Hedgeye Podcasts Hedgeye NexGen: Building Wealth for Young & New Investors | Episode 14 | Annuities
May 3, 2025
Ryan Ricci simplifies finance, focusing on essential wealth-building strategies for new investors. Delve into the complexities of annuities, exploring their role in retirement planning and the hidden fees that can eat into returns. The discussion critiques the often expensive choice between annuities and mutual funds, pointing out smarter, cost-effective alternatives. Listeners gain insights on effective retirement savings methods, emphasizing low-cost investment options and accessible tools that empower young investors to make informed financial decisions.
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Understand Annuity Basics
- Annuities provide retirement income by paying dividends after retirement, either by lump sum or accumulation.
- Understand the concept, but know life insurance companies charge many fees making annuities costly.
Insurance Companies Profit Model
- Life insurance companies profit from annuities by charging multiple fees.
- Their business model ensures the product is never free or purely beneficial to you.
Ask About Annuity Fees
- Annuities have many fees: commission (1-8%), annual admin fee (
0.3%), surrender charges (up to 45%), mortality expense (1.25%), and investment expense ratio. - Always inquire about fees, lockup periods, and surrender charges before buying.