its all about total return (mutual fund, margin, dividends, commission)

[mysticaltyger]

Originally Posted by Texas User

American Funds pay good divs.

Broken-record

[Pilgrim21784]

Originally Posted by [I

retirehappy;20040516]I've been thinking about taking my IRA & buying an annunity, anyone have any thoughts on whether that would be a good move or not? [/i]

I won't attempt to answer your basic question. Its impossible for anyone but you to decide. I'll offer some tidbits that have been useful to me in exploring the topic. Feel free to ignore this post if its old news. I've no idea what information/knowledge you already have on the subject but am basing my response on a presumption that you are new to the game.

http://www.tsp.gov/planningtools/ann...c_select.shtml

The above link is to a calculator for Federal government retirees that anyone can peruse. The calculator and related information (i.e., historical annuity rate indexes) can be useful in getting a feel for what your bucks can buy you. It can be useful for comparison purposes

Another one is Berkshire Hathaway's (Warren Buffet's outfit) at: EZ quote
That link is to their single premium life product, you can futz around their site and explore other options.

There are a huge number of annuity products offered, many with blindingly complicated provisions. As a brain dead rule of thumb - if you don't perfectly comprehend the actual details (not some salesman's comments) of any product, don't go near it.

Its obvious, but --- an annuity is a long term bet on the stability/financial health of the offeror. I would suggest going with only highly rated companies that have been in the business for a long time. AM Best is one well established ratings company, Fitch and Weiss are some other rating firms, and I suspect there are more I'm not familiar with - you've got to do your homework.

Another very serious consideration - whether to go for an annuity with or without an inflation adjustment factor. The Federal annuity product offers an inflation factor option capped at 3%, regardless of whether inflation is higher.
Berkshire doesn't appear to offer any inflation factor option (unless I totally missed it.) I've heard of other companies that offer differing inflation adjustment options, just don't have them at hand.

Protecting your future annuity payments from inflation is not cheap. You're best advised to really give it some thought and come to your own conclusion. Higher fixed payments or lower initial payments with some inflation adjustment - you ought to think about it.

As for what kind of annuity - your choice. Personally (which means you've got to bill me to cover a cup of coffee) I prefer fixed single premium immediate or deferred products with the highest inflation adjustment I can get. I also wouldn't rush out and buy one tomorrow because we're in the bottom of an interest rate period which significantly impacts what you'll be offered. Higher interest rates means higher annuity index rates which equals higher dollars to you.

Remember, you're going to pay for your own coffee. I distrust any type of equity indexed/bond indexed, whatever -- type of variable annuity product. If I wanted risk, I'd put the money in the market. I like plain vanilla fixed annuities from highly rated companies if I were going to buy one. That opinion will not cover the coffee, its just mine.

There is a ton of good information available on the Net about the subject. You've got to do your homework (I know, thats a repeat comment, its critical).

I suggest that whatever you do - make sure that you "buy" an annuity as opposed to getting "sold" one. There is a big difference.

Hope the above has been of some use.

PS - you might want to really evaluate the pros/cons of the tax impact regarding IRA $$ and annuities. I haven't because I would use existing after tax cash. Just a thought.

[smilinpretty]

I have been investing for 25 years or better. I have invested in the following: annuities (fixed). Stocks, mutual funds, CD's, Corporate Bonds, Municipal Bonds and real estate. I have lost money in municipal bonds and real estate. The key is diversity and I keep most of the money in secured investments. My return is 3.2 percent. Doom and Gloom thinking can cause you to lose money because you panic and take your money out of investment. Investments that are not secure are long term investments. Please for those people who are young and want to invest their money, educate yourself, then go to Edward Jones office but find some referrals to make sure you have a good counselor, Please most of the people on these message boards are doom and gloom, or are selling the product they boast about. The reality of it is: People do make money in the stock market, people do make money on annuities, people do make money on Corporate Bonds, Municipal Bonds and the fore mentioned. Variable annuities are a no no. Just be smart and conservative. We have been hearing doom and gloom on the stock market, real estate, gvt monitary system going broke...folks..it ain't going to happen. What we all have to do during a economy that is sluggish is to spend less than what we earn. Save for a rainy day. Plan ahead.

[mathjak107]

what!????????????? city data forums have doom and gloomers? i never noticed that.

[mathjak107]

Originally Posted by Pilgrim21784

I won't attempt to answer your basic question. Its impossible for anyone but you to decide. I'll offer some tidbits that have been useful to me in exploring the topic. Feel free to ignore this post if its old news. I've no idea what information/knowledge you already have on the subject but am basing my response on a presumption that you are new to the game.

http://www.tsp.gov/planningtools/ann...c_select.shtml

The above link is to a calculator for Federal government retirees that anyone can peruse. The calculator and related information (i.e., historical annuity rate indexes) can be useful in getting a feel for what your bucks can buy you. It can be useful for comparison purposes

Another one is Berkshire Hathaway's (Warren Buffet's outfit) at: EZ quote
That link is to their single premium life product, you can futz around their site and explore other options.

There are a huge number of annuity products offered, many with blindingly complicated provisions. As a brain dead rule of thumb - if you don't perfectly comprehend the actual details (not some salesman's comments) of any product, don't go near it.

Its obvious, but --- an annuity is a long term bet on the stability/financial health of the offeror. I would suggest going with only highly rated companies that have been in the business for a long time. AM Best is one well established ratings company, Fitch and Weiss are some other rating firms, and I suspect there are more I'm not familiar with - you've got to do your homework.

Another very serious consideration - whether to go for an annuity with or without an inflation adjustment factor. The Federal annuity product offers an inflation factor option capped at 3%, regardless of whether inflation is higher.
Berkshire doesn't appear to offer any inflation factor option (unless I totally missed it.) I've heard of other companies that offer differing inflation adjustment options, just don't have them at hand.

Protecting your future annuity payments from inflation is not cheap. You're best advised to really give it some thought and come to your own conclusion. Higher fixed payments or lower initial payments with some inflation adjustment - you ought to think about it.

As for what kind of annuity - your choice. Personally (which means you've got to bill me to cover a cup of coffee) I prefer fixed single premium immediate or deferred products with the highest inflation adjustment I can get. I also wouldn't rush out and buy one tomorrow because we're in the bottom of an interest rate period which significantly impacts what you'll be offered. Higher interest rates means higher annuity index rates which equals higher dollars to you.

Remember, you're going to pay for your own coffee. I distrust any type of equity indexed/bond indexed, whatever -- type of variable annuity product. If I wanted risk, I'd put the money in the market. I like plain vanilla fixed annuities from highly rated companies if I were going to buy one. That opinion will not cover the coffee, its just mine.

There is a ton of good information available on the Net about the subject. You've got to do your homework (I know, thats a repeat comment, its critical).

I suggest that whatever you do - make sure that you "buy" an annuity as opposed to getting "sold" one. There is a big difference.

Hope the above has been of some use.

PS - you might want to really evaluate the pros/cons of the tax impact regarding IRA $$ and annuities. I haven't because I would use existing after tax cash. Just a thought.

the best combinations these academic studies came up with is using some major percentage of your money invested conventionaly for inflation protection while pensionizing 20-25% in a fixed income stream. the inflation adjusted annuities eat up way to much compared to using your own nest eggs to cover that aspect..

[a34dadsf]

Originally Posted by mathjak107

i always stress that its all about total return in any investments. you hear folks spew buy dividend paying stocks because they pay you to wait.

well nothing can be further from the truth and even a history of a rising dividend doesnt mean your making money.

i came across a list of the bluest of blue chips ,all with a history of raising dividends right up to today and all sucked overall as investmets.

heres a few.

microsoft had a stock market value in 2000 of 508 billion ,it paid no dividend.
today its worth only 213 billion and pays 2.6%

merck in 2000 was worth 184 billion in stock market value and paid 1.4%
today 107 billion 4.4%

general electric in 2000 was 438 billion in market value, it paid 1.2%
today 194 billion and pays 3.3%

walmart was 244 billion in 2000 and paid .3%
today its 182 billion in value and pays 2.8%

cisco systems in 2000 was 375 billion in value ,it paid no dividend
today its 83 billion and pays 1.6%

intel in 2000 was 331 billion in market value,dividend was .1%
today its 113 billion in value and pays 3.2%

i can go on and on.

folks ill say it again, dont fall for the its okay if a stock falls because its paying a dividend myth. its not the same as a fixed income payment.

its all about total return ,period. its not even about buying a company that is raising its dividend year after year thinking it is a good investment. as you can see by some of the bluest of the blue chips its not.

Your numbers don't hold up since in 2000 we were at the peak of the dot com bubble. Its also nice that most of the stocks you listed are tech related.

None the less, dividend vs no dividend is entirely on the individual. People who are seeking dividends are looking for income where as people with no dividends are looking for capital appreciation. Each investor is seeking entirely different investment objectives.

[Pilgrim21784]

mathjak: Don't want to go off on a tangent to your OP/topic. Perhaps a separate thread on the fixed versus an inflation adjusted annuity would be in order.

I understand your referenced academic studies but they presume that folks want to stay involved with their income/investments, some folks do not. I actually got involved looking at annuities because a family member asked about it. They don't want any money management requirements going forward. Their income flows will be SS and whatever they do with their retirement savings. "Autopilot" retirement income is a viable option for some people.

I wouldn't discard the inflation adjusted option out of hand - as always, it depends on the details. Sorry to divert the thread.

[mathjak107]

Originally Posted by a34dadsf

Your numbers don't hold up since in 2000 we were at the peak of the dot com bubble. Its also nice that most of the stocks you listed are tech related.

None the less, dividend vs no dividend is entirely on the individual. People who are seeking dividends are looking for income where as people with no dividends are looking for capital appreciation. Each investor is seeking entirely different investment objectives.

again its not a list i compiled , its a list of stocks money magazine put together.. its an example of why you cant buy just because a stock has a history of a rising dividend, its long term performance may be lagging.

its only a list of what it is , its a list of blue chips that performed badly for 11 years while the markets did their typical 9% or so.its just a heads up to watch your total return over the years. . its nothing more than that.

i work with a guy who inheirited a load of ge stock about a decade ago. he knows very little about the markets and investing,in fact its the only thing he owns. he though it was doing great because he gets that dividend every month. once we looked at the historical he is actually behind and lost money...

[user_id]

The reasoning here makes no sense, to show that stocks that pay dividends have done poorly as a whole you cherry pick some stocks that were over valued in 2000 and show that the price has gone down, while the dividend has gone up. Well duh, that is exactly what you'd expect if the stock was over-valued! If earnings say the same, yet the stock goes down 50% the dividend is going to go up....

The real moral of this story is that you need to pay attention to value when purchasing a stock, ironically the investors in 2000 were doing exactly what you're suggesting, thinking about "total return" instead of thinking about value. They didn't care about the low dividends because they suspected the stocks to rapidly appreciate....

You are also entirely ignoring the issue of risk, again you promote ideological and risky investment strategies. The 10 year return on a diversified fund of dividend growth fund stocks is around 7.5%, on the other hand with the opposite extreme (pretty much no dividends) a small-cap fund has a 10 year return of around 10%, but the latter involves far more risk than the former. Adjusted for risk, the returns are the same.

[mathjak107]

the idea isnt about cherry picking.
your all trying to read into this and find some motive. there is none. its just a heads up for those without much investing knowledge to watch their total return. it doesnt matter what stocks we are talking about.

its only a few examples of some big names that raised their dividends and did poorly . just watch your over all return ,thats it. there is nothing else to this...

i thought about bringing this up because of my co-worker. there are soooooo many people out there that buy things and have no idea how they are doing overall.