DHP Financial Post of the week: Investments to stay away from ?

[imported_Gman]

Mutual funds that have loads on them. A load is an up front commission that you pay for each dollar invested in a fund. Loads can be as high as %7 on some funds. This means that this fund has to go up at least 7% for you to break even. It has been shown that Mutual funds that don't have loads on them perform just as well. Note that the load is different from the yearly management fees that you pay every year.

[imported_Gman]

Do you have a Variable Annuity ? These are usually offered thru an insurance company. They generally have high commissions, high management fees and additional expenses like "Mortality and risk" expense (what the fuck is that?). Also if you want to get out of the annuity within the first 5-7 years they have surrender charges upwards of 7% [img]graemlins/jpshakehead.gif[/img]

[Mack-Williams]

Mortality is what insurance companies use to estimate when you will die with in a certain age group. In Varible Annuity the owner of the Annuity takes all the risk not the insurance carrier. I just became a licensed agent, so if you need insurance yall bet not go anywhere else.

[ November 19, 2003, 02:39 PM: Message edited by: Mack-Williams ]

[imported_Gman]

Originally posted by Mack-Williams:
Mortality is what insurance companies use to estimate when you will die with in a certain age group. In Varible Annuity the owner of the Annuity takes all the risk not the insurance carrier. I just became a licensed agent, so if you need insurance yall bet not go anywhere else.

So whats in it for me ? explain

-G

[Mack-Williams]

Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by Mack-Williams:
Mortality is what insurance companies use to estimate when you will die with in a certain age group. In Varible Annuity the owner of the Annuity takes all the risk not the insurance carrier. I just became a licensed agent, so if you need insurance yall bet not go anywhere else.

So whats in it for me ? explain

-G </font>[/QUOTE]I will try to get you the cheapest and the policy that will fit your needs. Now what is your Net Worth.

[imported_Gman]

Originally posted by Mack-Williams:
</font><blockquote>quote:</font><hr />Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by Mack-Williams:
Mortality is what insurance companies use to estimate when you will die with in a certain age group. In Varible Annuity the owner of the Annuity takes all the risk not the insurance carrier. I just became a licensed agent, so if you need insurance yall bet not go anywhere else.

So whats in it for me ? explain

-G </font>[/QUOTE]I will try to get you the cheapest and the policy that will fit your needs. Now what is your Net Worth. </font>[/QUOTE]No, what I meant was variable annuities suck as investment instruments. Can you convince me otherwise ? [img]graemlins/biglaugha.gif[/img]

[Mack-Williams]

Variable Annuities suck some of the times because folks don't know what they are doing when it comes to investing. In a Variable annuity you make all the decisions on what you want you investments to go in. With that is certain risk, like the fluctuation in the stock market. Now if you know what you are doing it might work out a little better for you. If you don't know what you are doing I would recommend a fixed annuity. The carrier takes all the risk and they aren't too aggressive when it comes to investing. Oh by the way I can't even sell those until I get a securites license, but I can do fixed annuities.

[ November 19, 2003, 03:05 PM: Message edited by: Mack-Williams ]

[Leslie]

Originally posted by Mack-Williams:
Variable Annuities suck some of the times because folks don't know what they are doing when it comes to investing. In a Variable annuity you make all the decisions on what you want you investments to go in. With that is certain risk, like the fluctuation in the stock market. Now if you know what you are doing it might work out a little better for you. If you don't know what you are doing I would recommend a fixed annuity. The carrier takes all the risk and they aren't too aggressive when it comes to investing.

This is all very true, I have actually done pretty well with mine, but I am always looking at my monthly statements to see how my choice of funds are doing. You can also take a very conservative approach and for instance just stay in bonds for the most part. But I also agree with your suggestion about opting for a fixed annuity if one decides to go the annuity route at all.

[imported_Gman]

Originally posted by Mack-Williams:
Variable Annuities suck some of the times because folks don't know what they are doing when it comes to investing. In a Variable annuity you make all the decisions on what you want you investments to go in. With that is certain risk, like the fluctuation in the stock market. Now if you know what you are doing it might work out a little better for you. If you don't know what you are doing I would recommend a fixed annuity. The carrier takes all the risk and they aren't too aggressive when it comes to investing.

Mack how much is your commission ? What are the average yearly managment fee's for some of company's funds ? Why should I pay a mortality expense ?

-G

[Mack-Williams]

Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by Mack-Williams:
Variable Annuities suck some of the times because folks don't know what they are doing when it comes to investing. In a Variable annuity you make all the decisions on what you want you investments to go in. With that is certain risk, like the fluctuation in the stock market. Now if you know what you are doing it might work out a little better for you. If you don't know what you are doing I would recommend a fixed annuity. The carrier takes all the risk and they aren't too aggressive when it comes to investing.

Mack how much is your commission ? What are the average yearly managment fee's for some of company's funds ? Why should I pay a mortality expense ?

-G </font>[/QUOTE]G I am at a insurance brokerage, so I am the middle man. I will make money of the intial premium. That is no extra fee to you. Also, most of annuities we offer don't have mortiality cost. You might have small administative fees. Only thing about annuities most have surrender charges, so if you want to opt out of the annuity early will have to pay a fee. They are listed in policy and illustrations that you would have to look over.

[imported_Gman]

Originally posted by Mack-Williams:
</font><blockquote>quote:</font><hr />Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by Mack-Williams:
Variable Annuities suck some of the times because folks don't know what they are doing when it comes to investing. In a Variable annuity you make all the decisions on what you want you investments to go in. With that is certain risk, like the fluctuation in the stock market. Now if you know what you are doing it might work out a little better for you. If you don't know what you are doing I would recommend a fixed annuity. The carrier takes all the risk and they aren't too aggressive when it comes to investing.

Mack how much is your commission ? What are the average yearly managment fee's for some of company's funds ? Why should I pay a mortality expense ?

-G </font>[/QUOTE]G I am at a insurance brokerage, so I am the middle man. I will make money of the intial premium. That is no extra fee to you. Also, most of annuities we offer don't have mortiality cost. You might have small administative fees. Only thing about annuities most have surrender charges, so if you want to opt out of the annuity early will have to pay a fee. They are listed in policy and illustrations that you would have to look over. </font>[/QUOTE]So I would not have to pay a load to put money in the fund?

Also you say "small" administrative fee. Exactly how small is that ? .5%, 1%, 3% ?

What I am getting at is that in order to compare investments I have to know all the charges\fees involved in investing in that particular annuity.

In general we all should know what we are paying in expenses and fees to invest our money in a particular instrument. If you don't know then you should find out.

-G

[Mack-Williams]

No load to put in the fund just the amount you pay to start the annuity. The adminstrative cost differs from each anniuty or insurance policy. Like term insurance doesn't have any admistrive fees, but whole and universal life does because of the investing the insurance carrier does. Most are around $60 to $70 per year. For annuity the fee comes in the first year only.

[Bernie]

Originally posted by Gman:
Mutual funds that have loads on them. A load is an up front commission that you pay for each dollar invested in a fund. Loads can be as high as %7 on some funds. This means that this fund has to go up at least 7% for you to break even. It has been shown that Mutual funds that don't have loads on them perform just as well. Note that the load is different from the yearly management fees that you pay every year.

Also stay away from mutual funds with high expense ratio (the industry average is 1.36% of the fund balance--there are funds with much lower ratios than that), or has other fees like 12b-1 (often used to pay for advertising the fund).

These costs can cost you thousands of dollars over a investment time of 30 - 40 years. Also, watch out for index funds that are not really index funds (wolves in sheep's clothing). These funds can include sales loads, 12b-1 fees, and high expense ratios. Index funds can be had with an expense ratio as low as 0.18%, no 12b-1 fee, and an initial investment of as little as $1,000.

Just some thoughts,

[music]

do you recommend whole life insurance?

[Mack-Williams]

Originally posted by music:
do you recommend whole life insurance?

Universal Life.

[imported_Gman]

Originally posted by music:
do you recommend whole life insurance?

I currently have my life insurance thru my job so I pay very little for the coverage. It is equivalent to Term Insurance.

From what I understand Term Life Insurance is the way to go. I'll post an article that explains the difference between Term and Whole/Universal/variable Life but the bottom line is you are going to pay significantly more for the same coverage under Whole/Universal/variable Life than under Term.

-G

[ November 19, 2003, 06:17 PM: Message edited by: Gman ]

[Mack-Williams]

Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by music:
do you recommend whole life insurance?

I currently have my life insurance thru my job so I pay very little for the coverage. It is equivalent to Term Insurance.

From what I understand Term Life Insurance is the way to go. I'll post an article that explains the difference between Term and Whole/Universal/variable Life but the bottom line is you are going to pay significantly more for the same coverage under Whole/Universal/variable Life than under Term.

-G </font>[/QUOTE]True. I was saying universal life is better if you are going with permanent insurance.

[imported_Gman]

Originally posted by Bernie:
</font><blockquote>quote:</font><hr />Originally posted by Gman:
Mutual funds that have loads on them. A load is an up front commission that you pay for each dollar invested in a fund. Loads can be as high as %7 on some funds. This means that this fund has to go up at least 7% for you to break even. It has been shown that Mutual funds that don't have loads on them perform just as well. Note that the load is different from the yearly management fees that you pay every year.

Also stay away from mutual funds with high expense ratio (the industry average is 1.36% of the fund balance--there are funds with much lower ratios than that), or has other fees like 12b-1 (often used to pay for advertising the fund).

These costs can cost you thousands of dollars over a investment time of 30 - 40 years. Also, watch out for index funds that are not really index funds (wolves in sheep's clothing). These funds can include sales loads, 12b-1 fees, and high expense ratios. Index funds can be had with an expense ratio as low as 0.18%, no 12b-1 fee, and an initial investment of as little as $1,000.

Just some thoughts, </font>[/QUOTE]Vanguard's expense ratios are some of the lowest in the industy.

-G

[Bernie]

Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by Bernie:
</font><blockquote>quote:</font><hr />Originally posted by Gman:
Mutual funds that have loads on them. A load is an up front commission that you pay for each dollar invested in a fund. Loads can be as high as %7 on some funds. This means that this fund has to go up at least 7% for you to break even. It has been shown that Mutual funds that don't have loads on them perform just as well. Note that the load is different from the yearly management fees that you pay every year.

Also stay away from mutual funds with high expense ratio (the industry average is 1.36% of the fund balance--there are funds with much lower ratios than that), or has other fees like 12b-1 (often used to pay for advertising the fund).

These costs can cost you thousands of dollars over a investment time of 30 - 40 years. Also, watch out for index funds that are not really index funds (wolves in sheep's clothing). These funds can include sales loads, 12b-1 fees, and high expense ratios. Index funds can be had with an expense ratio as low as 0.18%, no 12b-1 fee, and an initial investment of as little as $1,000.

Just some thoughts, </font>[/QUOTE]Vanguard's expense ratios are some of the lowest in the industy.

-G </font>[/QUOTE]Yes indeed!!! [img]graemlins/thumbsup.gif[/img]

[imported_Gman]

Originally posted by Gman:
</font><blockquote>quote:</font><hr />Originally posted by music:
do you recommend whole life insurance?

I currently have my life insurance thru my job so I pay very little for the coverage. It is equivalent to Term Insurance.

From what I understand Term Life Insurance is the way to go. I'll post an article that explains the difference between Term and Whole/Universal/variable Life but the bottom line is you are going to pay significantly more for the same coverage under Whole/Universal/variable Life than under Term.

-G </font>[/QUOTE]Author Eric Tyson:

[imported_Gman]

Originally posted by music:
do you recommend whole life insurance?

^Bump for Music.

[julian_kelly]

I stay away from anything that I cant control to a great degree. I dont buy stuff and hope it makes me money...'buying and hoping' is gambling...a crap shoot...suicide...I dont gamble with my livelihood. I need to have a great degree of assurance that it will make me loot. The chance for loss is always there, but if I cant stack the odds in my favor from knowledge I acquire and the people I surround myself with, I dont fool with it.

I stay away from stuff I have to guess at.

I stay away from stuff I dont understand.

I stay away from stuff that is managed by people that I dont know....or people who have a bad track record. I need to know who the jockey riding the horse is and how successful they have been; as well as their strategies and their plans for the future. (i.e, folk invest in a mutual fund and dont even know the name of the fund manager or his or her track record....not good)

I maily stay away from mutual funds. I have two...dont really care for them, but I ususally stay away from them.

I try as hard as I can to stay away from stuff that gives me less than 10% yearly return. (Exception = bonds)

I often stay away from stuff that doesnt give me immediate income. (Immediate = less than 1 year...preferably weekely or monthly) I do buy long term stuff, but I mainly focus on making cash now so Ill have more later.

I stay away from stuff that isnt liquid. I need to know I can sell it immediately if need be with preferable tax treatment.

I try to stay away from stuff that isnt residual.

I stay away from stuff I have to watch/manage all the time.

julian kelly

[imported_Gman]

Originally posted by julian_kelly:
I maily stay away from mutual funds. I have two...dont really care for them, but I ususally stay away from them.
julian kelly

You prefer individual stocks or Mutual Funds don't make you enough money fast enough ?

-G

[C hristian]

The more I read my book "The Soul of Capitalism" (PICK IT UP! It's SCIENCE!) The more I agree with Warren Buffet: Don't invest in investment/company you don't completely understand.

or was that Julian Kelly of Omaha, Nebraska?

[imported_Gman]

Originally posted by C hristian:
The more I read my book "The Soul of Capitalism" (PICK IT UP! It's SCIENCE!) The more I agree with Warren Buffet: Don't invest in investment/company you don't completely understand.

or was that Julian Kelly of Omaha, Nebraska?

Thanks for the recommendation. Anytime you invest in something that you don't completely understand you can almost be assured that you will be taken advantage of. Take the time to get the knowledge (I need to follow my own advice [img]smile.gif[/img] ) .

Some people don't realize the financial planner\advisor they have been going to all along is really a salesperson. I have friends who are investing thousands of dollars a month in their retirement plans and they have no clue as to the fees and expenses associated with the investment. When I ask them to find out how much the company is charging them to invest their money they say things like "I want my money to work for me I don't want to work for my money". They so trust the financial planner (salesperson) at these companies its rediculous.

-G