Whole Life Insurance (cash value):
"Leaving aside the fact that there are many better ways to save for
retirement, these policies come with high fees and commissions, which
sometimes lop off as much as three percentage points from the annual
return. On top of that, there are up-front (but hidden) commissions
that are typically 100% of your first year's premium. Worse, it's
often impossible to tell what the return on the investment will be,
and how much of what you pay in goes toward the insurance and how much
toward the investment."
http://insurance.yahoo.com/lh/termwhole.in.html
Bonds:
"The worst thing that can happen to a corporate bond is pretty much as
bad as the worst thing that can happen to the stock of the same
company: They can both become completely worthless if the company goes
belly-up."
http://www.business2.com/b2/web/articles/0,17863,528225,00.html
Annuities:
"First, the effect of an annuity means that, when you die, there is
almost nothing left to go to the beneficiaries of your will. The other
big problem with annuities is that the insurance companies need a safe
and steady method of paying the income i.e. low risk, low growth
investments. With people living longer and longer after retirement,
there's every chance that your income will fail to keep pace with
inflation."
http://money.msn.co.uk/investing/Insight/SpecialFeatures/FundsAndISAs/RetirementISAs/default.asp
Real Estate:
I couldn't find a good article... but if you mention "buy low and sell
high" and talk about how obvious it is that the real estate market is
at an all time high then most people will get the clue. Also, ask
what they would do if they had to sell the property within 3-5 years
and the value of the house hadn't gone up (notice that they would then
lose the broker fees, house inspection costs, closing costs, finance
fees... Those amount to about 6%-10% of the house value which is
probably their total investment.)
Art:
"They also show that art is pro-cyclical. This means it tends to do
well when the economy is strong, but poorly when the economy is weak.
Property is a pro-cyclical asset too.
The indices also reveal that art can be a poor hedge against inflation
over short periods. This is largely because art prices can be
volatile. It is estimated that to consistently achieve positive
annualised returns, art needs to be held for at least 35 years."
http://uk.biz.yahoo.com/050228/35/fdes6.html
Gold:
"The winning timing method for an eight-year period is the Elliot
Wave. In that time you would have made 44.9%, which gives you an
annualized return of 4.7%. Am I missing something, or is that almost
as good as a CD?"
http://www.fool.com/Fribble/1996/Fribble960305.htm
211563, I'm curious... what investments do you suggest to your clients? |
