I’ve followed your channel for over a year and this is one of the most helpful videos I’ve seen. Thank you so much for providing more clarity around these products!
Really enjoyed this video and its host. Thank you Oak Harvest Financial Group for educating us all on the wonderful opportunities with fixed index annuities. Stay well.
Love all these FIA videos. Would love to see an explanation of when you should purchase one of these annuities. Should it be years before your retire? At retirement? Etc.
What about if the FIA Bonus is offerred as way to convert IRA money to ROTH, paying taxes, from within the new FIA Account? Does that change the calculation, as to whether it would be worth taking the bonus?
In my opinion, no. First, usually bonuses are vested over 10 years so if you were to surrender the policy for any reason you would only receive a certain percentage of that bonus. Because of this vesting, you would be withdrawing your own money to pay the taxes on the conversion. Yes, the bonus would increase the accumulation value on paper, so you would have more money after the conversion. But your money would have less growth potential for the remaining 9 years. The question that matters is after 10 years, how much money would you have in that Roth IRA with a bonus product versus a non-bonus product? If the market has 6-7 good years, then the higher rates offered through the non-bonus product would likely result in more money in your account. If the market does not perform well, let’s say has only 3 out of 10 good years, then the bonus product would likely result in more money. The bonus doesn’t really change the overall calculus. It’s not free money, it’s just an “advance” on future expected interest earned. I would like to also point out that the reset feature of the FIA is worth understanding here. Stock market crashes are the FIAs best friend because of the annual reset. You don’t lose money when the market goes down, but you get to start tracking the market from the low point at your contract anniversary. This means that the market could have 7 really good years, 3 awful ones and actually be lower than where it was 10 years ago, but the FIA tracking the S&P 500 would likely be highly profitable because it would have done really well in the good years and not lost any money in the bad years. I hope that makes sense and helps!
It is interesting to hear people's opposition to annuities. Those that do not have a pension usually wish they did and most people really like social security. Fixed annuities (not FIAs) are like a pension and can be a good way to protect against longevity.
I’d only like a pension if it were in addition to a 401k-type option (like my previous job). And you’re right that most people like SS, but they shouldn’t. Terrible rate of return on those funds sadly.
I’ve followed your channel for over a year and this is one of the most helpful videos I’ve seen. Thank you so much for providing more clarity around these products!
Really enjoyed this video and its host. Thank you Oak Harvest Financial Group for educating us all on the wonderful opportunities with fixed index annuities. Stay well.
You're welcome, Deirdre! We're so glad you enjoyed this video, thanks for watching!
Love all these FIA videos. Would love to see an explanation of when you should purchase one of these annuities. Should it be years before your retire? At retirement? Etc.
My understanding is that there is that there a higher commission to sell the annuity with he added bonus.
Great video as always!
This was quite educational......thank you!
You're welcome @melblacke5726, glad it was helpful!
What about if the FIA Bonus is offerred as way to convert IRA money to ROTH, paying taxes, from within the new FIA Account? Does that change the calculation, as to whether it would be worth taking the bonus?
In my opinion, no. First, usually bonuses are vested over 10 years so if you were to surrender the policy for any reason you would only receive a certain percentage of that bonus. Because of this vesting, you would be withdrawing your own money to pay the taxes on the conversion. Yes, the bonus would increase the accumulation value on paper, so you would have more money after the conversion. But your money would have less growth potential for the remaining 9 years.
The question that matters is after 10 years, how much money would you have in that Roth IRA with a bonus product versus a non-bonus product? If the market has 6-7 good years, then the higher rates offered through the non-bonus product would likely result in more money in your account. If the market does not perform well, let’s say has only 3 out of 10 good years, then the bonus product would likely result in more money.
The bonus doesn’t really change the overall calculus. It’s not free money, it’s just an “advance” on future expected interest earned.
I would like to also point out that the reset feature of the FIA is worth understanding here. Stock market crashes are the FIAs best friend because of the annual reset. You don’t lose money when the market goes down, but you get to start tracking the market from the low point at your contract anniversary. This means that the market could have 7 really good years, 3 awful ones and actually be lower than where it was 10 years ago, but the FIA tracking the S&P 500 would likely be highly profitable because it would have done really well in the good years and not lost any money in the bad years. I hope that makes sense and helps!
If the spread is 3. You make 3 right?
Thanks for the video. 👍🏻
great info.
Thanks @rapidsk8, we're glad it was helpful!
It is interesting to hear people's opposition to annuities. Those that do not have a pension usually wish they did and most people really like social security. Fixed annuities (not FIAs) are like a pension and can be a good way to protect against longevity.
I’d only like a pension if it were in addition to a 401k-type option (like my previous job). And you’re right that most people like SS, but they shouldn’t. Terrible rate of return on those funds sadly.
The one with no bonus.
Nationwide last 3 years JP Morgan Mozaic 2 = ZERO
Hey @marantz747, thanks for watching!