Who Wins the Variable Annuity Versus Mutual Fund Battle?
By Dale Maley
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About this ebook
This short story explores the issue of variable annuities versus stock index funds so ordinary investors can determine which option is best for helping to achieve their financial goals.
Dale Maley
Dale C. Maley is the author of the 19999 book Index Mutual Funds: How to Simplify Your Financial Life and Beat the Pros. He is also a contributing author to Chapter 18 Seeking Help from Professionals in the 2009 book The Bogleheads Guide to Retirement Planning. He is a very successful private investor who has been a student of Financial Planning and Investing for over 30 years. He was trained as an engineer at the University of Illinois and has been a practicing engineer for 32 years. His accomplishments as an engineer include the granting of 16 U.S. Patents and authorship of over 500 professional technical papers. He is also a member of the International Society of Automotive Engineers and the Society of Manufacturing Engineers. He also has earned an MBA (Masters Degree in Business Administration) degree from Illinois State University. His background in mathematics, engineering, and business provides him with the excellent basis for understanding and teaching investments and financial planning. He is also a very successful investor who has been investing in common stocks and mutual funds since 1980. He has also personally invested in both 401(K) and IRA plans, so he is familiar with participation and management of these types of investments. He has been investing in indexed common stock mutual funds since 1990. Dale became a Registered Financial Advisor in the State of Illinois in 2006 and is currently launching his business as a fee-only financial planner. He is President of Maley Financial Planning LLC.
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Book preview
Who Wins the Variable Annuity Versus Mutual Fund Battle? - Dale Maley
Who Wins the Variable Annuity Versus Mutual Fund Battle?
by
Dale C. Maley
SMASHWORDS EDITION
* * * * *
PUBLISHED BY:
Artephius Publishing on Smashwords
Who Wins the Variable Annuity Versus Mutual Fund Battle?
Copyright © 2008 by Dale C. Maley
All rights reserved. Without limiting the rights under copyright reserved above, no part of this publication may be reproduced, stored in or introduced into a retrieval system, or transmitted, in any form, or by any means (electronic, mechanical, photocopying, recording, or otherwise) without the prior written permission of both the copyright owner and the above publisher of this book.
Q: What areas of investing have you been exploring since the publication of your book Index Mutual Funds: How to Simplify Your Financial Life and Beat the Pros?
A: The last few years I have been exploring all aspects of retirement planning. Variable annuities are one area that I really did not know much about. The popular press has vilified variable annuities to the point that most knowledgeable investors will not give them any consideration at all as an investment. Variable annuities are often sold to people who have fully funded their retirement accounts. The allure of variable annuities is their tax-free compounding until you cash them out. The downside of variable annuities is they are hard to understand, are loaded with fees, and you are taxed at ordinary income rates when you cash them in.
Another option for investors who have fully funded their retirement accounts is to invest in taxable indexed stock mutual funds. Because stock index funds are very tax efficient, you almost get tax-free compounding like a variable annuity. Index funds are extremely low cost and you are taxed at lower capital gains rates when you cash them in.
My goal is to further explore the issue of variable annuities versus stock index funds so ordinary investors can determine which option is best for helping to achieve their financial goals.
Q: What is a variable annuity?
A: There are many different types of annuities.