K****D 发帖数: 30533  1 Today on the radio one guy called in and proposed a way to beat 10 year
index annuity. I think it makes sense.
Put 60% of your money in a 5.5% 10year CD, it will become 100% after 10
years.
Put the rest 40% into index ETF. It will become something above 0% after
10 years.
Therefore, the total is guaranteed to be above 100%. The benefit is that
you'll save a bunch on fees and get the same benefit of an annuity. 
g*****g 发帖数: 34805  2 Are you kidding? Say if index averages 7% per year,
ETF beats 0%, your CD underperform.
【在 K****D 的大作中提到】 : Today on the radio one guy called in and proposed a way to beat 10 year : index annuity. I think it makes sense. : Put 60% of your money in a 5.5% 10year CD, it will become 100% after 10 : years. : Put the rest 40% into index ETF. It will become something above 0% after : 10 years. : Therefore, the total is guaranteed to be above 100%. The benefit is that : you'll save a bunch on fees and get the same benefit of an annuity.


K****D 发帖数: 30533  3 Please read the definition of index annuity.
http://en.wikipedia.org/wiki/Equityindexed_annuity
"An equity index annuity in the United States is a type of taxdeferred
annuity whose credited interest is linked to an equity index SEE EXAMPLE
HERE>>[1], and typically uses the S&P 500 or international index. It
guarantees a minimum interest rate (typically between 1% and 3%) if held to
the end of the surrender term and protects against a loss of principal. An
equity index annuity is a contract w
【在 g*****g 的大作中提到】 : Are you kidding? Say if index averages 7% per year, : ETF beats 0%, your CD underperform.

f****i 发帖数: 20252  4 where to get the 5.5% 10year CD? Put your money in Money market and wait
for 5
years?
【在 K****D 的大作中提到】 : Today on the radio one guy called in and proposed a way to beat 10 year : index annuity. I think it makes sense. : Put 60% of your money in a 5.5% 10year CD, it will become 100% after 10 : years. : Put the rest 40% into index ETF. It will become something above 0% after : 10 years. : Therefore, the total is guaranteed to be above 100%. The benefit is that : you'll save a bunch on fees and get the same benefit of an annuity.

b****e 发帖数: 460  5 Ibond is 5.64%, and has some sweet tax benefit as well. 5% is not hard to
find.
【在 f****i 的大作中提到】 : where to get the 5.5% 10year CD? Put your money in Money market and wait : for 5 : years?

K****D 发帖数: 30533  6 Why not 4.65% 5year CD now and another 5year CD later?
Actually according to the radio host (Ray Lucia), the scheme that guy
proposed is exactly what index annuities do. They just charge you fee
for doing that because they need to feed themselves and also need to
buy insurance (so they can get a good name and attract more people to
buy).
【在 f****i 的大作中提到】 : where to get the 5.5% 10year CD? Put your money in Money market and wait : for 5 : years?

t*******d 发帖数: 2570  7 Other than the fees, they can also provide you cash in regular intervals due
to their pool of money. Your home made "annuity" may have the same return
for 10 years, it does not have the flexibility of getting cash every month
if you throw 60% in a 5 year CD. You cannot take any of that part out during
the 5 years without losing the interest.
【在 K****D 的大作中提到】 : Why not 4.65% 5year CD now and another 5year CD later? : Actually according to the radio host (Ray Lucia), the scheme that guy : proposed is exactly what index annuities do. They just charge you fee : for doing that because they need to feed themselves and also need to : buy insurance (so they can get a good name and attract more people to : buy).

K****D 发帖数: 30533  8 But most CDs are liquid ah. You can always early withdraw with some
penalty.
For complete liquidity, one has to go with a savings account, which
usually is 1% lower in interest rate, //sigh... In that case, 70%
money needs to be in the savings, 30% in equity.
due
during
【在 t*******d 的大作中提到】 : Other than the fees, they can also provide you cash in regular intervals due : to their pool of money. Your home made "annuity" may have the same return : for 10 years, it does not have the flexibility of getting cash every month : if you throw 60% in a 5 year CD. You cannot take any of that part out during : the 5 years without losing the interest.

K****D 发帖数: 30533  9 I rethought about it, my way of thinking was wrong.
The liquidity should come from the equity part, not the CD part.
If one takes cash out of the CD part, it cannot guarantee the yield
after 10 years would be above 0%.
Since equity part is always liquid, there should not be a problem
taking cash out. The only limit is the amount that one can take.
The more one takes out, the more the portfolio is like a CD.
Also, for tax consideration, it's better not to cash out anything
in the first 12 months
【在 K****D 的大作中提到】 : But most CDs are liquid ah. You can always early withdraw with some : penalty. : For complete liquidity, one has to go with a savings account, which : usually is 1% lower in interest rate, //sigh... In that case, 70% : money needs to be in the savings, 30% in equity. : : due : during

f****t 发帖数: 1063  10 not sure I understand. Why do you consider only index annuity? I think some good annuity can average about 56% (guaranted). If the 40% equity is gone (or a big loss), how can you beat the 100% with 5
6% return?
【在 K****D 的大作中提到】 : Today on the radio one guy called in and proposed a way to beat 10 year : index annuity. I think it makes sense. : Put 60% of your money in a 5.5% 10year CD, it will become 100% after 10 : years. : Put the rest 40% into index ETF. It will become something above 0% after : 10 years. : Therefore, the total is guaranteed to be above 100%. The benefit is that : you'll save a bunch on fees and get the same benefit of an annuity.
