Thursday, June 21, 2007

 Capital

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  Ready to retire? looking for income, safety and growth? You're a sitting duck for a broker selling a fancy new investment product--a variable annuity with "guaranteed minimum withdrawal benefits for life." You put up some money; it's invested in stocks and bonds; you're guaranteed an annual payment of 5 or 6 percent of your initial investment for life (that's $5,000 or $6,000 on a $100,000 investment); if stocks keep rising, your future payments can (supposedly) rise, too, but they'll never fall.

 

What's not to like? Plenty, as I've said before. Recently, I even got a call from an industry insider who knows these products well. He wanted to talk, on background, about how bad they are.

 ^ You're paying through the nose.
Annual expenses run a stiff 3 to 4 percent, which slashes the amount of income your investment ...





















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