I have been chatting with a financial planner. He has talked to me about different option for IRA and life insurance. The IRA is through a company I think called Allianz and he said that anytime you put money in there plan you get a 4% bonus. I think the then is taking 1% of that has commission but I could be wrong. I have to keep my money in this IRA for 10 years but it is promised to never go down over those ten years from the highest $ amount.
He also discussed different types of insurane plans.. I have no idea. I am 34 single mother of 2 kids 3 %26amp;5. Any clue as to what type of plan would be good for me. My company doesnt offer a 401K. What % is reasonable for him to get on the life insurance?|||OK, lots of assumptions being made here, and I suspect most of them are incorrect.
First of all, you are not clear whether the Allianz annuity is a variable annuity or an indexed annuity. What you described could easily be either type, but my guess is that it is an indexed annuity because of the 10 year time frame. Variable annuities typically do not have surrender periods that last that long.
If you are interested in a risk-free Allianz annuity, you would be best served by a MasterDex 5, however, it will require an initial investment of $10K to open an account. It will pay you 5% upfront on any deposits you make during the first 5 policy years, the term is 10 years, and it has no fees to you other than potential early withdrawal charges which are associated with nearly all annuities. Return-wise, you will have good years with double digit growth when the market has good years, you will have years with no growth when the market has bad years, and you'll probably wind up with an average annual return between 5-7% over a 10 year span, depending on the S%26amp;P500 index of course. For a single mother of two, even though the potential is there to wind up with higher returns in riskier variable investments, losing any money may be difficult to stomach, and this may be a better option for you as it removes the downside risk from the equation but still gives you access to market based returns.
If you don't have $10K to fund into an IRA, your best bet is actually CD's at a local bank until you build some money for a foundation. A lot of people think return is what really makes an IRA go, but really, it's contributions that are far more important than return in the early stages. If you get 4-5% annual interest in CD's for 2-3 years while you accumulate $10K, that is more than sufficient interest for a short-term account.
Beware, once you put money into an IRA, you have to plan on not touching it until you turn 59.5 years old. If you take an early withdrawal from an IRA, aside from a few exceptions, you will be forced to pay a 10% penalty to the IRS on the amount withdrawn.
Before all else however, you definitely should have a term life insurance policy. A 20-year term policy will be able to provide for your kids until the youngest is 23 and out of college, so if you were to die before then, the kids would be taken care of financially. The amount of coverage depends on how much would be missed if you passed away. Realistically, I recommend $500K-$1M policy, depending on how much you can afford. It's amazingly inexpensive at your age for a considerable amount of insurance. Don't make yourself insurance poor, but at the same time, it's far more important for you to have term insurance than to fund your IRA, the funding of the IRA can be done if there is other money left over after the insurance premium is paid. Allianz also offers this insurance, and they are a rock solid company. You can shop the term rates, but you're going to find all companies offer pretty similar premiums. Premiums never change on term policies during the term period, so you'll have the same annual premium rate for the next 20 years.
I strongly advise against giving up your e-mail address to any of the online insurance websites that advertise they'll shop around for you or you'll be up to your neck in spam e-mails.
Any commission the financial planner gets paid for any of the things you are talking about should not be paid directly by you in any way. If the financial planner is trying to charge you any sort of fee, tell him/her to get lost. They get paid directly from the insurance company via commissions. The commissions never come from your money, the company fronts the commission to the agent based on money they anticipate earning by holding your money for a significant length of time.
Side note: It was previously mentioned that you should seek a Certified Financial Planner or someone with similar creditentials - that's a huge myth. All that is required to become a CFP is taking a short course and then a test. Any moron can get the designation if they study for the test, and it signifies absolutely nothing about the knowledge and/or ability of the advisor to actually help you.|||There are so many variables in your question. (Like where you live- how much money you are investing.. etc.) My best advice is to consult a few different people. Find out what their fee's are and what services they provide. Ask them, not us. As far as insurance, stick with term life- you waste your money otherwise.|||Financial planners (like everybody else) should get paid what the market will bear. The last thing anybody needs is some beaurecrat dictating how much money a person can make....yikes!
Sounds like the Allianz thing is a variable annuity. They typically have lots of bells %26amp; whistles and charge fees for these bells and whistles. Most people don't need all of those extra benefits, but then again..."you ain't most people." You might find some value in paying for those extra benefits.
I'd recommend staying away from the Allianz annuity and going with a good selection of mutual funds instead. The mutual funds won't have any guarantees, but odds are they will provide a much higher return over your lifetime since they have lower fees.
You can select a few mutual funds on your own, or you can get your planner to assist you. If your planner assists you then they deserve to be compensated in a reasonable manner.|||I agree the variable annuity thing is a rip-off. The chance of any investment being below it's original value in 10 years is virtually nil.
Most insurance products have huge commissions. Stick with a good term life policy, and invest the difference in price in a good mutual fund.
As for retirement savings, open an IRA, and a Roth-IRA to substitute the lack of a 401k.|||I agree with the others. That's some type of variable annuity product with high internal expenses. You are wise to question the bonus. You just pay for it in a different way...like each year for 10 years!
It would be wise for you to consult some different planners before deciding on what to do. If possible look for someone who is a Certified Financial Planner(tm) professional or CFP(r). He or she would probably recommend mutual funds in your IRA and term life insurance.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment