Re: Best Annuities
Date: August 16, 2012 12:06PM
OP-Do you really understand what you are getting when investing in an annuity? Are you talking fixed or variable? If it is a variable annuity, do you know the difference in the rate of return you will be getting through the annuity company v. investing directly in the underlying assets, and do you know what you are getting in return for that lower return? Do you know the financial situation of the annuity company and do you understand why that is important? Do you know when you are permitted to begin taking penalty-free withdrawals from the fund and how much the penalties would be if you took the funds out early? Do you know what the commission is that is going to be paid to the broker or advisor who sold you the annuity, and have you considered how that might influence the advisor's opinion?
I'm sure there are a number of other questions to consider.
I am not anti-annuities. I do believe though that many annuities are sold in high pressure sales pitches which overestimate the benefits of annuities while understating or ignoring their weaknesses. For a knowledgeable investor or one who is being well guided by an independent financial advisor, they may be great. An uninformed investor relying on the advice of someone who stands to get a fat commission for closing the deal is likely to get screwed.