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Is an annuity appropriate for me?

With a $2.5 million portfolio in mostly fixed income, is it necessary to have $200,000 in a variable annuity? The fees are very high, and the sales pitch rationale is that I have no pension otherwise. Is this true?

Pensions, Annuities, Asset Allocation, Bonds / Fixed Income
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2 weeks ago

Hi, you are right to be suspect. The fact is if less than 10% of your assets would be in equities, this is totally unnecessary. I would advise to look at USMV, the Ishares Low Volatility index. Even with a 40% drop in the value of your equity investments that would only represent an overall drop in your portfolio of 3.2%. So the question is simple, can you deal with a 3.2% drop in your portfolio? Good luck, and always trust your instincts! Also, make sure to check out your high yield bond exposure, this can act like equities in a downtown.

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