jump to navigation

Derided strategy looks good right now for retirees! July 28, 2009

Posted by shaferfinancial in Finance.
Tags: , ,
trackback

Perhaps there is no strategy that was attacked by mainstream financial planners and do-it-yourself investors more than variable annuities.  Derided as expensive, sold by selfish insurance folks looking out more for themselves than their customers, and generally laughed at, this product has turned out to be much better than its critics have admitted.  Now I will admit that I am not a big fan of variable insurance products, preferring instead the equity indexed strategy.  However, the Wall Street Journal ran an article on this product last week that highlights what I have been telling folks for a while.  Folks that believed the indexers and invested their retirement funds into mutual funds have a huge problem.  Anyone that followed that strategy over the last 10-12 years has seriously compromised their retirement income.  As the Wall Street Article points out, if instead they bought the insurance product with the additional expenses and the guarantee they would have a much higher income today.  And so far, even though a couple of insurance companies have been bailed out, there has been no failed annuity payments even by AIG!

How much is that guarantee worth to retirees?  I would say quite a bit today.  In short, this is another example of where the mainstream has put expenses at the top of the list to their detriment!  The models of the mutual fund cheerleaders are severely flawed as I have pointed out many times.  Not that I am suggesting variable annuities; I’m not, I’m suggesting value in insurance products and their guarantees!

The time to take the added risk of equity investments is during your accumulation period.  And if you haven’t proven your investment acumen as you approach retirement, you might want to consider taking that guarantee!

Advertisements

Comments»

No comments yet — be the first.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: