Are Fidelity annuities a good investment?
By kroger2 from Surprise, AZ
I'd be very careful of investing in anything right now.
I recommend bankimplode.com to check on your own bank's current soundness.That's to make sure your money is safe where it is.
Then I'd google for info about things you should know about annuities. You could write someone at marketwatch.com.
The columnists there could steer you to questions you should answer before investing.
Financials of all kinds are suspect in my opinion.
You might also google for information on Fidelity itself. Like, Is Fidelity having problems? Fidelity under investigation? That sort of thing.
I would not invest in annuities but you have to make that decision. There are some pros but I see more cons. If you are to invest in them I would do a lot of research and check out the company that pays out the annuity which may not be the company that you buy from. Also, the money you recieve is a fixed amount and is subject to inflation. So as inflation increases purchasing power decreases. And who knows what will happen with today's economy.
Annuities are very similar to mutual funds. You're taking a big risk if you invest. You would be much farther ahead in buying U.S. Savings Bonds.
My brother-in-law inherited his father's house at the time of his death. He lived in the house for a while and then sold it. As soon as he received the check from the lawyer's office he took $50,000 and invested in an annuity. He never received any dividends and he might as well kiss his $50,000 goodbye. So much for annuities.
A better alternative is to search for the best CD rates, and then ask for the interest to be paid monthly. I got one at a local credit union that paid better than anything online.
Monthly or annual interest payment is useful since the best rates are on longer terms. If some of the money won't be needed for a while, then put that money in another CD and let the interest compound.
Look for information on "laddering CDs" You can divide the money any way you want. When I bought my last car instead of paying cash I bought 4 CDs, one maturing every year while I had car payments. It was enough to pay the car payments, and since the interest on the car was less than the CDs were paying, I earned about $1000 by doing it this way.
Also, never let a CD rollover. Everytime one matures, do your research again. If nothing else, call the bank that has the CD and ask which rates are best right now. That changes constantly, and if you let it rollover you will not earn the best interest. Over years this will add up to quite a lot of money, and that's why they do it. One year For example, you buy a 12 month CD. The following year the bank has a better rate on 13 months or 15 months. Buy a 48 month CD, when that matures the best rate might be for 39 months. Makes no sense except that it makes banks a LOT of money.
Annuities are costly for you and very profitable for the company selling them. One somebody tried to sell me makes the money disappear immediately from your ownership, and then pays you something every month. This is only a good idea if you're going into a nursing home tomorrow and need to lower your assets. Otherwise it's the next best thing to legal robbery.
Salesmen make them sound very attractive, don't they? But ask about costs and they get very cagey. As Pikka says, be wary of financials. You're better off with FDIC insured CDs right now. I wish I'd invested in CDs years ago instead of mutual funds, I'd be better off now.
Please do some HOMEWORK. Go to www.clarkhoward.com and enter
ANNUITIES in the search box. He had a segment on annuities on 7/13's radio show. He also apprears on HNN TV. He's our consumer advocate. His show is nationawide. I've saved money using his advice. One big tip if you have money to invest please find a member of the National Association Personal Financial Advisors in your vicinity. They don't make commision on investments, just a fee for their services. Just
Google them & go to their site. Good Luck
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