Comments on: Fidelity and Vanguard Creating Investments to Compete With Annuities http://www.consumerismcommentary.com/fidelity-and-vanguard-creating-investments-to-compete-with-annuities/ A premier personal finance blog, established 2003. Within, Flexo discusses his own experiences with money, and he and other authors comment on a wide range of personal finance topics. Mon, 13 Feb 2012 04:45:42 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Andrew http://www.consumerismcommentary.com/fidelity-and-vanguard-creating-investments-to-compete-with-annuities/comment-page-1/#comment-158834 Andrew Mon, 23 Jun 2008 17:07:50 +0000 http://www.consumerismcommentary.com/?p=3367#comment-158834 It's certainly a boon to be able to pass on the principal to heirs, which doesn't usually happen when you annuitize, but many annuities are beginning to either offer guaranteed income features that don't require annuitization or allow for a preservation of principal to be left to a beneficiary. Most people purchase annuities for guaranteed income to insure they won't run out of money due to longevity or poor market results. Really, I don't see this appealing to the same crowd. With your money still very much in the market you have a significant comparative upside but you stand to lose your nest egg as well, which is what most annuity investors are trying to avoid. Where this could fit pretty well is with investors searching for a middle ground between annuities and traditional funds. The more risk averse will stick with guarantees. It’s certainly a boon to be able to pass on the principal to heirs, which doesn’t usually happen when you annuitize, but many annuities are beginning to either offer guaranteed income features that don’t require annuitization or allow for a preservation of principal to be left to a beneficiary.

Most people purchase annuities for guaranteed income to insure they won’t run out of money due to longevity or poor market results. Really, I don’t see this appealing to the same crowd. With your money still very much in the market you have a significant comparative upside but you stand to lose your nest egg as well, which is what most annuity investors are trying to avoid.

Where this could fit pretty well is with investors searching for a middle ground between annuities and traditional funds. The more risk averse will stick with guarantees.

]]> By: Kyle http://www.consumerismcommentary.com/fidelity-and-vanguard-creating-investments-to-compete-with-annuities/comment-page-1/#comment-158028 Kyle Thu, 19 Jun 2008 15:26:50 +0000 http://www.consumerismcommentary.com/?p=3367#comment-158028 I can't seem to find a link right this moment, but I've read before the ER of the Vanguard funds will be in the 0.5-0.6% range. The reason it's so high (for Vanguard) is because dividends paid out on short positions by the market neutral portion of the portfolio must be included in the ER per SEC rules even though the fund will usually recover those costs in normal circumstances. Can't find a link to where I read that for the life of me, though. I think it was on morningstar. I can’t seem to find a link right this moment, but I’ve read before the ER of the Vanguard funds will be in the 0.5-0.6% range. The reason it’s so high (for Vanguard) is because dividends paid out on short positions by the market neutral portion of the portfolio must be included in the ER per SEC rules even though the fund will usually recover those costs in normal circumstances. Can’t find a link to where I read that for the life of me, though. I think it was on morningstar.

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