Annuity/investment question

[kandb]

I am considering putting most of my savings in a 3 year annuity which is going to make 2.3% interest. The amount of money is around $150K. Any pros/cons out there about this? My husband and my house is PIF and we have a combined income of around $270K/year. I am also putting around $25K a year in a 457 account at work. We are both in our mid fifties. My husband has around $160K in a savings account as well that is getting 1.5% interest but will have to decide what to do with that money when the 1.5% offer expires in a few months. We have no car loans or credit card debt. We aren't big risk takers in the stock market. Thanks for any advice.

 

[runwad]

I don't honestly know a lot about annuities but the advice I've always heard is steer clear from Variable Annuities, I think there are a lot of fee's and other things to separate you from your money. So if you're going to invest in one of those, educate yourself first.

 

[kandb]

I don't honestly know a lot about annuities but the advice I've always heard is steer clear from Variable Annuities, I think there are a lot of fee's and other things to separate you from your money. So if you're going to invest in one of those, educate yourself first.

Thanks, this a fixed annuity thru Fidelity with no fees. (The company it is with is NY Life)

 

[gottalovepluto]

FWIW when your DH's 1.5 is done Ally is running 1.45% on their savings account & that will increase, slowly, as interest rates do. I think it was 1.35 when the year started.

I love people managing their own financial destinies but with the amount of money your household makes you may want to look into a financial advisor.

Other things to look at are CDs (since they are often FDIC insured & safety is important to you) & make sure you fully understand the tax benefits/consequences of your annuity.

 

[kandb]

FWIW when your DH's 1.5 is done Ally is running 1.45% on their savings account & that will increase, slowly, as interest rates do. I think it was 1.35 when the year started.

I love people managing their own financial destinies but with the amount of money your household makes you may want to look into a financial advisor.

Other things to look at are CDs (since they are often FDIC insured & safety is important to you) & make sure you fully understand the tax benefits/consequences of your annuity.

Thanks for your advice.

 

[suevee]

I am 66 and at age 59 I was advised by some women on my bowling league whom I respect to stay away from annuities because I was to young and it was a bad investment due to fees. They advised me to go to a fee based financial advisor who had a fiduciary responsibility to me. I took their advice and 7 years later am very happy. So now I give the same advice to my family members.

My advisor gets me 6 to 8 percent on a low risk portfolio.

 

[MillauFr]

It is probably a good deal if you are looking for a low risk investment.

 

[MillauFr]

My advisor gets me 6 to 8 percent on a low risk portfolio.

To make 8% you are not in low risk investments. You are primarily in stocks. Risk and reward are always correlated.

 

[miztressuz]

Synchrony Bank also has decent CD rates for a good ladder strategy and 1.5% on savings accounts. They have IRA CD and Money Markets accounts as well with the same rates. All FDIC insured.

Example CD rates:
1yr 1.9
2yr 2.0

3yr 2.05

Personally I'm looking at a shorter term ladder strategy since interest rates are on the rise, so I can take advantage of the increases rather than get locked in long term on a lower rate.

Edit: as an aside how did you PIF your husband, i'd be interested in that ​

 

[randumb0]

With fixed annuities the fees are usually rolled into the interest rate so that they appear to have no fees. I would strongly recommend speaking with a financial advisor (a fee based like a previous poster mentioned) as there's no reason to keep that much money in savings

 

[suevee]

To make 8% you are not in low risk investments. You are primarily in stocks. Risk and reward are always correlated.

My advisor has built me a balanced personal mutual fund portfolio which has provided me with a comfortable income when combined with my SS and very small widows military pension. My principle has grown modestly while providing me with income. My balance does not fluctuate markedly either up or down with the stock market. It is listed as a low risk portfolio. My stock exposure is very low. Sometimes I wish it were higher. I own my home out right and only carry a car debt because the interest rate was 0.9% and it made no sense to pay in full when my investments earn more. And i wanted a new car with heated seats.

I have 2 unqualified accounts and 2 401k accounts. One 401k account I am not touching until age 70 when I will be required to. At that point I will cease withdrawals on my unqualified accounts and allow them to rebuild.

My fee based fiduciary advisor is with RBC Weath Management and is available at any time I have any questions.

I interviewed four advisors including a "life management" advisor as well as friends who manage investments before choosing him because I know my own short comings when it comes to managing money.

 

[tvguy]

The most important thing is you be comfortable with where your money is. My wife has been putting 15% of her pay into a 401k for 30+ years. When she turned 55, and our financial adviser crunched the numbers, the balance was enough that she could comfortably retire at 62 1/2 and have money at least decade past her life expectancy. So she moved all her 401k money into money markets because she wasn't comfortable with the risk of losing a penny of that money. Yes, she missed out on the soaring stock market of the past 16 months there, but she left her IRA money in stocks, and made more them that in her 401k, even though the 401k balance is 10 times the IRA balance. But who knew this stock run up would happen? She did what was right for her. My 401ks are in a mix of mutual funds and annuities that lock in a return tied to stocks (as long as I take the predetermined benefit. If I cash them out, I lose the locked in rate or return). I've made more in the past year there than DW and I have made combined in salary.

 

[AquamarineSteph]

Agreed with the above that the number one goal is to be comfortable with where your money is, know how much you owe in fees, and determine if there is any penalty for an early withdrawal. A 3 year annuity is a small risk since you have other assets and few debts.

I am not a financial advisor, but I believe Fidelity is a reputable company.

The only other question - is there any risk to your principle with this account? If not, then it may be a safe, short term investment for you.

Does your bank have an investment counselor? Ours provides one for free for account holders, and he has been very helpful over the last few years. It's worth asking, at any rate.

 

[meriface11]

Synchrony Bank also has decent CD rates for a good ladder strategy and 1.5% on savings accounts. They have IRA CD and Money Markets accounts as well with the same rates. All FDIC insured.

Example CD rates:
1yr 1.9
2yr 2.0

3yr 2.05

Personally I'm looking at a shorter term ladder strategy since interest rates are on the rise, so I can take advantage of the increases rather than get locked in long term on a lower rate.

Edit: as an aside how did you PIF your husband, i'd be interested in that ​

I recommend a CD with Synchrony or Marcus (GS Bank). Great rates as they are online only banks. Good technology and service.