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Financial Conversations with Fitz #60 - Some Things To Remember with the Annuity for Investing - 04/12/2010

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Nice rain this morning!!!!!   Was a busy weekend again.   Had a good evening in Thompson for the Winnebago County Fair Fundraiser on Saturday.   Over 180 people in attendance, with great meal and some good local entertainment.   Cattleman had a gathering on Thursday night with small crowd with a good program.   We had about 60 plus people getting their pesticide education on Thursday night also at the bank community room.  Saw lots of tillage around the area this weekend.   Conversation Saturday night was most of the producers were going to start this week.   Ground temp about 50 in most areas.   Grains should open positive this morning after weekend overnight trading.   The DOW will probably flat this morning.   How about hitting that $11K figure on Friday.     

A standard method of investing came up a bit more this last week than I have heard for a while.  That is the Annuity.   Of course you know that is when you invest a set amount that earns a certain return depending on the type.    The main reason we make the annuity part of our portfolio is that the principal normally doesn’t change and there are several options on payout.  There was over $234 billion sold in the industry last year.  The top 20 sold $188 billion or 80%.   Iowa alone has four companies in the top 20. They sold $27.5 billion.   With CD rates being historically low lately, lots of people thinking about alternative investments which of course includes annuity.   I get a lot of questions why they are paying such a high rate when we are so low.   The people that set the annuity rates usually work off of averages.   They also lead the pack with movement most of the time.   Now, if a company is way above the banks and other conservative companies you better do some more checking.   Be sure to work with someone you know of when you buy an annuity.   I remember the last wide spread by a certain company about 10 years ago and they had a 35 year withdrawal penalty.   Be sure you know how long the rate is good for and what the basis is when it changes.   There are fixed, variable, and indexed annuities.   You also need to make some decisions on how you want the money.   Two of the factors are lifetime or fixed payouts.   So there are a lot of factors to consider, so be sure you work with someone knowledgeable and trustworthy.    You can visit with our Boyken Insurance department to get your questions answered.   They are available at any of our three offices.

Remember that you should deal with people in community banks and organizations that when they put something together for you that they will be sitting with them at ball games, church or community events.  So, if in doubt give us a call.