Page 52 - Know-So Money, Hope-So Money, Retirement Secrets Wall Street Doesn't Want You to Know

Think of the market as a powerful jet plane flying at 500 mph into a
600-mph headwind. Yes, it’s powerful, but how far are you really going
to go? Now, think of the annuity as a 300-mph nonstop bullet train with
no head wind to fight. Which is going to get you there faster?

10. “The fees are too high.”

That’s true, if we are discussing variable annuities, which most brokers
deal in. However, with fixed annuities there are no fees unless an extra
benefit is added on. The insurance company earns a spread between the

gross of the bond portfolio’s yield, which they manage, and the net is
credited to your account. This spread is similar to how banks make
money and typically ranges around 2% annually. From this spread the
insurance company pays the agent, covers the insurance company’s
expenses and returns a profit to its shareholders.

The difference is that a spread is not taken from your existing account
balance. So in a year where the annuity credits zero growth due to a flat
or declining market, the FIA owner gets a true zero - not zero minus 2-4
½% in management fees, which is what happens on brokerage accounts
and variable annuities (or even a loss minus 2-4 ½% !), adding insult to

injury!

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