The big move is happening this weekend. Moving is a terribly stressful experience, and I hope I never have to move again. This place has all the features of a forever home, and it’s even a single story.
We’re still trying to figure out what to do with the large detached garage. I’m not into mechanical work or woodworking, so we might turn it into the ultimate game room. I created a game room when we were living in Pittsburgh, but unfortunately, no one ended up using it. It sounds like a good idea, but spaces like that rarely get utilized—kind of like a pool. Teenage kids want it so bad, swim a couple times, and then never use it again.
On a positive note, the new house has solar panels, so my electric bill will be much lower, and we have well water (which I've never had before), which should help with watering costs. However on the downside, I’ll need to pay someone to mow the five acres of lawn, as there’s pretty limited tree cover.
Wish us luck! By next week, we should be all settled in.
Below, you can see Grammy and Desmond taking a break from their packing duties.
Annuity Season Is Open
With all the recent market jitters, the annuity salesmen have come out of the woodwork like mosquitos after a summer rain.
Their favorite weapon? Fear.
I've seen it firsthand lately. A few people—good folks, smart people—have moved their money into annuities. It’s disheartening. Not because they’re bad people, but because they’ve been sold a product that sounds comforting but is anything but.
They moved out of a well-diversified portfolio of stocks and bonds—one of the most reliable, long-term strategies for growing wealth—and into something that might feel safer but usually isn’t. At least not in the way they think.
Let’s be clear: they didn’t gain peace of mind. They gave up potential. A lot of it.
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The Sales Pitch You’ve Probably Heard
The scare tactics usually go something like this: "You don’t want to lose all your money, do you?" "Remember 2008? People lost everything. You’re retired now—can you afford that kind of risk?"
Cue the ominous music.
What they don’t mention is that the stock market recovered relatively quickly after 2008. If you stuck with it, you made your money back—and then some.
Then comes the golden line:
"We can offer guarantees. Don’t you want guarantees?"
Well sure. I’d love a lifetime guarantee. But life—and investing—doesn’t work that way.
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Why This Matters
Annuities can only be sold by brokers. Not by fiduciaries like me.
What’s the difference?
Brokers get commissions. Fiduciaries don’t. Brokers are allowed to sell you something that’s suitable. Fiduciaries are legally obligated to act in your best interest.
That’s not just a subtle difference. That’s the ballgame.
And those commissions? They’re hefty—usually around 7%. So if you hand over $100,000, your friendly neighborhood broker pockets $7,000 right out of the gate—no wonder they’re working so hard to win you over.
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The "Churn and Burn" Game
Brokers also have a habit of churning—moving clients from one annuity to another so they can collect fresh commissions over and over.
It’s not investing. It’s a merry-go-round, and you’re the one getting dizzy.
Annuities come in a million shapes and sizes, with more bells and whistles than a parade float. But let’s strip it down to basics.
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What Is an Annuity, Really?
At its core, an annuity is simple: You give an insurance company your money. In return, they promise to give you a set monthly amount for the rest of your life.
Social Security is a great example. So is a teacher’s pension. You pay in, you get a steady check, and when you die, it stops. But the financial industry loves to turn something simple into a Rubik’s Cube.
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The Two Big Offenders
The two annuity types most commonly pushed right now? Variable annuities and equity-indexed annuities.
Variable annuities let you invest in the market—sort of. They come with a monthly income guarantee but at a very steep price. These contracts are hundreds of pages long, written in fluent legalese, and stuffed with fees.
Low-cost index funds usually cost around 0.1% per year. Variable annuities? Try 3–4% annually. That’s thirty to forty times more expensive.
Equity-indexed annuities are the free-steak-dinner special. You’ll hear: "You can’t lose money if the market drops! And if it goes up, you get a share of the gains!"
What they don’t mention is how tiny that "share" usually is.
The S&P 500 was up 24% last year. Most indexed annuity statements I reviewed earned between one and four percent. You read that right. You avoided a 0% loss… by settling for a 4% return.
You’d do better with a decent CD. And those don’t come with fine print the size of a phone book.
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A Few Other Nuggets You Should Know
Taxes: All annuity growth is taxed as regular income, not at the lower capital gains rate. That’s a quiet little gotcha.
Surrender Penalties: Want your money back? Too bad. Most annuities limit withdrawals and penalize you if you take out too much—often for 5 to 15 years.
Age Restrictions: Take money out before age 59½, and the IRS hits you with a 10% penalty.
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So, What Should You Do?
If you find yourself at a steak dinner listening to a polished salesman pitching annuities, here’s my advice:
Smile. Enjoy the steak. Chew slowly. Don’t sign anything. Most annuity owners I meet don’t really understand what they bought. When in doubt, keep things simple.
A diversified portfolio of stocks and bonds has served investors well for hundreds of years. It’s not flashy, but it works. Why does something require a free steak to sell? It should sell itself.
Be Blessed,
Dave
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