Something Else Troubling Is Going Around: Dubious Investments
March 31, 2020 by Tara Siegel Bernard
Shortly after the stock market began its initial descent, Rob Phelan, a high school math teacher in Maryland, received an email sales pitch: “The Coronavirus may be Fatal — to Your Retirement Savings!”
Click HERE to read the full story via The New York Times.
Wink’s Note:
1. Indexed annuities (IAs) are not investments; they are insurance. Regulators won’t even let us call them that. So please, follow suit.
2. It sounds like you are paid by the investment community? Please provide the names of your top three advertisers at The New York Times. Thank you.
3. IAs also provide a “pension-like stream of income,” which you indicate is a “valuable benefit.” Good to know you recognize the value in these products!
4. IAs actually outperform CDs. They are intended to provide 1% – 2% greater interest than fixed annuities. Fixed annuities generate returns that are slightly greater than CDs.
5. Some IAs have no surrender charges.
6. The average commission paid on IAs in 4Q2019 was equivalent to 0.574% annually, & even less for older annuitants.
7. Cerulli’s data is not precisely right. Indexed annuity sales in 2019 increased 7.05% to $73.2 billion.
8. Proprietary indices on IAs are almost never capped.
9.Mr. Phelan should have been advised that IAs are intended to transfer the risk of living too long; not provide outstanding rates of return.
