JoeTaxpayer

Regular readers of mine know that I am anti-Variable Annuity, one of my first articles on my main site JoeTaxpayer.com was titled “Variable Annuities are sold, not bought“. More recently, I quoted Suze Orman, who “hate[s] them with a passion”. That blog post received much response from readers challenging me to be more open minded. So I invited those readers to offer me a VA that they felt was worth a fresh look. In my August feature article titled “Another Look at Variable Annuities“, I analyzed the Fidelity Growth & Guaranteed Income Annuity. It’s a piece worth reading and as always, I invite any comment. In it, I conclude that the product doesn’t achieve what the typical buyer is seeking, inflation protected growth. I was challenged to suggest an alternate solution and in this month’s feature article, “Creating an Inflation-Adjusted Immediate Annuity“, I offer a strategy to create an inflation-adjusted stream of income from the purchase of a series of standard (non-adjusted) annuities. This is a strategy I am proud to present as I’ve not seen such a strategy presented elsewhere, and it offers both a high starting withdrawal rate (5%) along with conservative assumptions (4% inflation factor, yet just 3% return on savings). Please read it and share your thoughts.

Joe

written by JOE \\ tags: fidelity, immediate annuity, income, inflation, saving, suze, Suze Orman, variable annuities

Regular readers know where I stand on Variable Annuities, and I though thought I’d share this quote from a Suze Orman interview on CNN Money which caught my eye;

“I hate them with a passion - a passion! - especially in a retirement account like an IRA. Variable annuities have all these extra fees and tax issues and penalties, but - oh, that’s okay! - because they give you a tax deferral. But a retirement account is already tax-deferred without all those fees. It’s absolutely ridiculous. I think variable annuities exist for one reason only: to make money for the financial advisers who sell them.”

I’ve had some disagreements with some of her advice, but lately I’m finding more of her quotes that are right on target.

Joe

written by JOE \\ tags: CNN, cnn money, IRA, money, Retirement, retirement account, Suze Orman, tax deferral, variable annuities

Last September I wrote about a zero interest credit card offer I took advantage of. I took the money and bought a CD, pocketing $1000 interest in 6 months time. I received a few comments and questions, centering around how this would impact my credit score. I offered a chart showing how the score is impacted, in general, but couldn’t say for sure the precise impact of any one action on the score. That would take regular access to the score itself, which through MyFICO, would cost nearly $50/yr. Now, I discovered a free way to have regular access. It seems that WAMU (Washington Mutual) offers such access to their credit card holders. The card has no annual fee, and you just click through a link to see your score. They offer an option to get email notification if your score moves by more than 20 points. Combine this with a regular request for your full credit report, and you have a good plan to monitor your credit health

Joe

written by JOE \\ tags: annualcreditreport.com, Credit, credit cards, credit report, Equifax, equity line, Experian, Finance, lend, loan, Suze Orman, TransUnion

Some time back I made some remarks on my main site regarding some of Suze Orman’s advice. Long enough ago that it now has been moved to The Archives. A regular reader of mine wrote that those posts appeared to be mean spirited, and I edited to change their tone a bit and also stopped with new posts in that direction.

Now, I just had the opportunity to see a CNBC special she did for Martin Luther King Jr. day when my recorder is set to record Kudlow & Co. I must say, she was right on the mark with one great answer after the next.

• Do I pay off the small balance or high interest credit cards first? She replied,”Anyone who tells you to do anything but pay the high interest cards first is an idiot!” Well, right on, Suze. I’ve said this is the one flaw of the ‘debt snowball‘, and I’m glad you agree.
• She advised to deposit enough to one’s 401(k) to capture the company match. Again, I’ve been preaching the same message.
• She advocates Roth for those starting out and how it can serve double duty as an emergency fund, exactly as I remarked last month in my post ‘Roth Magic‘.
• Lastly, she stated most emphatically, that the only people Variable Annuities were good for was the salesmen who sold them.
• I’ll also admit that even though I disagree that one should ever invest 20% of their money in gold, Suze called it right in her advice of July 2006. Gold was about $640 then, $925 now.

I don’t know if she changed her approach a bit or I just happen to catch a good show, but today I liked what I saw.

JOE

written by JOE \\ tags: credit cards, debt, Finance, mild bagel, Suze Orman