Annuity vs. investment

来源: 2015-12-16 11:03:48 [] [旧帖] [给我悄悄话] 本文已被阅读: 0 次 (1665 bytes)
回答: what is difference of Investing Bank and Annuityjuja2015-12-15 18:23:46

It is generally assumed stock market (such as S&P 500 index) is averaging 8% a year OVER LONG TERM (50 years etc).   But it is no guarrantee in the next 10-20 years the stock market will give you 8% or even 6.5% per year average growth.  This is where insurance company makes money on your annuity.

You give them $100K, they promise you 6.5% a year income, so you get $6.5k EVERY YEAR.  But if they put your money in stock market, OVER LONG TERM they are going to make 8% (8K) a year, the insurance company makes 2.5% profit using your money to cover their cost, salaries, and eventually company profit. 

Annuity is a gurranteed investment.  It is useful for example, If your wife is a housewife who does not know anything about money managment, and you worry if you die she'll be cheated out of her inheritance, you buy her an annuity.   It guarrantees X% of income every year, so she can enjoy her life.

I personally think a person with a college degree should be able to do better than annuity in the stock market by simply buying index fund.  So I tend to agree with your investment agent.  However, maybe you don't want to spend the time, and like to thought of gurranteed 6.5% per year. It is lower income in exchange of safety.   It is up to you. 

 

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