With the stock market plunging. . .

[Brett]

Hopefully in a few months all this social distancing will work and everything will be back to normal

 

[Passepartout]

Well, that ol' 7% immediate annuity I bought all those years ago suddenly looks PLUMB WONDERFUL!

 

[VacationForever]

Well, that ol' 7% immediate annuity I bought all those years ago suddenly looks PLUMB WONDERFUL!

I have to wait 2.5 more years to see the first payment from my purchase. Still, I am feeling pretty good about it.

 

[Brett]

Well, that ol' 7% immediate annuity I bought all those years ago suddenly looks PLUMB WONDERFUL!

maybe, the stock market is back to where it was at June 2017 ..... so many years ago

 

[Passepartout]

maybe, the stock market is back to where it was at June 2017 ..... so many years ago

I was in the equities market until last Thursday. So I guess I didn't miss much. But right now the monthly income is welcome in these uneasy times.

 

[bluehende]

maybe, the stock market is back to where it was at June 2017 ..... so many years ago

You sent me to the charting software. Actually the last time it was this low (at the close today) was the week of feb 6 2017. One interesting thing is the last week it was below these levels for the whole week was a week before a bigly crowd in DC. Since I have been bored at home I have used the volatility to try my hand at short term trading. So far I am 3 for 3 with assuming we would retrace half of the day before's loss or gain. I am annoyed that I missed half the move today when I panicked mid day and took my 6 %. I am set up long for tomorrow. My guess is it will not be as much fun when the pattern breaks.

edited to say I used the dow for this and thanks to boeing it probably looks the worst.

Sorry to keep editing but charts can keep me busy for a long time. The SPY was right where it is in june 2017. It briefly went lower than present levels in dec 2018 right before christmas. For those chartists this looks like a perfect retest of those dec 2018 lows as long as it holds 233

 

[dagger1]

Well, that ol' 7% immediate annuity I bought all those years ago suddenly looks PLUMB WONDERFUL!

I will say it again, all those annuity haters are really quiet right now....

 

[Passepartout]

I will say it again, all those annuity haters are really quiet right now....

I just wish I felt as good about other life matters right now as I do about my annuities.

 

[am1]

I will say it again, all those annuity haters are really quiet right now....

Who is backing the annuities?

 

[VacationForever]

Who is backing the annuities?

Insurance companies sell annuities and they invest in safer investments, and never in equities, hence the low rate of returns on annuities. They invest mainly in bonds and the rate of returns is tied very closely to long term bond rates. Buyers also get higher returns from mortality credits, i.e. some will die off and never get back what they put in.

 

[geekette]

I will say it again, all those annuity haters are really quiet right now....

no hater here.

I don't like (trust) insurance companies, and I don't like that annuity sales are often packed with extra fees or confusing fine print. I don't like that the annuity is forever tied to the health of that insurance company.

That said, there are some great products sold by some solid companies.

They aren't for me, but I understand why people like them. I can't fault someone for wanting a (nearly) sure thing. It would be hard for me to hand over a chunk of money to lock in, so I respect annuity owners for being able to do that.

I don't ever HA HA HA to annuity holders when equities are flying high, but note that I am not boo hoo hoo over my equities, either. I own a lot of companies and I understand the risks. Some of my companies might not make it to the other side of the "coronacession", but I've owned stock for over 30 years so I'm far from panic-stricken. I don't sell and I haven't lost any yet. Maybe this time, maybe not.

 

[Brett]

I will say it again, all those annuity haters are really quiet right now....

the "haters" who hold stocks probably also invest in fixed income - bonds, cds, preferred stock, real estate, etc
and some pension "annuities" are invested in stocks - e.g. Calpers

 

[WinniWoman]

I think if annuities work for people - great. And the lucky people who have pensions that they can actually live on. For me and my husband, Social Security is the annuity and the pension all in one and we are holding off collecting as long as we can.

 

[bogey21]

The primary risk one has with an annuity or Pension is the financial condition of the entity making the monthly payments. The biggest problem is the potential that the financial condition of these entities can change over time meaning that the financial condition of the entity obligated to send you monthly payments may deteriorate from what it was when you made your decision to buy an annuity or accept monthly payments for your Pension instead of taking a lump sum...

Having said this I am happy I took my Pension as an annuity...

George

 

[dagger1]

Who is backing the annuities?

no hater here.

I don't like (trust) insurance companies, and I don't like that annuity sales are often packed with extra fees or confusing fine print. I don't like that the annuity is forever tied to the health of that insurance company.

That said, there are some great products sold by some solid companies.

They aren't for me, but I understand why people like them. I can't fault someone for wanting a (nearly) sure thing. It would be hard for me to hand over a chunk of money to lock in, so I respect annuity owners for being able to do that.

I don't ever HA HA HA to annuity holders when equities are flying high, but note that I am not boo hoo hoo over my equities, either. I own a lot of companies and I understand the risks. Some of my companies might not make it to the other side of the "coronacession", but I've owned stock for over 30 years so I'm far from panic-stricken. I don't sell and I haven't lost any yet. Maybe this time, maybe not.

Totally agree with you. One leg (of our 4 legged retirement stool) is stocks/bonds (corporate and municipal)/mutual funds. The Social Security leg and Annuity leg provide (together) more than enough for our day to day expenses. Market fluctuations in the investment leg are of minor significance, because this portfolio will go to our children and grandchildren. This is not to say that we enjoy seeing a 15-25% decline in the value of this portfolio, but it doesn’t effect our day to day lives.
I have never and would never call an annuity an investment (nor is social security an investment). It is a self purchased pension, providing all the benefits so apparent right now with all of this stock turmoil.

 

[geekette]

I have never and would never call an annuity an investment (nor is social security an investment). It is a self purchased pension, providing all the benefits so apparent right now with all of this stock turmoil.

Great terminology!

 

[Passepartout]

Great terminology!

This is precisely what it is. It's just one part of the whole retirement package- not the ONLY part.

 

[dagger1]

Also, it might be interesting to see how many insurance companies have defaulted on their contractual payments (I think it’s close if not zero) over the last 200 years. Insurance companies all reinsure with each other. Not to say it couldn’t happen, but highly unlikely. Compared to stock values falling and dividend cuts and/or elimination, annuities are extremely secure. That’s why they can’t provide the gains or other upsides of a stock/bond/mutual fund portfolio. They are an insurance product meant to provide a secure retirement, nothing more.
And it also amazes me that some find it hard to pay the upfront 6-8% commission (which is actually largely paid by the insurance company if the annuity is held the standard ten years); but have no problem paying 1/2 -1-1/2% of their investment portfolio PER YEAR to their mutual fund/brokerage company/investment manager. As the portfolio grows, so does the annual fee because it’s a percentage of the gross portfolio. Even 1/2% per year over 20 years is a 10% taking. And these fees never stop...

 

[geekette]

This is precisely what it is. It's just one part of the whole retirement package- not the ONLY part.

Or, no part.

I am 401k generation, no pension, just my savings and SS, but anchored by paid off home where I could live off the land if necessary. I'd hate to take a roommate, but I could.

I could not possibly part with lump sum for an annuity. I need liquidity, that's cash and stocks. Two-legged stools are what most folks GenX and on will have. I don't imagine folks younger than me will be interested in paying big sums to insurance companies for a promise, as too many of us have seen promises vaporize. My money where I can see it matters more. Plenty of us know that it won't be possible to have more than enough to fund retirement, it's not a realistic goal, workers are being left behind, the lower on the rung you are, the worse it is. Work till you die is the new reality.

 

[geekette]

Also, it might be interesting to see how many insurance companies have defaulted on their contractual payments (I think it’s close if not zero) over the last 200 years. Insurance companies all reinsure with each other. Not to say it couldn’t happen, but highly unlikely. Compared to stock values falling and dividend cuts and/or elimination, annuities are extremely secure. That’s why they can’t provide the gains or other upsides of a stock/bond/mutual fund portfolio. They are an insurance product meant to provide a secure retirement, nothing more.
And it also amazes me that some find it hard to pay the upfront 6-8% commission (which is actually largely paid by the insurance company if the annuity is held the standard ten years); but have no problem paying 1/2 -1-1/2% of their investment portfolio PER YEAR to their mutual fund/brokerage company/investment manager. As the portfolio grows, so does the annual fee because it’s a percentage of the gross portfolio. Even 1/2% per year over 20 years is a 10% taking. And these fees never stop...

Exactly why I own stocks directly, and now no fee to buy or sell. I have always been significantly fee averse. My plan was always to keep as much of my money as possible.

My sister has someone manage her money, they take 2% every year. ouch,

 

[dagger1]

Exactly why I own stocks directly, and now no fee to buy or sell. I have always been significantly fee averse. My plan was always to keep as much of my money as possible.

My sister has someone manage her money, they take 2% every year. ouch,

6-8% up front looks pretty good compared to the 2% a year fee. Especially since the annuity commission is paid by the insurance company. Of course if you cash out an annuity before the contractually agreed upon term, you can take a big hit.
It’s also very interesting to read about the way brokerage companies make money in self directed accounts, even with zero trade commissions. They still get paid when buying or selling...

 

[Brett]

ugh ... another ugly day on the "street"

 

[Panina]

ugh ... another ugly day on the "street"

View attachment 18065

Imo It will get uglier, My guess is right under 16000. Hope I am wrong, and it gets better, for many it will be disastrous short term. Planning on moving assets then.

 

[DavidnRobin]

How low will the Dow Jones go?

Any guesses?
Might as well have fun with it while 30-40% of the Equity market has gone ‘poof’.

^DJIA Closing value:
My guess -
16,300


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[Fredflintstone]

Imo It will get uglier, My guess is right under 16000. Hope I am wrong, and it gets better, for many it will be disastrous short term. Planning on moving assets then.

Sadly, I think you might be right. I suppose it all depends in truly how bad this problem is. They are sure treating it like an apocalyptic problem. Shutting everything down for months could make this a depression and if that happens, we could see 2009 Dow. The problem here is governments, corporations and individuals went debt crazy which means few bullets to address the problem, individuals one pay check from doom and risk of financial collapse as defaults skyrocket.

I never thought a virus could potentially destroy our economies.

I was lucky in one way, my FAs did put 40 percent of my holdings in early February based on them seeing cracks in the economy (not because of this virus) which has kept the losses at 15 percent. I am now glad they did that even though it’s still a train wreck.

I still see in 5 years, it will recover if one is well diversified.

The travel industry is in real hurt. Hilton is shutting down many hotels. I can see major pops in MFs to try to survive if this keeps going.

With oil at 20 bux a barrel, Canada is really in a world of hurt. Economic collapse is a real possibility as we are in debt and rely on natural resources that are either collapsing in price or not needed as manufacturing is stopping. Plus, governments are injecting money we don’t have to try to mitigate the collapse. I can see the US recovering better because of its huge, diversified economy.


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