New York Life - Invest as Favor for Friend

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shieldsdigby
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New York Life - Invest as Favor for Friend

Post by shieldsdigby »

Good afternoon all,

An acquaintance recently started at New York Life as an insurance salesman. I'd like to help him out (his family has been a great help to me professionally and personally) although investing outside Vanguard (or investing in something other than a passive index fund) goes against my sensibilities. I've got about $5,000 to park.

Is there anything I could invest in there that a Boglehead might approve of? (As background, I'm 35 and childless, so no need/desire for life insurance.)

Thanks, as always, for your insights.
brad.clarkston
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Re: New York Life - Invest as Favor for Friend

Post by brad.clarkston »

Nope, I wouldn't touch that.
sport
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Re: New York Life - Invest as Favor for Friend

Post by sport »

Perhaps disability insurance?
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cheese_breath
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Re: New York Life - Invest as Favor for Friend

Post by cheese_breath »

Option 1 - Give him the $5,000. That will help him the most.

Option 2 - Since he's the salesman let him pick the investment for you. A high commission with front end load should help a little.

Option 3 - Do what you're think of now and go with a low commission, no load investment that will earn him squat.
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123
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Re: New York Life - Invest as Favor for Friend

Post by 123 »

None of the products he is going to be able to offer as a salesperson are going to be of any value to use as a Boglehead.

If you want to help the friend out as a favor you need to be aware that likely anything you purchase would likely be money down the drain and while the friend might benefit from activity toward a sales quota the commission impact to him (that he receives directly) is likely less than 50% of whatever premium you pay. He would be far better off financially if you were to just gift cash directly to him. There is a tremendous amount of overhead whenever you want to help a friend get started in sales. These are awkward situations.
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BolderBoy
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Re: New York Life - Invest as Favor for Friend

Post by BolderBoy »

Don't "invest" with an insurance company. Would you buy insurance from an investment company?
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Nate79
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Re: New York Life - Invest as Favor for Friend

Post by Nate79 »

Buy him a nice bottle of wine.
rjbraun
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Re: New York Life - Invest as Favor for Friend

Post by rjbraun »

Tough situation, but kudos to OP for trying to help a dear friend.

I guess just giving the friend $5000, or whatever OP can spare, would be my thought. Of course, there's the risk of offending the NY Life rep if it's viewed as a "hand out", so diplomacy is key.

One thing not yet mentioned: if OP invests $5000 with NY Life, presumably OP's friend will be expected by NY Life management to bring in more assets from OP. The exception I can imagine would be if OP's friend is so successful raising assets from other investors that OP's account isn't a focus. In that case, I would just rather try to avoid opening an account to begin with unless I was prepared to continue to invest. Like I said, not an easy situation. Good luck.

Edit: Oh, I see it's OP's acquaintance. In that case, I would maybe just try to be supportive and send a gift card to congratulate them on the (new?) job or whatever else seems appropriately celebratory.
Last edited by rjbraun on Thu Sep 17, 2020 2:01 pm, edited 1 time in total.
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Stinky
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Re: New York Life - Invest as Favor for Friend

Post by Stinky »

shieldsdigby wrote: Thu Sep 17, 2020 1:31 pm Good afternoon all,

An acquaintance recently started at New York Life as an insurance salesman. I'd like to help him out (his family has been a great help to me professionally and personally) although investing outside Vanguard (or investing in something other than a passive index fund) goes against my sensibilities. I've got about $5,000 to park.

Is there anything I could invest in there that a Boglehead might approve of? (As background, I'm 35 and childless, so no need/desire for life insurance.)

Thanks, as always, for your insights.
You don’t need life insurance.

You’re too young for an annuity.

You like Vanguard, so no reason to buy NYL mutual funds.

If you really want to do something for your friend, maybe you could buy him a nice leather satchel or briefcase for all of his papers. That will have the additional benefit of being useful to your friend if he washes out with NYL, as many rookie salesmen do.
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rjbraun
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Re: New York Life - Invest as Favor for Friend

Post by rjbraun »

BolderBoy wrote: Thu Sep 17, 2020 1:45 pm Don't "invest" with an insurance company. Would you buy insurance from an investment company?
Fair point, though insurance companies do offer mutual funds and other "investment" vehicles.

https://www.newyorklife.com/products/in ... tual-funds

https://www.lifeandretirement.aig.com/i ... tual-funds
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Re: New York Life - Invest as Favor for Friend

Post by vtjon02 »

shieldsdigby wrote: Thu Sep 17, 2020 1:31 pm Good afternoon all,

An acquaintance recently started at New York Life as an insurance salesman. I'd like to help him out (his family has been a great help to me professionally and personally) although investing outside Vanguard (or investing in something other than a passive index fund) goes against my sensibilities. I've got about $5,000 to park.

Is there anything I could invest in there that a Boglehead might approve of? (As background, I'm 35 and childless, so no need/desire for life insurance.)

Thanks, as always, for your insights.
I've been in a similar situation with my best friend since he became a FA at Edward Jones. I wanted to show him some support but obviously didn't want to pay high fees. I let him know my concerns and he found the lowest fee option that he could offer. Some sort of program that is rarely offered to customers. It costs me a small percentage of the purchase price and I invest the minimum per month and buy a vanguard ETF (something like 1 or 2 percent of purchase amount). And it will cost me $100 when I eventually transfer my account away. No other ongoing charges. It ends up being about the same amount per year that I'd spend taking him and his wife out for a nice dinner. I occasionally get a sales call from another EJ broker or sales person which is annoying, but all in all it is not too bad to show some support to a friend if you can.

For an acquaintance I don't know, see if he has something that is very low fee or just explain to him that you are fee conscious but wish him good luck.
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Re: New York Life - Invest as Favor for Friend

Post by Mel Lindauer »

Don't mix insurance and investments.

Some things to consider:

Once you become a customer, your friend may later give you the "opportunity" to buy some "new and exciting product" that NY Life just introduced. Sales pitches never end with just one purchase. He may also ask for referrals, so it can really turn into a slippery slope.

Friends who are selling stuff often become too pushy over time and turn into ex-friends.

As others have suggested, perhaps a nice bottle of wine or other one-time gift would be the better option.
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Tingting1013
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Re: New York Life - Invest as Favor for Friend

Post by Tingting1013 »

BolderBoy wrote: Thu Sep 17, 2020 1:45 pm Don't "invest" with an insurance company. Would you buy insurance from an investment company?
All insurance companies are also investment companies.

What do you think they do with the premiums?
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shieldsdigby
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Re: New York Life - Invest as Favor for Friend

Post by shieldsdigby »

Thanks, all, for your insights. It's a tough situation, and I worry about being 'in for a penny, in for a pound.' I was hoping there might be something analogous to a 2-year CD that I could purchase, hold, and collect in 2 years (and hope he finds a better gig in the interim). But I'm sure the fees he'd collect off that would be minimal.

Certainly don't envy the role of a FA or insurance salesman--tough way to make a living, it seems.

Thanks again.
playtothebeat
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Re: New York Life - Invest as Favor for Friend

Post by playtothebeat »

Life insurance.
You might be childless now, but that could change. Insurance today will be cheaper than a year from now. Buy a 30 year policy.
Rex66
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Re: New York Life - Invest as Favor for Friend

Post by Rex66 »

Their term is not competitive but I’d buy that and in a few years switch. Very likely he won’t be there at that point.
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Re: New York Life - Invest as Favor for Friend

Post by Northern Flicker »

NYLife has a subsidiary that offers mutual funds, probably an acquisition of another company originally.

Their S&P500 fund has a 1.5% sales load and 0.54% ER.

https://www.nylinvestments.com/mainstay ... Index-Fund

The other Mainstay (NYLife) mutual funds just get worse from there.
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Re: New York Life - Invest as Favor for Friend

Post by 123 »

How about minimizing yours (and his/her) losses by sending a congratulatory card on the new job and enclose a gift card (VISA so it can be used anywhere/for anything) of $100 or more for their new business wardrobe.
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Brianmcg321
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Re: New York Life - Invest as Favor for Friend

Post by Brianmcg321 »

Get a term policy
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Artful Dodger
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Re: New York Life - Invest as Favor for Friend

Post by Artful Dodger »

If you give him anything it will count as a sale, so management will know he's working.

The disability policy suggestion was good. I don't know if you have employer provided coverage, but if so a supplemental policy is an option. If you don't have employer provided coverage, disability is something you actually do need. You're not going to spend $5000 in a one time payment, but maybe $1000 to $2000 annually. He'll likely get 50% to 75% of the first year premium, and then 5%-10% each year after.
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Re: New York Life - Invest as Favor for Friend

Post by vineviz »

shieldsdigby wrote: Thu Sep 17, 2020 2:22 pm Thanks, all, for your insights. It's a tough situation, and I worry about being 'in for a penny, in for a pound.' I was hoping there might be something analogous to a 2-year CD that I could purchase, hold, and collect in 2 years (and hope he finds a better gig in the interim). But I'm sure the fees he'd collect off that would be minimal.

Certainly don't envy the role of a FA or insurance salesman--tough way to make a living, it seems.

Thanks again.
NY Life does offer fixed term annuities and $5,000 is the minimum purchase. The shortest term is 3 years and the longest is 7 years. Current rate is 0.65%.

These are relatively benign investments, basically like a CD as long as you don’t get sucked into a complex optional rider.

It’ll be a learning experience for you both.

Here’s the kind of instrument I’m talking about: https://www.blueprintincome.com/fixed-a ... term-mva-7
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Re: New York Life - Invest as Favor for Friend

Post by petulant »

vineviz wrote: Thu Sep 17, 2020 4:53 pm
shieldsdigby wrote: Thu Sep 17, 2020 2:22 pm Thanks, all, for your insights. It's a tough situation, and I worry about being 'in for a penny, in for a pound.' I was hoping there might be something analogous to a 2-year CD that I could purchase, hold, and collect in 2 years (and hope he finds a better gig in the interim). But I'm sure the fees he'd collect off that would be minimal.

Certainly don't envy the role of a FA or insurance salesman--tough way to make a living, it seems.

Thanks again.
NY Life does offer fixed term annuities and $5,000 is the minimum purchase. The shortest term is 3 years and the longest is 7 years. Current rate is 0.65%.

These are relatively benign investments, basically like a CD as long as you don’t get sucked into a complex optional rider.

It’ll be a learning experience for you both.

Here’s the kind of instrument I’m talking about: https://www.blueprintincome.com/fixed-a ... term-mva-7
This is really the best suggestion in the thread.
000
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Re: New York Life - Invest as Favor for Friend

Post by 000 »

Buy VTI in a NYLIFE Securities InvestorOne Brokerage Account? :mrgreen:
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Re: New York Life - Invest as Favor for Friend

Post by Big Dog »

I'd consider a fixed term annuity, say 5 years. Rate is probably not great, but a way to help your friend out.
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Re: New York Life - Invest as Favor for Friend

Post by Mr.BB »

Helpng your friend out doesn't mean you have to help his business out. If you really want to help his business indirectly tell him as a you would like to buy him a really nice high-end suit to look good in when he talks with clients. A good friend will truly understand that you don't want to mix money and friendship.
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shieldsdigby
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Re: New York Life - Invest as Favor for Friend

Post by shieldsdigby »

petulant wrote: Thu Sep 17, 2020 4:56 pm
vineviz wrote: Thu Sep 17, 2020 4:53 pm
shieldsdigby wrote: Thu Sep 17, 2020 2:22 pm Thanks, all, for your insights. It's a tough situation, and I worry about being 'in for a penny, in for a pound.' I was hoping there might be something analogous to a 2-year CD that I could purchase, hold, and collect in 2 years (and hope he finds a better gig in the interim). But I'm sure the fees he'd collect off that would be minimal.

Certainly don't envy the role of a FA or insurance salesman--tough way to make a living, it seems.

Thanks again.
NY Life does offer fixed term annuities and $5,000 is the minimum purchase. The shortest term is 3 years and the longest is 7 years. Current rate is 0.65%.

These are relatively benign investments, basically like a CD as long as you don’t get sucked into a complex optional rider.

It’ll be a learning experience for you both.

Here’s the kind of instrument I’m talking about: https://www.blueprintincome.com/fixed-a ... term-mva-7
This is really the best suggestion in the thread.
This is *perfect*. Exactly what I was looking for. Thanks so much to you and everyone on this forum. I would never have expected to receive this many helpful responses in such a short timeframe.
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Re: New York Life - Invest as Favor for Friend

Post by Stinky »

shieldsdigby wrote: Thu Sep 17, 2020 5:58 pm
petulant wrote: Thu Sep 17, 2020 4:56 pm
vineviz wrote: Thu Sep 17, 2020 4:53 pm
shieldsdigby wrote: Thu Sep 17, 2020 2:22 pm Thanks, all, for your insights. It's a tough situation, and I worry about being 'in for a penny, in for a pound.' I was hoping there might be something analogous to a 2-year CD that I could purchase, hold, and collect in 2 years (and hope he finds a better gig in the interim). But I'm sure the fees he'd collect off that would be minimal.

Certainly don't envy the role of a FA or insurance salesman--tough way to make a living, it seems.

Thanks again.
NY Life does offer fixed term annuities and $5,000 is the minimum purchase. The shortest term is 3 years and the longest is 7 years. Current rate is 0.65%.

These are relatively benign investments, basically like a CD as long as you don’t get sucked into a complex optional rider.

It’ll be a learning experience for you both.

Here’s the kind of instrument I’m talking about: https://www.blueprintincome.com/fixed-a ... term-mva-7
This is really the best suggestion in the thread.
This is *perfect*. Exactly what I was looking for. Thanks so much to you and everyone on this forum. I would never have expected to receive this many helpful responses in such a short timeframe.
One tiny thing. Just realize that you’ll pay income tax when the annuity matures. Plus a 10% tax penalty on interest earned if you’re under 59.5 years old when you take the interest.

But a 10% penalty on 0.65% is only 0.065%. :D
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Re: New York Life - Invest as Favor for Friend

Post by neverpanic »

Mr.BB wrote: Thu Sep 17, 2020 5:50 pm If you really want to help his business indirectly tell him as a you would like to buy him a really nice high-end suit to look good in when he talks with clients. A good friend will truly understand that you don't want to mix money and friendship.
This. I like the earlier suggestion from vineviz, but if that's not a viable option, I'd also opt for the tailored suit and new shoes. And I'd be open about not wanting to mix money and friendship in this way. If his company has something you want in the future, let him know he'll be your first call.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
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Re: New York Life - Invest as Favor for Friend

Post by rjbraun »

Stinky wrote: Thu Sep 17, 2020 6:29 pm
shieldsdigby wrote: Thu Sep 17, 2020 5:58 pm
petulant wrote: Thu Sep 17, 2020 4:56 pm
vineviz wrote: Thu Sep 17, 2020 4:53 pm
shieldsdigby wrote: Thu Sep 17, 2020 2:22 pm Thanks, all, for your insights. It's a tough situation, and I worry about being 'in for a penny, in for a pound.' I was hoping there might be something analogous to a 2-year CD that I could purchase, hold, and collect in 2 years (and hope he finds a better gig in the interim). But I'm sure the fees he'd collect off that would be minimal.

Certainly don't envy the role of a FA or insurance salesman--tough way to make a living, it seems.

Thanks again.
NY Life does offer fixed term annuities and $5,000 is the minimum purchase. The shortest term is 3 years and the longest is 7 years. Current rate is 0.65%.

These are relatively benign investments, basically like a CD as long as you don’t get sucked into a complex optional rider.

It’ll be a learning experience for you both.

Here’s the kind of instrument I’m talking about: https://www.blueprintincome.com/fixed-a ... term-mva-7
This is really the best suggestion in the thread.
This is *perfect*. Exactly what I was looking for. Thanks so much to you and everyone on this forum. I would never have expected to receive this many helpful responses in such a short timeframe.
One tiny thing. Just realize that you’ll pay income tax when the annuity matures. Plus a 10% tax penalty on interest earned if you’re under 59.5 years old when you take the interest.

But a 10% penalty on 0.65% is only 0.065%. :D
Plus, if I read the material correctly it looks as if there is a 7% surrender charge. Is that what OP would pay for redeeming prior to the 3 year maturity?
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Re: New York Life - Invest as Favor for Friend

Post by BolderBoy »

Tingting1013 wrote: Thu Sep 17, 2020 2:18 pm
BolderBoy wrote: Thu Sep 17, 2020 1:45 pm Don't "invest" with an insurance company. Would you buy insurance from an investment company?
All insurance companies are also investment companies.

What do you think they do with the premiums?
Then the OP should by all means buy investment products from his insurance salesman buddy. I'm sure he'll get the best deals on the planet.
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bltn
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Re: New York Life - Invest as Favor for Friend

Post by bltn »

I like the idea of getting your friend a nice briefcase. He ll be able to take it with him if he changes jobs as well as use it at New York Life.
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Re: New York Life - Invest as Favor for Friend

Post by d18lover »

How consequential is $5000 for you?

If you're otherwise comfortable or wealthy, my advice would be:

Friendship > Money.
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Re: New York Life - Invest as Favor for Friend

Post by Grt2bOutdoors »

Tingting1013 wrote: Thu Sep 17, 2020 2:18 pm
BolderBoy wrote: Thu Sep 17, 2020 1:45 pm Don't "invest" with an insurance company. Would you buy insurance from an investment company?
All insurance companies are also investment companies.

What do you think they do with the premiums?
Do you understand where premiums go? Hint: it’s not just into a house investment account.
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Re: New York Life - Invest as Favor for Friend

Post by Stinky »

rjbraun wrote: Thu Sep 17, 2020 7:12 pm
Stinky wrote: Thu Sep 17, 2020 6:29 pm
shieldsdigby wrote: Thu Sep 17, 2020 5:58 pm
petulant wrote: Thu Sep 17, 2020 4:56 pm
vineviz wrote: Thu Sep 17, 2020 4:53 pm

NY Life does offer fixed term annuities and $5,000 is the minimum purchase. The shortest term is 3 years and the longest is 7 years. Current rate is 0.65%.

These are relatively benign investments, basically like a CD as long as you don’t get sucked into a complex optional rider.

It’ll be a learning experience for you both.

Here’s the kind of instrument I’m talking about: https://www.blueprintincome.com/fixed-a ... term-mva-7
This is really the best suggestion in the thread.
This is *perfect*. Exactly what I was looking for. Thanks so much to you and everyone on this forum. I would never have expected to receive this many helpful responses in such a short timeframe.
One tiny thing. Just realize that you’ll pay income tax when the annuity matures. Plus a 10% tax penalty on interest earned if you’re under 59.5 years old when you take the interest.

But a 10% penalty on 0.65% is only 0.065%. :D
Plus, if I read the material correctly it looks as if there is a 7% surrender charge. Is that what OP would pay for redeeming prior to the 3 year maturity?
If OP invests $5,000 for three years, he will make $98 in interest. In total.

If he wants to surrender before the 3 years is over, he will owe a $350 surrender charge. Plus a market value adjustment, which could ding him more.

He will owe regular income tax. Plus the penalty tax if he’s under 59.5.

That’s a lot of heavy lifting to do to help out a friend. Get a briefcase instead. :D
It's a GREAT day to be alive - Travis Tritt
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Nate79
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Re: New York Life - Invest as Favor for Friend

Post by Nate79 »

I would feel bad every time I looked at my friend knowing I bought their subpar product just to make them happy.
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vineviz
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Re: New York Life - Invest as Favor for Friend

Post by vineviz »

Stinky wrote: Thu Sep 17, 2020 8:07 pm
He will owe regular income tax. Plus the penalty tax if he’s under 59.5.
The income tax is, of course, only paid on the income (the 0.65% return) not the original investment.

Same for the IRS penalty, which can also be avoided by exchanging the amount into another similar annuity.
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rjbraun
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Re: New York Life - Invest as Favor for Friend

Post by rjbraun »

Stinky wrote: Thu Sep 17, 2020 8:07 pm
rjbraun wrote: Thu Sep 17, 2020 7:12 pm
Stinky wrote: Thu Sep 17, 2020 6:29 pm
shieldsdigby wrote: Thu Sep 17, 2020 5:58 pm
petulant wrote: Thu Sep 17, 2020 4:56 pm

This is really the best suggestion in the thread.
This is *perfect*. Exactly what I was looking for. Thanks so much to you and everyone on this forum. I would never have expected to receive this many helpful responses in such a short timeframe.
One tiny thing. Just realize that you’ll pay income tax when the annuity matures. Plus a 10% tax penalty on interest earned if you’re under 59.5 years old when you take the interest.

But a 10% penalty on 0.65% is only 0.065%. :D
Plus, if I read the material correctly it looks as if there is a 7% surrender charge. Is that what OP would pay for redeeming prior to the 3 year maturity?
If OP invests $5,000 for three years, he will make $98 in interest. In total.

If he wants to surrender before the 3 years is over, he will owe a $350 surrender charge. Plus a market value adjustment, which could ding him more.

He will owe regular income tax. Plus the penalty tax if he’s under 59.5.

That’s a lot of heavy lifting to do to help out a friend. Get a briefcase instead. :D
Ouch, that 7% surrender charge isn't trivial. I guess it highlights the need for OP (or anyone else looking at an instrument like this) to be quite certain and willing to leave the money parked for the full 3 years. If someone needed to redeem after the first year, the $32.50 in interest earned would be dwarfed (even more) by the $350 surrender charge, in addition to a potential market value adjustment (hit).
GibsonL6s
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Re: New York Life - Invest as Favor for Friend

Post by GibsonL6s »

A former tutor for my kids joined NWM a few years ago. I needed some extra term and bought a policy. I honestly could have done better elsewhere, but wanted to help while being true to what I believe in.

I explained to him the BH way and that I would not be "investing" in life insurance. I also declined the request to give him names of people he could "help". That may be a way to go.
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Re: New York Life - Invest as Favor for Friend

Post by NotWhoYouThink »

I'd like to help him out (his family has been a great help to me professionally and personally)
Will his family be in a position to help or hurt you professionally or personally in the future? Some people keep score of what they've done for others, and feel that they are owed favors in return. You need to understand where you stand with these people.

If they are kind people who help one and all and don't keep score, you don't need to do anything, and shouldn't. If you are counting on their future help, and believe they would feel slighted if you did not play the game, you have a decision to make - pay up (probably for term life), or prepare to break ties with them.
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Re: New York Life - Invest as Favor for Friend

Post by Doctor Rhythm »

I would do the same thing I’d do if he got a job in the sales/marketing department of a pharma or aerospace company (unless your answer is to buy chemotherapy drugs or a cruise missile).
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Re: New York Life - Invest as Favor for Friend

Post by Stinky »

shieldsdigby wrote: Thu Sep 17, 2020 5:58 pm This is *perfect*. Exactly what I was looking for. Thanks so much to you and everyone on this forum. I would never have expected to receive this many helpful responses in such a short timeframe.
shieldsdigby,

You’ve gotten a lot of good input on this thread.

Please let us know what you decide to do.
It's a GREAT day to be alive - Travis Tritt
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