# Upon Turning 70 and Reaching My Goal



## Belguy (May 24, 2010)

I am in the throws of a dilemma. I recently turned 70 and my registered portfolio has reached the goal that I always had in mind for it.

The problem is what to do now?

On another thread, most folks are suggesting that fixed income investments may not even keep up with inflation going forward. However, I have also read that it doesn't make sense to put your savings at jeopardy unnecessarily by investing in stocks if you don't really need to.

My research has also brought me to the suggestion that your fixed income allocation should equal your age. With this in mind, I would have an equity allocation of 30 per cent and a cash and/or fixed income allocation of 70 per cent.

For my 30 per cent equity allocation, I would invest in a geographically diversified portfolio of either broad-based or dividend focussed ETF's.

Which of these would you suggest?

It is the 70 per cent cash/fixed income allocation that has me stumped. I am thinking of simply investing in a five year GIC ladder.

I would appreciate any thoughts or suggestions that you may have because, after all, we all get old one day.

What would you do?


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## lonewolf (Jun 12, 2012)

This is my take on it. Max of 2 % should be put in investments that are bought & sold @ auction i,e.,stocks

The other 98% should be put in the safest investments possible i.e., GICs, home ownership of a practical home, annuities

The 2% that is invested in stocks can grow beyond 2 % of portfolio & use age as the determining factor i.e., if the investor is 30 yrs old then that 2% can grow to 70% of portfolio @ age 70 it would be reduced to 30%

Another way might be for the investor to let the 2% grow & set no limits till enough money is made so the money can be taken out & lived on i.e., could be invested in GICs & live off the interest. Then start over @ 2% with the high risk money & let it grow to age percentage to boast life style & or have more money to dyversify into alternative investments for safety i.e., differnt currencies, metals or whatever.


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## sags (May 15, 2010)

Congratulations.........if you reached your goal for the amount of money you need for life...........why risk any of it?

I would put 90% in a GIC ladder and keep the rest handy for buying stuff you don't "need"................but "want".

At 70....................why bother with investing?

Inflation only matters if you are spending. Besides.........if inflation takes root.........your pensions and interest on GICs will go up.


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## Squash500 (May 16, 2009)

Belguy IMHO it depends on a few factors. Do you want to leave a big estate to your beneficiaries or would you be OK with the value of your estate going down to zero? How expensive are your tastes? Do you like to travel etc? Are you a big spender or are you frugal?

All these above factors IMHO will help to determine what your asset allocation going forward will be etc.


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## fatcat (Nov 11, 2009)

you are asking the wrong questions
how you invest should be based not on choosing asset classes but answering questions about how the end of your life will play out

1) what the difference is between your yearly expenses and your yearly income from investments and pensions ?
2) what you want to do with the rest of your life
3) what your health is ?

if you have a bad heart and diabetes and want to travel i would take on more risk and put more into equities (i.e. you won't be living to 100)

if you are hale and hearty and come from a long lived family and have little pension income, i would put a lot more into gic's


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## lonewolf (Jun 12, 2012)

If your method works it is going to make money if it does not you wont lose much. As the high risk money grows more then one system should be built incase the system blows up i.e., instead of holding one stock in portfolio hold more then when it is practical. If commision costs eat up to high of a cost of portfolio it is not practical to hold to many stocks.


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## My Own Advisor (Sep 24, 2012)

Like Squash wrote, depends on your longer term plans...

Do you want to leave a big estate? If so, how much? This may mean you want a larger growth component to keep up and exceed inflation.

If a small estate and essentially living life and spending cash as you wish, then I like the model as-is: laddered GICs or laddered bond ETFs or a combination of both.

Congrats on a great milestone! I don't mean figuring out the asset allocation


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## MoneyGal (Apr 24, 2009)

At age 70, and considering current yields on fixed income, and depending on your longevity-risk-aversion (which I would peg as at least "moderate" based on your posting history), and depending on your spending needs versus the size of your nest egg, I would seriously consider annuitizing a portion of your portfolio with a life annuity. You will get better rates on the annuity (by a considerable stretch) than a comparable guaranteed investment. http://ifid.ca/payout.htm


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## Charlie (May 20, 2011)

My 80yo parents are 100% in equities. Dividend paying diversified blue chips, mainly. Loading up on a sub 2% GIC ladder when you've got a 15-20 year+ horizon just doesn't appeal to me -- though I know it's common advice. Possibly stick with what got you to your goal for the next 5 yrs or so and reevaluate then?

And congrats old timer! .


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## lonewolf (Jun 12, 2012)

If you set up 5 yr GIC ladder go 3yr, 4yr, 5yr, 6yr & 7yr when the 3yr matures buy a 5yr when the 4yr matures buy a 5yr etc. Sometimes the Manitoba credit unions offer longer then 5yr. Manitoba credit unions are not CDIC insured

There was a write up on safe haven website either yesterday or the day before regarding the Canadian banks had to be bailed out in 08 & it BS that they did not need it, were solid & are solid now. The credit unions didnt need bailing. The goverment goes against the law of letting the strong survive & supports the weak.


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## My Own Advisor (Sep 24, 2012)

Smart idea. Someone must have read a book about pensionizing the nest egg. Or, wrote it. 

@MoneyGal, I suspect that approach would work well for those that do not a modest DB plan, meaning, the majority of Canadians?

If Belguy can pensionzie with a safe withdrawal rate of 4%+, that would be good.


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## Belguy (May 24, 2010)

I don't know as much as I should about annuities. Some people swear by them and others recommend not touching them with a ten foot pole!!

How smart is purchasing an annuity when interest rates are at an all-time low?

Which types of annuities should I consider and which should I avoid at all costs?

I am a 70 year old male with diabetes and a heart condition. Wouldn't an annuity make much more sense if I were a female with no known major health issues?

With an annuity, you are betting on a long and healthy life well into your retirement.

Maybe I should buy life insurance instead!!


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## MoneyGal (Apr 24, 2009)

The rates question is of decreasing importance as you age. A quick glance at the table I linked show demonstrates that. Where else will you get a guaranteed, lifetime payout at the kinds of rates the table shows?


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## MoneyGal (Apr 24, 2009)

Also: you will probably find this link useful: http://milevsky.info.yorku.ca/popular-articles/

On that page there is a slightly math-heavy article which decomposes the impact of interest rates (technically "duration") on annuity prices. Quoting from that article:

_Practically speaking, retirees in their late 70s and early 80s who are interested in acquiring a life annuity, but are “waiting for interest rates to improve” might be surprised to learn that even if interest rates increase by a percentage or two, it won’t make as big a difference. Mortality rates are what drive payouts. _


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## Belguy (May 24, 2010)

Also, once you purchase an annuity, you can't touch that portion of your savings that you used to purchase it.

http://www.mgmadvantage.co.uk/blog/savings-investments-part-5-purchased-life-annuities-plas/

In effect, you lose control of your money.


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## lonewolf (Jun 12, 2012)

How smart is it @ age 70 to hold on to stocks when the DJI is close to & or has been making all time highs with NYSE margin debt @ highest level ever? With the market nearing the completion of a rare price pattern that has occured before crashes how smart is it to be loaded up with stocks ?

How smart is it to buy an annuity all @ once & not interest rate average into them ?

Belguy can you get enough interest from GICs to not lower your net worth if you live off the interest & other income you might have coming in ?


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## Charlie (May 20, 2011)

Belguy said:


> In effect, you lose control of your money.


I think that's the point.....You're buying a DB pension (without the indexing). No need to worry about the markets/allocations etc.

It's an interesting tack. Not one many consider --- but useful to some.


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## MoneyGal (Apr 24, 2009)

You give away the money, in exchange for giving away the risk. This is pretty much the essence of the annuity purchase.


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## MoneyGal (Apr 24, 2009)

Charlie said:


> I think that's the point.....You're buying a DB pension (without the indexing). No need to worry about the markets/allocations etc.
> 
> It's an interesting tack. Not one many consider --- but useful to some.


(You can buy an indexed annuity; not every DB pension is indexed)


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## MorningCoffee (May 8, 2013)

Belguy, I think your original plan is a good one. If the market tanks for a few years, can you pull money out of your 70% fixed income to live? Do you have the funds (and the stomach) to ride it out if it happens? I don't think it's too aggressive to have 30% in something like index funds or ETFs. I like the couch potato approach, but you can set an allocation that works for you.

The 70% in a 5 year GIC ladder could help you keep it safe until interest goes up. I plan on buying a small annuity when I'm retired but plan on being flexible and buying when they aren't too expensive. Annuities are expensive right now, but you could hedge your bets and put some to buy an annuity, some in a 5 year GIC ladder. 

It doesn't have to be all or nothing - you can spread out that 70%. Take your time and decide what you think is best for you, as everyone's situation is different.
Congrats on your achievements!


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## Charlie (May 20, 2011)

MoneyGal said:


> (You can buy an indexed annuity..


I didn't know that! Thank you.


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## blin10 (Jun 27, 2011)

cash out, get a ferrari with call girls....


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## My Own Advisor (Sep 24, 2012)

Funny :chuncky: @blin10


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## Belguy (May 24, 2010)

Annuities for Dummies cheat sheet:

http://www.dummies.com/how-to/content/annuities-for-dummies-cheat-sheet.html

Annuities provide peace of mind:

http://www.theglobeandmail.com/glob...cted-way-to-buy-peace-of-mind/article8985458/


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## MoneyGal (Apr 24, 2009)

Careful! That's a U.S. reference and MANY of the points are not applicable in Canada.


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## Emma (May 18, 2013)

Congrats! I was beginning to think I was the only retiree on this forum. Sounds like we are in the same boat....decision making time!


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## Toronto.gal (Jan 8, 2010)

Charlie said:


> My 80yo parents are 100% in equities. Dividend paying diversified blue chips, mainly. Loading up on a sub 2% GIC ladder when you've got a 15-20 year+ horizon just doesn't appeal to me -- though I know it's common advice. Possibly stick with what got you to your goal for the next 5 yrs or so and reevaluate then?
> 
> And congrats old timer! .


+1, except I would change the 100% to 20%. :chuncky:

Mr. Belguy, I thought you were going the same route as cousin Vinny, no?

From what you have told us, you seem to have enough for annuity/GICs/stocks.

Time to stress less and enjoy life more!

Enjoy your weekend.


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## Belguy (May 24, 2010)

When shopping for annuities, which type(s) should you consider and which ones should you avoid?

Also, what happens if you purchase an annuity from a certain insurance company which subsequently goes belly up?:distress::cower::eek-new::concern:


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## lonewolf (Jun 12, 2012)

Do not have to put all the money in one company. Could be wrong on this but I think up to a certain amount is insured & above a certain amount is not insured. Sorta like CDIC with a bank only 100,000 is insured


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## Belguy (May 24, 2010)

Its bad enough to give up control of your own money but it's another matter to end up losing it all because the underwriting insurance company goes bankrupt!! Didn't a big one go bankrupt a few years back?


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## MoneyGal (Apr 24, 2009)

Yes, and not one annuity holder lost one cent of annuity payments. You are right to consider counterparty risk, which is why you wouldn't buy an annuity from "Joe's Annuity Hut."


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## Cal (Jun 17, 2009)

If you put it in a laddered GIC isn't that the same as giving up control of your money too.


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## lonewolf (Jun 12, 2012)

Thats the problem with Canada. I dont think there is an independent rating agency that does not get paid by the insurance company to do the rating.

Another problem @ market highs the optimism of the herd effects everyone including those that are doing the ratings. High optimism less likely to judge rationaly the dangers.


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## Belguy (May 24, 2010)

One of my biggest problems, for better or for worse, is that, when it comes to money, I don't trust ANYBODY!! That is what led me to setting up a discount brokerage account and investing primarily in index products.

Even with any given individual stock, how do you really know what hanky-panky is going on behind the scenes!!

Just another example:

http://business.financialpost.com/2...nt-approved-investors-get-fraction-of-losses/

Are your investments safe?

By the way, MoneyGal, do you have any contact information for Joe's Annuity Hut? Do they have good deals?


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## kcowan (Jul 1, 2010)

Based on your health Belguy, you should not buy an annuity.

What has changed between age 65 and now that would merit any change? You are 5 years older and so closer to the goal line!

Stay the course that you have chosen. You just finished rebalancing at the start of the year.

(Have you put $25500 in your TFSA?)


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## lonewolf (Jun 12, 2012)

Belguy said:


> One of my biggest problems, for better or for worse, is that, when it comes to money, I don't trust ANYBODY!! That is what led me to setting up a discount brokerage account and investing primarily in index products.
> 
> Belguy
> 
> ...


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## Belguy (May 24, 2010)

But, can we trust MoneyGal?


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## lonewolf (Jun 12, 2012)

Belguy you should only trust in your own judgement with reason fixed firmly in her seat. If you do work with someone you want to work with someone that knows how to simplify things so you understand so you make your own decisions. You want someone that shows you both the positive & negitives of your plan of action & maybe how to supercharge your method & point out the mistakes you might be making.

Anyone that promotes investors to make thier own decisions & helps them understand is who you want to work with. Your the guy responsible though dont try to put that resposibility to anyone else.

The reason I like creidt unions is because they are membered owned & there is no conflict of interest of whos interest they are putting first.


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## scomac (Aug 22, 2009)

Belguy said:


> But, can we trust MoneyGal?


Man, that has to be THE DUMBEST thing you have ever said! I can't imagine why anyone would respond to any of your queries anymore.


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## lonewolf (Jun 12, 2012)

scomac said:


> Man, that has to be THE DUMBEST thing you have ever said! I can't imagine why anyone would respond to any of your queries anymore.


 scomac

It is not a dumb thing to say. It does not matter who someone is, Nasa even makes mistakes, I think I have traveled further out in space then the great scientist that have worked for Nasa & I do not even trust myself. I have often had to replace that which is not true with in my mental content & replace it with that which is true. The space between my ears is not entirely used so it has a reserve capacity i.e., take in new knowledge & understanding such as how to spell words.


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## Uranium101 (Nov 18, 2011)

I did not read all 4 pages, but I did read the OP.
Here is my 2 cents.

Put all into equity except for the amount of money that you need for the next 12 months.
Put those money into short term bonds or simply a saving account.

This question rises many times as where you should put your money. The realities are:
1) Stocks' earning yield is still around 6-8%
2) Long term bonds' yield is around 2%
3) Short term bonds' yield is around less than half a percent
4) Real estate is a bit expensive in Canada right now
5) Under your mattresses (0%)

You are retired, but doesn't mean you are dead. You will still need your portfolio to grow.


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## scomac (Aug 22, 2009)

Lonewolf,

Trust and making mistakes are two completely separate issues. We all make mistakes. Trust on the other hand is a matter of intent. Trustworthy people don't deliberately do things to undermine others. MoneyGal has a long history of generously giving to this community the value of her insight and expertise with no expectation of anything in return beyond the self-satisfaction of helping others. To suggest otherwise, even in jest is highly insulting, so in this instance, it DOES MATTER who someone is. In fact, in matters of trust it always matters who someone is!


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## MoneyGal (Apr 24, 2009)

I only came back to this thread because Scomac posted! Now I'm glad I did. each:


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## My Own Advisor (Sep 24, 2012)

Nicely put scomac.


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## MoneyGal (Apr 24, 2009)

I'm really just a front for Joe's Annuity Hut.


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## Nemo2 (Mar 1, 2012)

MoneyGal said:


> I'm really just a front for Joe's Annuity Hut.


Does ya do takeout?


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## MoneyGal (Apr 24, 2009)

AND laser eye surgery. "We may not be GOOD, but we're CHEAP."


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## Nemo2 (Mar 1, 2012)

:joyous:


MoneyGal said:


> AND laser eye surgery. "We may not be GOOD, but we're CHEAP."


:smile:


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## kcowan (Jul 1, 2010)

I agree with scomac. I think OP was being flippant. At least I hope so! 

(But does OP really want advice? I see no evidence that he has done anything as a result from the substantial input he has received here.)


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## Belguy (May 24, 2010)

Hank Cunningham is a bond expert and I recently heard him say on BNN that he would currently choose a longer term bond fund over a shorter term one. Do you think that I heard this correctly and, if so, why would he say it given that pretty much everyone on this forum is suggesting that, if you invest in bonds at all, go short, short, short!!

Can you think of any argument to validate investing in longer term bonds at this juncture in the cycle?

I think that he was recommending seven year corporate bonds which might not be of that long a duration in the grand scheme of things.

But, then again, I just came across this and he seems to be suggesting four to six year corporates:

https://www.odlumbrown.com/research/fixed-income-research/hanks-blog

Thoughts?


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## Four Pillars (Apr 5, 2009)

kcowan said:


> (But does OP really want advice? I see no evidence that he has done anything as a result from the substantial input he has received here.)


Belguy just likes to talk with the fine folks on the board. Nothing more, nothing less.

Nothing really wrong with that I guess, although it would be nice if he could just post in the 'social' section of the board, so that people don't waste a lot of time trying to 'help' him.


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## Four Pillars (Apr 5, 2009)

Belguy said:


> Also, once you purchase an annuity, you can't touch that portion of your savings that you used to purchase it.
> 
> http://www.mgmadvantage.co.uk/blog/savings-investments-part-5-purchased-life-annuities-plas/
> 
> In effect, you lose control of your money.


This quote illustrates perfectly the annuity puzzle that MG has mentioned in the past. Why don't more people buy annuities, even when it's the best choice for them?

A lot of us look at gold-plated government pensions and think about how great they are because we focus on the guaranteed payments and ignore the 'loss of control or inheritance'. But with annuities, we ignore the exact same guaranteed payments and focus on the lack of control and no inheritance.

Doesn't make sense.


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## MoneyGal (Apr 24, 2009)

The best thing I read this week (so far) (on annuities) is that "sustainable withdrawal rates are sexy, and annuity purchases are lumpy and gross."


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## Four Pillars (Apr 5, 2009)

MoneyGal said:


> The best thing I read this week (so far) (on annuities) is that "sustainable withdrawal rates are sexy, and annuity purchases are lumpy and gross."


Lol - for a financial joke, that's pretty funny.


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## MoneyGal (Apr 24, 2009)

It's from David Blanchett at Morningstar Chicago: http://www.advisorone.com/2013/06/13/how-do-i-advise-thee-let-me-count-the-ways-live-bl


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## Four Pillars (Apr 5, 2009)

On a far more serious note - what's up with the BBQ Hut? Did it ever reopen from it's reno?


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## MoneyGal (Apr 24, 2009)

It is open!! Also pizza nights start at the Brickworks on July 3!


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## sags (May 15, 2010)

Four Pillars said:


> This quote illustrates perfectly the annuity puzzle that MG has mentioned in the past. Why don't more people buy annuities, even when it's the best choice for them?
> 
> A lot of us look at gold-plated government pensions and think about how great they are because we focus on the guaranteed payments and ignore the 'loss of control or inheritance'. But with annuities, we ignore the exact same guaranteed payments and focus on the lack of control and no inheritance.
> 
> Doesn't make sense.


I don't know the rules in Canada, but in the US a lot of life insurers have been trying to change the rules for their annuity holders.........long after they bought the products.

The life insurance companies are complaining they can't control the risk and the costs are too high.........so they are seeking to raise fees, change the investment choices, eliminate the ability to increase contributions, and to "buy out" the annuity holders.

http://www.forbes.com/sites/feeonlyplanner/2012/08/09/variable-annuities-look-to-bail-on-guarantees/

It makes me wonder.........why then.........Prudential takes on the GM and Verizon DB pension funds, and just today I read that Sun Life Financial took over the Canadian Wheat Board pension plan and is looking for more.

http://business.financialpost.com/2...ng-deal-to-take-on-wheat-boards-pension-risk/

The Sun Life announcement seems odd............given they were trying to sell all their annuity business last year.

http://www.boston.com/businessupdat...-operations/c9hXSRWaeZfQSbegV4dMGK/story.html

Something isn't adding up, and it isn't surprising that people don't want to hand all their money over to a life insurance company.

I also read that some of the "fees" charged to manage an annuity are over 3% a year.

Maybe I am not understanding...........


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## Belguy (May 24, 2010)

I'm sorry but I just don't trust big (insurance) companies. There are just too many horror stories out there. That is why I 'manage' my own money because I just have a hangup when it comes to trust. Perhaps I am shortchanging myself because I often wonder if things could have been better had I been able to find a knowledgeable and trustworthy financial advisor along life's highway but my experience was the exact opposite. I found a mutual fund salesperson who was looking out for himself.

For better or for worse, I will not likely go the annuity route because I do not want to turn a chunk of my hard-earned savings over to a big insurance company due to my complete lack of trust.


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## MoneyGal (Apr 24, 2009)

They aren't changing the rules for existing purchases. They are changing the products going forward. The articles you linked offer to buy out guarantees but they are not changing the existing contracts unilaterally: they can't. 

Many U.S. annuity businesses are changing hands and morphing; the U.S. is a different environment than here. You notice the announcement was not, "Sun Life Canada sells off its Canadian annuity business." 

There's a lot of important information you are leaving out of your post - things which may seem like details to you but fundamentally impact the message you are imparting. 

There are no ongoing management fees on an annuity. What fee would they charge? They already have your money; there's no asset on which to charge a fee.


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## MoneyGal (Apr 24, 2009)

??? Where's the "zinger" in "Belguy likes to talk with the fine folks on this board, nothing more nothing less"?

Belguy, you do ask over and over for peoples' thoughts and advice and you don't seem to take a lot of it in. That isn't (intended to be) a criticism, and I'm not the first one saying so. Are all your questions ("what is an investor to do?" "Thoughts and opinions?") intended to be rhetorical? They actually seem like genuine questions, but you don't seem interested in either actual answers or genuine discussion.


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## Retired Peasant (Apr 22, 2013)

MoneyGal said:


> ??? Where's the "zinger" in "Belguy likes to talk with the fine folks on this board, nothing more nothing less"?


I think the zinger was in the second sentence that you snipped. - "...waste a lot of time trying to _help _him..."



> Belguy, you do ask over and over for peoples' thoughts and advice and you don't seem to take a lot of it in. That isn't (intended to be) a criticism, and I'm not the first one saying so. Are all your questions ("what is an investor to do?" "Thoughts and opinions?") intended to be rhetorical? They actually seem like genuine questions, but you don't seem interested in either actual answers or genuine discussion.


Just remember that there are others (perhaps many) that are reading the discussion and maybe taking quite a bit in. I, for one, learn a lot/get ideas from reading these discussions and have enjoyed Belguy's posts. JMO


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## Four Pillars (Apr 5, 2009)

MoneyGal said:


> ??? Where's the "zinger" in "Belguy likes to talk with the fine folks on this board, nothing more nothing less"?


Sorry, there is no zinger. I like Belguy, even if he has an odd way of starting threads (ie meaningless questions).


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## lonewolf (Jun 12, 2012)

scomac said:


> Lonewolf,
> 
> Trust and making mistakes are two completely separate issues. We all make mistakes. Trust on the other hand is a matter of intent. Trustworthy people don't deliberately do things to undermine others. MoneyGal has a long history of generously giving to this community the value of her insight and expertise with no expectation of anything in return beyond the self-satisfaction of helping others. To suggest otherwise, even in jest is highly insulting, so in this instance, it DOES MATTER who someone is. In fact, in matters of trust it always matters who someone is!


 Somic

Thanks, I agree 

Which helps makes people like Moneygal & Suzy Orman @ being the best @ what they do. Both of them also promote the building of powerfull strong people & help with understanding on how to proceed for financial independence.

My goal of post was to promote independene while being interdependent. for thinking is a complex process of logical identification which can only be preformed by the individual mind. MoneyGal & Suzy have a lot of experience & will point out the thinking people have failed to do. No thought sits in a vacume by its self one thought leads to another thought. (the odds are high they will give athought that will promote positive outcomes) In the end though it is best for each individual to be like the little boy that saw the emperor naked with there own eyes & not get in the habit of of living in a fog of self doubt & confusion by looking through someones elses eyes. As well to examine thier mental content & replace that which is not true with that which is.


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## Belguy (May 24, 2010)

As of today, I have no longer reached my goal.:upset::frown::frown-new::grumpy:


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## scomac (Aug 22, 2009)

Belguy said:


> As of today, I have no longer reached my goal.


Well, now you have something to work towards! :wink:


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## Belguy (May 24, 2010)

scomac said:


> Well, now you have something to work towards! :wink:


Again!!!:upset::grumpy::disgust:


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