Annuity- Lincoln Level Advantage Indexed variable annuity

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Neeran
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Annuity- Lincoln Level Advantage Indexed variable annuity

Post by Neeran » Tue Jul 03, 2018 11:07 am

I am considering investing $100k in the above annuity. Is this a better investment than doing a DIY structured investment with Cd ladder / zero coupon bonds and S&P 500 ETF.

Annity:
6 year term
30% downside protection and 85% participation. Pont to Point S & P index.
Any thoughts / advise is appreciated.

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Stinky
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by Stinky » Tue Jul 03, 2018 11:19 am

The annuity and your proposed structure have different instruments, so they'll perform differently.

But with the annuity you will be at least 5%, if not more, in the hole on day 1 due to agent commissions. You'll pay minimal, or no fees in your proposed structure. So you should generally be ahead staying outside of an annuity for this purpose.

Also, if this is in a taxable account, believe that all annuity "gains" are taxed at ordinary rates. Meanwhile, at least the S&P would/could be taxed at capital gains rates if you satisfy holding period.

Given your two alternatives, I'd pick your proposed structure.
It's a GREAT day to be alive - Travis Tritt

grok87
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by grok87 » Tue Jul 03, 2018 11:25 am

Neeran wrote:
Tue Jul 03, 2018 11:07 am
I am considering investing $100k in the above annuity. Is this a better investment than doing a DIY structured investment with Cd ladder / zero coupon bonds and S&P 500 ETF.

Annity:
6 year term
30% downside protection and 85% participation. Pont to Point S & P index.
Any thoughts / advise is appreciated.
Thanks.
The thing is, the 85% participation is for the index excluding dividends. So actually a lot worse than you think...
Keep calm and Boglehead on. KCBO.

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prudent
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by prudent » Tue Jul 03, 2018 11:26 am

What attracted you to an annuity?

The dividends that don't count towards your participation would be worth about 2%/year.

Nate79
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by Nate79 » Tue Jul 03, 2018 11:27 am

These are probably the most toxic products sold by salesman.

pkcrafter
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by pkcrafter » Tue Jul 03, 2018 11:48 am

neeran, this is not a good investment product. Check out a review here and be sure to scroll down and look at the fees.
Variable annuities are known for being riddled with fees and charges and the Investor Advantage annuity is no different. Here you will find a plethora of expenses going out the proverbial door – both during the annuity’s accumulation period and when you’re receiving income.
http://www.annuitygator.com/independent ... e-annuity/

https://investment-fiduciary.com/2011/0 ... re-paying/

1. Don't invest in anything you don't fully understand, and I guarantee you won't understand an annuity contract.

2. Don't mix investments with insurance.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

Neeran
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by Neeran » Fri Jul 06, 2018 11:45 am

Thanks for all the responses. I am trying to be a DIY Investor and was looking for better safe Investments for the $500k + Cash I have a accumulated. I was looking at Annuities mainly because of the capital protection since I am 60 now. I then started looking in to making my own Structured Investment using CD's and say VTI. I have never traded options.

Any guidance on how I could better invest the cash instead of just Ally bank Cds would be appreciated. Or if there are any links to articles on how I could put together my own effectively a structured product using zero coupon bonds etc.

rgs92
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by rgs92 » Fri Jul 06, 2018 11:59 am

I would put half into an SPIA and the other half into a total stock market index fund. The SPIA is your safe foundation for life. The index fund is for growth.

grok87
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by grok87 » Fri Jul 06, 2018 12:03 pm

Neeran wrote:
Fri Jul 06, 2018 11:45 am
Thanks for all the responses. I am trying to be a DIY Investor and was looking for better safe Investments for the $500k + Cash I have a accumulated. I was looking at Annuities mainly because of the capital protection since I am 60 now. I then started looking in to making my own Structured Investment using CD's and say VTI. I have never traded options.

Any guidance on how I could better invest the cash instead of just Ally bank Cds would be appreciated. Or if there are any links to articles on how I could put together my own effectively a structured product using zero coupon bonds etc.
FoRget about structured. Do the 3-legged stool approach.
viewtopic.php?f=10&t=245377
The 3 way support this provides is all the “structure” you need.
Cheers,
Grok
Keep calm and Boglehead on. KCBO.

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BL
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by BL » Fri Jul 06, 2018 12:41 pm

You have been given good advice here.

If you still insist you want something like this, go where folks go to get out of these bad options that mainly benefit the salesperson:
Vanguard annuities link (no experience) has something similar with no salesman commission so no surrender charges. It is still somewhat more expensive than buying mutual index funds but much cheaper and better than what you buy from a salesman.

At 60, you could plan to spend down some in order to (buy) delay SS until perhaps age 70. That is buying a COLAd annuity that lasts for life. It may be the best deal in town!

bberris
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by bberris » Fri Jul 06, 2018 1:20 pm

rgs92 wrote:
Fri Jul 06, 2018 11:59 am
I would put half into an SPIA and the other half into a total stock market index fund. The SPIA is your safe foundation for life. The index fund is for growth.
Make sure you know the difference between a SPIA and the crap you (OP) are considering.

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Mel Lindauer
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by Mel Lindauer » Fri Jul 06, 2018 1:52 pm

Here's a link to an old Forbes column i did on these lousy products.

https://www.forbes.com/2010/08/10/truth ... dauer.html
Best Regards - Mel | | Semper Fi

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ruralavalon
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by ruralavalon » Fri Jul 06, 2018 3:04 pm

Welcome to the forum :) .

Neeran wrote:
Tue Jul 03, 2018 11:07 am
I am considering investing $100k in the above annuity. Is this a better investment than doing a DIY structured investment with Cd ladder / zero coupon bonds and S&P 500 ETF.

Annity:
6 year term
30% downside protection and 85% participation. Pont to Point S & P index.
Any thoughts / advise is appreciated.
The indexed variable annuity is a horrible idea, for all the reasons others have already stated. Don't even consider that.

Neeran wrote:
Fri Jul 06, 2018 11:45 am
Thanks for all the responses. I am trying to be a DIY Investor and was looking for better safe Investments for the $500k + Cash I have a accumulated. I was looking at Annuities mainly because of the capital protection since I am 60 now. I then started looking in to making my own Structured Investment using CD's and say VTI. I have never traded options.

Any guidance on how I could better invest the cash instead of just Ally bank Cds would be appreciated. Or if there are any links to articles on how I could put together my own effectively a structured product using zero coupon bonds etc.
At one time I used a ladder of zero coupon Treasury bonds (STRIPS), but have dropped that. I think that using STRIPS was a mistake for me.

If your accounts are at Vanguard then you can buy STRIPS through Vanguard's bond desk.

About how long until your expected retirement?

(1) If soon, then a possible choice might be a Single Premium Immediate Annuity (SPIA) to fill your desire for something very safe, and to produce a guaranteed income stream. A good place to shop for rates is www.immediateannuities.com.

(2) As another choice federally insured CDs are reasonable, use the Google search box (upper right, this page) to search the forum for discussions of "CD ladder."

(3) A third choice could be simply be Vanguard Total Bond Market Index Fund Admiral Shares (VBTLX) or a Vanguard intermediate-term bond fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Cyclesafe
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by Cyclesafe » Fri Jul 06, 2018 3:16 pm

OP.
Don't be like me. In the '90's, I locked $1M in an investment annuity under what is now $3M of earnings that all will be taxed at full incremental income rates before I have access to my original investment. Maybe this will evoke little sympathy from some, but I would have been far, far better off with a three fund portfolio as suggested above.

SPIA's make sense under specific situations, but......

Don't do anything until you understand what you are doing. The person trying to sell you this investment does NOT have your best interests at heart. Run, run, run from him.

Neeran
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by Neeran » Thu Jul 12, 2018 10:12 am

Thanks for all the insights. I will not be buying an annuity.

briko3
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by briko3 » Fri Jul 27, 2018 3:44 pm

2 things to point out. 1) over 6 years, there is almost never a loss that big. 2) I've seen this thing and it's not a participation rate, it's a cap rate over 6 years.

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Sandtrap
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by Sandtrap » Fri Jul 27, 2018 4:25 pm

Neeran wrote:
Fri Jul 06, 2018 11:45 am
Thanks for all the responses. I am trying to be a DIY Investor and was looking for better safe Investments for the $500k + Cash I have a accumulated. I was looking at Annuities mainly because of the capital protection since I am 60 now. I then started looking in to making my own Structured Investment using CD's and say VTI. I have never traded options.

Any guidance on how I could better invest the cash instead of just Ally bank Cds would be appreciated. Or if there are any links to articles on how I could put together my own effectively a structured product using zero coupon bonds etc.
If you are concerned about "safety", do it through diversification.
For example, a certain percentage in a "Bogle 3 fund portfolio" (read forum WIKI), and a certain percentage in more stable fixed such as CD Ladder, Short Term Treasuries, etc.
Also, search the forum archives for "Liability Matching Portfolio".
As you are nearing retirement, also search the forum archives for "Retirement Red Zone" and "Sequence of Returns Risk".
j

grok87
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Re: Annuity- Lincoln Level Advantage Indexed variable annuity

Post by grok87 » Fri Jul 27, 2018 4:50 pm

Sandtrap wrote:
Fri Jul 27, 2018 4:25 pm
Neeran wrote:
Fri Jul 06, 2018 11:45 am
Thanks for all the responses. I am trying to be a DIY Investor and was looking for better safe Investments for the $500k + Cash I have a accumulated. I was looking at Annuities mainly because of the capital protection since I am 60 now. I then started looking in to making my own Structured Investment using CD's and say VTI. I have never traded options.

Any guidance on how I could better invest the cash instead of just Ally bank Cds would be appreciated. Or if there are any links to articles on how I could put together my own effectively a structured product using zero coupon bonds etc.
If you are concerned about "safety", do it through diversification.
For example, a certain percentage in a "Bogle 3 fund portfolio" (read forum WIKI), and a certain percentage in more stable fixed such as CD Ladder, Short Term Treasuries, etc.
Also, search the forum archives for "Liability Matching Portfolio".
As you are nearing retirement, also search the forum archives for "Retirement Red Zone" and "Sequence of Returns Risk".
j
Agree but instead of the cds and short term treasuries I would recommend Long dated tips. You want to match longer term inflation sensitive spending needs with long dated inflation sensitive bonds- ie tips.

See this thread, the 3-legged stool approach

viewtopic.php?f=10&t=245377

Cheers
Grok
Keep calm and Boglehead on. KCBO.

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