r****m
发帖数: 1204 | 1 我就简单地说几个重点吧:
1. High expense, each and every year until your money is gone.
Two types of expenses:
a). Variable Annuity specific fees, typically minimum 2%.
b). Fund expenses. One of the selling points of VA is it provides a lot
more choices than 401(K)'s choices, which is correct, but the Funds'
expenses are typically jacked up when they are included in Variable Annuity.
(e.g. if you buy Fund xxx directly from Fidelity, expense is 0.5%; now
this Fund is included in this VA product as a "nice" choice, but its annual
expense will be 1.0%. Specific numbers may vary, but you get the idea)
2. Confusing concepts.
Two important concepts (most people think they know, but they don't really
get the key differences):
a). Cash value. This is your actual investment's value, its return is after
the above expenses. Don't think the expenses above are not much each year,
if you invest the same amount of money in a very low cost index ETF fund (
typically annual expense 0.1%), the difference could easily reach 40% at the
end of 30 years! (e.g. $300K vs. $450K)
b) Guaranteed value. This term could vary with different providers, but it'
s typically marketed as "after-expense, guaranteed growth" value, with
growth rate could reach 6% (it varies with products). The problem is, this
is not YOUR money, your money is Cash Value.
3. You will get nothing left.
The selling point of VA is you will get lifetime guaranteed payment. It
will come out of your cash value, which combined with high expenses, your
cash value will quickly deplete. But your annual payment is guaranteed for
life, which is a great deal, right?
Wrong! Because once you start taking payment, your guaranteed value will
stop growing (in most cases, because your cash value will never catch up
with it, thanks to high expenses). Even you are taking 5% payout at age 65,
this is still less than the average annual growth rate you can get from
your index ETF investment, and whatever money in indext ETF investment is
still YOURs.
Comments or 砖头 welcome! | l******e
发帖数: 60 | 2 VA本身就只适合少数人,annuity的存在并不是因为他是一种投资工具，而是他的tax-
deferred的特点。很多人IRA到上限了才去买annuity的，我觉得把annuity理解成一种
non-qualified IRA更合适一些。annuity更像是一种介于保险和IRA之间的一种账户，
你拿它更ETF和MF比那肯定不行了 | r****m
发帖数: 1204 | 3 Yes, VA's gain is tax deferred, but two bad things happened (and majority
financial salesmen/saleswomen don't know or won't tell you about):
1) VA's gain is tax deferred only (you still have to pay for it and actually
worse, see 2. below), more importantly, you don't get it for free, you pay
for it with your asset based expensive fees, regardless you have gain or
loss. For the long run, your cost far outweigh the deferred tax benefits.
2) After investing 20-30 years, you would expect your gain to be taxed as
long term capital gain, right? No, it will be taxed as income. If you
invest in ETF, you will be paying long term capital gain only.
I am saying VA fits nobody excepts the advisors, but if you believe it fits
少数人, could you specify who are those 少数人? That will help many people
here. | r****m
发帖数: 1204 | 4 我就简单地说几个重点吧:
1. High expense, each and every year until your money is gone.
Two types of expenses:
a). Variable Annuity specific fees, typically minimum 2%.
b). Fund expenses. One of the selling points of VA is it provides a lot
more choices than 401(K)'s choices, which is correct, but the Funds'
expenses are typically jacked up when they are included in Variable Annuity.
(e.g. if you buy Fund xxx directly from Fidelity, expense is 0.5%; now
this Fund is included in this VA product as a "nice" choice, but its annual
expense will be 1.0%. Specific numbers may vary, but you get the idea)
2. Confusing concepts.
Two important concepts (most people think they know, but they don't really
get the key differences):
a). Cash value. This is your actual investment's value, its return is after
the above expenses. Don't think the expenses above are not much each year,
if you invest the same amount of money in a very low cost index ETF fund (
typically annual expense 0.1%), the difference could easily reach 40% at the
end of 30 years! (e.g. $300K vs. $450K)
b) Guaranteed value. This term could vary with different providers, but it'
s typically marketed as "after-expense, guaranteed growth" value, with
growth rate could reach 6% (it varies with products). The problem is, this
is not YOUR money, your money is Cash Value.
3. You will get nothing left.
The selling point of VA is you will get lifetime guaranteed payment. It
will come out of your cash value, which combined with high expenses, your
cash value will quickly deplete. But your annual payment is guaranteed for
life, which is a great deal, right?
Wrong! Because once you start taking payment, your guaranteed value will
stop growing (in most cases, because your cash value will never catch up
with it, thanks to high expenses). Even you are taking 5% payout at age 65,
this is still less than the average annual growth rate you can get from
your index ETF investment, and whatever money in indext ETF investment is
still YOURs.
Comments or 砖头 welcome! | l******e
发帖数: 60 | 5 VA本身就只适合少数人,annuity的存在并不是因为他是一种投资工具，而是他的tax-
deferred的特点。很多人IRA到上限了才去买annuity的，我觉得把annuity理解成一种
non-qualified IRA更合适一些。annuity更像是一种介于保险和IRA之间的一种账户，
你拿它更ETF和MF比那肯定不行了 | r****m
发帖数: 1204 | 6 Yes, VA's gain is tax deferred, but two bad things happened (and majority
financial salesmen/saleswomen don't know or won't tell you about):
1) VA's gain is tax deferred only (you still have to pay for it and actually
worse, see 2. below), more importantly, you don't get it for free, you pay
for it with your asset based expensive fees, regardless you have gain or
loss. For the long run, your cost far outweigh the deferred tax benefits.
2) After investing 20-30 years, you would expect your gain to be taxed as
long term capital gain, right? No, it will be taxed as income. If you
invest in ETF, you will be paying long term capital gain only.
I am saying VA fits nobody excepts the advisors, but if you believe it fits
少数人, could you specify who are those 少数人? That will help many people
here. | c*******e
发帖数: 5818 | 7 刚看到老帖，很受教育，顶一下，
还请问，我现在的 403b 退休账号就是 个 variable annuity 性质的，的确发现，买
funds时，fee要多 1%，那么是不是应该赶快 转成 MF 性质的。
Annuity.
annual
【在 r****m 的大作中提到】
: 我就简单地说几个重点吧:
: 1. High expense, each and every year until your money is gone.
: Two types of expenses:
: a). Variable Annuity specific fees, typically minimum 2%.
: b). Fund expenses. One of the selling points of VA is it provides a lot
: more choices than 401(K)'s choices, which is correct, but the Funds'
: expenses are typically jacked up when they are included in Variable Annuity.
: (e.g. if you buy Fund xxx directly from Fidelity, expense is 0.5%; now
: this Fund is included in this VA product as a "nice" choice, but its annual
: expense will be 1.0%. Specific numbers may vary, but you get the idea)
| r****m
发帖数: 1204 | 8 If you have any choice, yes. But unfortunately for many 403b accounts, the
choices are usually very limited. |
|
