Variable annuities

I am not expert on these things...so maybe someone could explain it to me...

why is my broker trying to sell me a variable annuity inside my tax 4deferred 401(k) account? Why would this make sense at all?

My broker was trying to do this and I wanted to punch his face. I looked into it and the fees were really high on what he was trying to sell me and there was a surrender charge. What a fucker. He probably would get a big commision on it or something.

The only way I see variable annuities making sense is outside a tax deferred acount. Since I don't fully understand them and their fees, I'd only consider them after I maxed out my 401(k) and Roth IRA.

I looked at Vanguard's and they have one that one looks reasonable. They have variable annuities that have fees under 1% a year and there are no surrender charges.

"the fees were really high on what he was trying to sell me and there was a surrender charge. What a fucker. He probably would get a big commision on it or something."

There ya go.
Not that I'm any expert with annuities.

Time to change brokers.

The comi$$ion is VERY high on Variable Annuities = your answer.

The commissions on variable annuities are not enormous and they are the same as mutual funds. I sold variable annuities and got paid 1% and I had to split that with my broker dealer. So a $100,000 deposit would put $500 in my pocket. I don't consider that to be enormous to make $500 on a $100,000 sale.

Next, the fund management charges are generally lower inside a variable annuity than the same mutual fund outside the variable annuity. So you are saving money on the fund charges, sometimes as much as 50%.

Some variable annuities offer a cash guarantee. You won't find that with mutual funds.

Many offer a guaranteed income stream with a minimum guaranteed rate of return.

If you are married, they also offer a guaranteed death benefit regardless of the performance of your account.

You can also switch between funds, they call them accounts within a variable annuity, as often as you want with no sales charges.

There are also several other reasons.

I think for a diversified portfolio, variable annuities make since.

C/P

"VARIABLE ANNUITIES are sold more aggressively than fake Gucci handbags on the streets of New York City. Thanks in part to commissions around 5%, sales of variable annuities have soared over the past decade."

"Variable annuities are notorious for the fees they charge. Indeed, the average annual expense on variable annuity subaccounts currently stands at 2.08% of assets, according to Morningstar. (This figure includes fund expenses plus insurance expenses.) The average mutual fund, on the other hand, charges just 1.38%. Unfortunately, variable annuity fees don't stop there. Many variable annuities also have loads on their subaccounts, surrender charges for selling within, say, seven years and an annual contract charge of about $37."

http://www.smartmoney.com/retirement/investing/index.cfm?story=wrongannuities