minimum with $1000 for one fund.). With the T. Rowe Price family of mutual funds (www.troweprice.com) you can invest a minimum of $50 per month, each month until you reach their normal $2500 minimum. They have some (in my opinion & others) very good mutual funds and I think they also sell low cost annunities.

Answer 5

Here's a good broker to use if you don't have much to invest:
http://www.best-stock-trading-systems.com/sharebuilder_review.html

Answer 6

simple go to any bank that gives the best profit scheme and open an account their trust me that is the best and secure investment