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Is the cash portion of my investments measured in ROI or do I know I'm sacrificing ROI for stability? Same thing with my emergency fund that could be invested in something other than a savings account. Sometimes ROI isn't the measuring stick
Cash is not an investment. Elementary. Apples to oranges.
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it is deeper than that because the actual roi comes from not having to sell off equities for longer periods of time to replenish your spending money since the cash flow from the spia is much higher than you can get from cash and bonds so that is where you make your roi. it isn't really going to be on the spia but rather because
Apples to oranges. As I educated Lowexpectations, in today's low interest rate environment, putting money in cash is not investing. You invest in bonds and stocks.
Also peaking of apples to oranges, that "study" that you quoted earlier analyzed the failure rate of a moderately risk 50 / 50 portfolio and probably included the great depression when the stock market was a completely different beast. They should have analyzed a senior citizen portfolio of about 30/70. The last 14 years is the perfect example. Bond stock investors were able to take out more than 5.5% and STILL retained their original principal.
Cash is not an investment. Elementary. Apples to oranges.
Apples to oranges. As I educated Lowexpectations, in today's low interest rate environment, putting money in cash is not investing. You invest in bonds and stocks.
Also peaking of apples to oranges, that "study" that you quoted earlier analyzed the failure rate of a moderately risk 50 / 50 portfolio and probably included the great depression when the stock market was a completely different beast. They should have analyzed a senior citizen portfolio of about 30/70. The last 14 years is the perfect example. Bond stock investors were able to take out more than 5.5% and STILL retained their original principal.
It is an investment in which I earn money on. You can't make up your own definition to investment
It is an investment in which I earn money on. You can't make up your own definition to investment
A SPIA is something that drops to zero by the time you die.
You can't make up your own measurement to compare investments. ROI is and always has been the benchmark measurement.
A SPIA is something that drops to zero by the time you die.
You can't make up your own measurement to compare investments. ROI is and always has been the benchmark measurement.
You are incorrect. People often give up Roi for security and guarantees. See US govt debt for another example where people invest for safety not roi
actually it is directed right to you. if you want others to learn from you as you said above , then you need to be willing to learn yourself about the areas you lack knowledge in . so far you have demonstrated nooooo wanting to learn about retirement planning at all.
your thinking is stuck in the accumulation stage and as such does not apply much to the 2nd half of the game which is learning to give as little away in taxes as you can and not grow poorer through retirement while preserving assets from inflation and having your money outlive you as well as some legacy money.
sure ,there are retirees who never leave the accumulation stage , pensions and other sources of income have the pay checks never really stopping but for retirees forced to live off their own savings and who need to pensionize their own income it is very different than where your head is at and where your knowledge is.
you lack the knowledge on playing the 2nd half of the game and i strongly suggest you start to learn how to play it early on. i made the mistake of thinking with my accumulation stage hat all the early years and devoted no time to the things that are important to structure early on because i had limited knowledge as to what those things were.
tax wise i am paying the price now as i pull the plug this year and things are set in stone at this stage ,they would be a tax nightmare to do what i should have done had i been smarter earlier.
don't fall into the trap of believing your own bull_sh*T , and thinking you know enough to make good decisions in areas you know little about yet. your brain can only work with what it knows and it can't factor in the pieces of the puzzle you are missing because you don't know.
Last edited by mathjak107; 01-06-2015 at 03:05 AM..
A SPIA is insurance against running out of money. There is no real ROI. Take a step back and look into the logic of it.
I can annuitize $250,000 at age 62 and get around $1100 a month for life for my wife and I. I get my money back in 18 1/2 years. After that, I'm making money, although the returns divided by the 18 1/2 will be paltry. To get the equivalent income elsewhere requires a 4 1/2 % return yearly. On average, that should be doable, but what happens if the markets have a big correction or enter a bear market your first years of retirement? You end up drawing down a lot bigger percentage of your money requiring higher and higher returns on your money to maintain the income levels.
Now, if you have a pension and SS and are fine on that income, then a SPIA probably isn't for you. But what if you only have SS? You need another amount to pay bills and do things. That's where a properly thought out SPIA could help. By locking in income, you can invest more of your remaining assets a bit more aggressively. You can ride out the down years knowing you have a solid income stream.
I can see people benefiting from a SPIA. I can also see a lot of people who would not. They need to be used as part of a well thought out plan. From my experience, that is the minority.
I still have 4 years to retirement. I think about my finances a lot and how to protect myself. SPIA 's could prove useful to me down the road. I don't see a need or benefit today, but things change. Another tool to be used as needed.
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