Annuities

[crystallake68]

Hello everyone,

I really like your forum...

I've recently become involved in the management of my mothers estate. I dont trust paper assets or the markets in general; I feel like the fix is in. I've been placing all my personal wealth in junk silver over the last few years and I've slept very well knowing its safe. I have a minty set of ZIMBABWE dollars on my wall to remind me what paper is really worth. Originally I was convinced that placing the majority of my mothers wealth into bullion via goldmoney over the next year or so via cost averaging way would be the way to go.

All I want to do is whatever would be the safest thing to protect my mothers wealth and preserve its purchasing power. I still think putting it into bullion would be the correct answer but, after discovering the permanent portfolio I'm not so sure. I want my family to be like the smart Jews who got out early.

I think what I am interested in doing is establising a PP with half the wealth and a VP with the other half leaning heavily on precious metals bullion & sotcks and a foreign ranch somewhere in south america.

My mother has almost a third of the wealth tied up in fixed annuities; WHICH PART OF THE PP WOULD THESE BE CONSIDERED? Are they considered cash even though their is a stiff penalty to liquidate?

[AdamA]

Welcome to the PP and the forum.  A few comments...

My mother has almost a third of the wealth tied up in fixed annuities; WHICH PART OF THE PP WOULD THESE BE CONSIDERED? Are they considered cash even though their is a stiff penalty to liquidate?

At 1/3 of your holdings, I don't think you should consider this as part of your PP proper.  The point of the cash portion of the PP is both the safety of the US treasury and liquidity...annuities don't really give you either.

If it was a smaller position, I might tell you to view it as a part of your cash holdings (because you could add some plain ol' cash and use it to rebalance), but at 1/3, it's just too much.  

I'm not sure how I would go about setting up a PP in your case..  Probably the simplest way would be to view the annuities as a pension and treat them as a separate investment.  Then just use the other 2/3rds for your PP (you could add cash from the annuities every time it paid out).  I'm sure others will have more elegant ideas.  

I want my family to be like the smart Jews who got out early.

I think what I am interested in doing is establising a PP with half the wealth and a VP with the other half leaning heavily on precious metals bullion & sotcks and a foreign ranch somewhere in south america.

Maybe just a little paranoid?  

[MediumTex]

I can't help too much with the South American ranch (what makes you think South American bankers and politicians are any wiser than North American bankers and politicans?), but it would be fun shopping for one.

As far as the general suitability of the PP for the purposes you stated, I think it would probably be a very good fit.

Just spend some time reading the forum and most of your questions will be answered.  Anything you can't find an answer to I'm sure we can help you with one way or another.

Be aware that the PP is simply the investment strategy manifestation of a larger and more comprehensive worldview.  If you want to determine whether the PP is right for you, look into the premises upon which it was built and see if they make sense to you.  If you accept the general concepts that Harry Browne based the PP on, it's much easier to create and maintain your own PP without stress or worry.

[Storm]

Welcome.  I think you will find a lot of good information here.  I realize that in the next several years, gold and precious metals may turn out to be a good investment, but that is just a prediction.  Rather, putting the majority of your retirement into gold is predicting that the future holds inflation.

The basic PP philosophy is that it is impossible to predict what economic climate the future holds, so we diversify to achieve gains in any economic climates.

Perhaps the biggest realization I came to when I started the PP was that even by doing something as simple as holding all my money in cash (which was what I was doing throughout 2006-2009), I was trying to predict the market.  Holding all cash is basically a prediction that we are going to suffer deflation.

I think you're off to a good start - but I would just caution you to not be so sure that inflation is in the cards.  We could just as easily suffer a prolonged deflation like Japan.

[crystallake68]

So I understand, annuities could not be considered any part of the standard PP? I may want to begin liquidating them at the allowed 10% per year and moving that capital into the standard PP?

As far my yearing for a ranch in South America, I suppose it could be considered a little paranoid but, better safe than sorry.

With the PP I wouldnt really be worried about the South American bankers and I dont trust any polititians period but; I trust our omnipotent warfare loving government even less.

[AdamA]

So I understand, annuities could not be considered any part of the standard PP? I may want to begin liquidating them at the allowed 10% per year and moving that capital into the standard PP?

My cursory opinion is no.  Medium Tex seemed to think otherwise, and will likely be able to provide a good explanation as to why.

My thinking is that it's a lot of non-treasury cash, and it's awkward within the PP b/c it's not liquid.

I think liquidating at 10% per and putting the proceeds into the PP is not a bad idea unless there are big penalties for doing so.

Bear in mind that I have NO annuity experience whatsoever.

As far my yearing for a ranch in South America, I suppose it could be considered a little paranoid but, better safe than sorry.

With the PP I wouldnt really be worried about the South American bankers and I dont trust any polititians period but; I trust our omnipotent warfare loving government even less.

Who has a better history of respecting a prospective rancher's property rights:  South American bankers, or our omnipotent warfare loving government?

[MediumTex]

"Annuities" is a broad term.

What kind of annuities are we talking about here?

[crystallake68]

"Annuities" is a broad term.

What kind of annuities are we talking about here?

The annuities are all with the same life insurance company Midland National, the two largest are Non-Qualified so as I understand it they were taxed on the way in and wont be taxed on the way out like the other IRA ones. The Non-Qualified ones are named Flexible Premium Deferred Annuity - Legacy Bonus 11, 14 year surrender period with the first four years being 22% the next 20 then 18 etc, we will be at 14% in august of this year; both the big non-qulified ones are fixed at around 3 % with a 2% minimum but during the anniversary window can be changed to any mix of fixed averaging and or point to point. She got an 11% bonus up front but they had her write 2 checks to set up the account.

The other two are IRA type annuities wth the same name FPDA - Legacy Bonus 11.

[pershing83]

The best insurance company is Northwestern Mutual. Check it out.