1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Can an investment firm Guarantee a 7% increase in your inventment???

Discussion in 'Chit-Chat' started by Mace, Aug 16, 2006.

  1. Mace

    Mace rock scientist.. Staff Member s-Moderator

    Messages:
    21,335
    Likes Received:
    1,769
    Joined:
    Feb 17, 2002
    Location:
    Las Vegas
    Can an insurance investment firm guarantee that you will have no less than a 7% return on your investment?


    My wife sat in on a seminar from World Financial Group. I am wondering how legit this really is. To me it seems like a pyramid scam and defiantely too god to be true.

    Has anyone had any real experiences with this company?
     
  2. warrior_1515

    warrior_1515

    Messages:
    483
    Likes Received:
    0
    Joined:
    Sep 12, 2005
    Location:
    Bend, OR
    Sounds like an annuity.

    They will probably be hanging on to your money for the next 10-15 years.

    So, to answer your question...yes, with the correct amount of disclamers and contract wording they can.
     
  3. Fly Rod

    Fly Rod

    Messages:
    3,061
    Likes Received:
    44
    Joined:
    May 23, 2005
    Location:
    Ashland, OR
    Depending on the type of investment they could. The big question is how much the fees, charges and every other bs they are not including in the "return". A simple example, $100k investment paying $7k in interest is returning 7%. Take the $500 maintenance fee and $500 transaction fee off and your 7% is now 6%. So, get it in writing that the 7% return is AFTER all fees, charges, taxes, and BS.

    I am not an investor or advisor so this is just my WAG on the situation.
     
  4. Cube Dweller

    Cube Dweller Moderator

    Messages:
    1,180
    Likes Received:
    11
    Joined:
    May 22, 2004
    Location:
    22 Acacia Avenue
    Pretty much everyone in the financial community w/out interest in insurance products will tell you for most people, the only insurance product that makes sense to "invest" in is term life.

    [flame suit] I know there are brokers on the board that may claim different, that annuities, whole life, universal life, etc are great investment vehicles, blah blah. [/flame suit]
     
  5. Urrrk

    Urrrk

    Messages:
    89
    Media:
    2
    Albums:
    1
    Likes Received:
    161
    Joined:
    Jun 7, 2005
    Location:
    Bellevue, WA
    I'm getting 8% but I have no idea how, since my investment strategy consists of wild ass guesses on the right mix of mutual funds in seven categories.

    If I knew what I was doing, I'd be selling a newsletter.
     
  6. dieseldog

    dieseldog She idles just fine . . .

    Messages:
    1,873
    Likes Received:
    3,577
    Joined:
    Jan 25, 2005
    Location:
    Houston & BFE
    Of course they can guarantee that return if they are willing to put up the shortfall themselves, should there be one. They are not guaranteeing what the market will do. They ARE trying to establish a floor below which they are gambling that their investment decisions will not fall.
     
  7. White Shark

    White Shark

    Messages:
    763
    Media:
    1
    Albums:
    1
    Likes Received:
    2
    Joined:
    Dec 13, 2004
    Location:
    Red Triangle
    Past performance is no guarantee of future results.... :D
     
  8. dieseldog

    dieseldog She idles just fine . . .

    Messages:
    1,873
    Likes Received:
    3,577
    Joined:
    Jan 25, 2005
    Location:
    Houston & BFE
    Product not available where prohibited by law.

    (Wait, did I just say "Product"? s***.)
     
  9. Poriomania

    Poriomania

    Messages:
    354
    Likes Received:
    1
    Joined:
    Feb 1, 2004
    Location:
    Chicago

    Why is that? I know little about it, but we talked to friend in the insurance business the other day and it looked like whole life made more sense than term. The structure we saw showed whole life to look like a combination of IRA and life insurance. You pay into whole life and have cash you can pull out or loan against. Term was a lot cheaper monthly, but was a simple bet against when you thought you might die with no equity of any sort.
     
  10. fjwagon

    fjwagon

    Messages:
    1,795
    Likes Received:
    4
    Joined:
    Dec 7, 2004
    Ask Dave Ransey(not sure if spelt his name correctly) on his radio show. ;)
     
  11. Cruisin'Carolina

    Cruisin'Carolina

    Messages:
    1,434
    Likes Received:
    8
    Joined:
    Dec 11, 2004
    Location:
    The Rock
    The only way for them to guarentee a return is if it is wrapped in insurance. Is it a flat 7% (fixed annuity) or at least 7% (variable).....

    Some allow you you to experience the ups of the market, and take away the risk of losing principle.....

    It makes sense for a lot of people that don't have time to recover before their target retirement date if the market falls, but gives them a chance to grow their nest egg...

    It does cost money....the ins co is betting they can get a better return than that because they have access to markets where only the big boys play....but many annuities of today are actually fairly cheap compared to days gone by....when interest rates were higher....not to mention the operating and expense charges of some mutual funds...not to mention sales loads.

    No load funds are fine as well, but then you usually have to pay someone to access them, either a flat rate or a %...it costs a little to play no matter what you do, especially if you don't have the knowledge, interest, or time to become very familar with the market. You just have to decide what is right for you.

    Term vs whole, different strokes for different folks....Only you can decide what is right for you....beware of anyone who makes blanket statements about anything....the reason there are different products is because of the varying degrees of need and what fits one person's age, knowledge, interest, and time to meet objectives is different from the next guy....

    Don't write anything off....talk to someone who knows both ends....financial services people hate insurance and annuities because they think it is too expensive....sometimes that is true. Insurance only people tend to be slightly more conservative....but that could hinder potential growth.

    Talk to someone who understands both sides, they will do a risk tolerance and time horizon assessment, and then you can choose what's best for you.

    BEFORE you give this co ANY money, check out their strength and financial security, licenses, past performance history.....

    CHECK THEM OUT WELL...forget fancy brochures, is the guy local? Check Standard & Poor's, AM Best, everything you can get your hands on. FInd out the surrender charge period, and the expense costs to get that 7%

    Many variable products have been acheiving that regularly, but that floor is higher than what I've seen.

    Be careful!!!
     
  12. tcb

    tcb

    Messages:
    2,775
    Media:
    3
    Albums:
    2
    Likes Received:
    177
    Joined:
    May 2, 2005
    Location:
    Swinging from a vine.
    Yes, as others have said with an annuity.

    Historically speaking, 7% ain't s***... How long will your money be tied up?
     
  13. tcb

    tcb

    Messages:
    2,775
    Media:
    3
    Albums:
    2
    Likes Received:
    177
    Joined:
    May 2, 2005
    Location:
    Swinging from a vine.

    What if you take the monthly difference between the price of the whole life and the price of the term and invest it in a good no-load mutual fund? I bet you will have more $$$ to pull out or loan against.
     
  14. tcb

    tcb

    Messages:
    2,775
    Media:
    3
    Albums:
    2
    Likes Received:
    177
    Joined:
    May 2, 2005
    Location:
    Swinging from a vine.
    If this is a brokerage, they will get their ass in a sling making guarantees like this... it's not allowed. period.

    It has to be an annuity or insurance type "product"...
     
  15. Cruisin'Carolina

    Cruisin'Carolina

    Messages:
    1,434
    Likes Received:
    8
    Joined:
    Dec 11, 2004
    Location:
    The Rock
    Some changes have been occuring on the surrender charge front as well.....when interest rates were high, the contracts written had to penalize severely for taking money out because the co was investing your money long term, and they get penalized for pulling out early as well....

    Most modern annuities will allow you to withdraw 10% of the principle each year, and some even allow that 10% to stack up for several years....

    I've seen 5 year periods and 9 year periods....2% penalties and 9% penalties when looking over other company's contracts....

    Most are a snapshot in time and reflect the economic heartbeat then....in other words, contracts that locked in rates when mtg rates were 21% paid handsomely.....guarenteed fixed rates today, because interest is so low, won't be able to promise anything near what a contract in the 80s did...
     
  16. Cruisin'Carolina

    Cruisin'Carolina

    Messages:
    1,434
    Likes Received:
    8
    Joined:
    Dec 11, 2004
    Location:
    The Rock

    You are right.....maybe;)

    I'm a fan of Dave Ramsey, but his blanket statements regarding this don't always make sense.

    It has been documented that 94% of the people who choose term so they can "invest the difference" simply do not do it.

    It takes real dedication to set aside $200-300 per month outside of 401Ks and other investments....

    I see both sides....

    I'm actually a fan of buying enough term to take care of your family during your working years, and having at least a small amount of whole life as well. That way you can cover both bases, still invest, but no matter what happens (die to early, die really old, market makes you rich, or market crashes) you have covered all the bases.
     
  17. tcb

    tcb

    Messages:
    2,775
    Media:
    3
    Albums:
    2
    Likes Received:
    177
    Joined:
    May 2, 2005
    Location:
    Swinging from a vine.
    obviously the math doesn't work without discipline. discipline is the key to damn near everything in life. I'm a term life guy... always have been. My mother still carries a small whole life policy on me though....:rolleyes:

    I'm not trying to knock your gig... I'm a broker too... not insurance... but still a broker. I've seen annuities that pay out 10 points to brokers in the past, and have heard that some insurance policies are like that as well (i have no first hand knowledge of those). IMHO, anything where the broker can make 10% for selling is probably not a good investment for the end user.
     
  18. Cruisin'Carolina

    Cruisin'Carolina

    Messages:
    1,434
    Likes Received:
    8
    Joined:
    Dec 11, 2004
    Location:
    The Rock
    A quick search revealed no listing within my source for the co you listed....

    Makes me think that is the name of the broker/agency, not the insurance co they actual product comes from..

    Find that out for sure.
     
  19. wob

    wob

    Messages:
    2,813
    Likes Received:
    683
    Joined:
    Feb 28, 2003
    Location:
    SC
    I like ZTR. Pick it apart for me and tell me why I shouldn't own it. I enjoy the 10%+ yield.
     
  20. Cruisin'Carolina

    Cruisin'Carolina

    Messages:
    1,434
    Likes Received:
    8
    Joined:
    Dec 11, 2004
    Location:
    The Rock
    It's all good!!!:beer:

    There are a LOT of expensive products out there, but some really competitive ones as well....One of the ones we use is only .5% higher per year for that guarentee than the 12b1 of the the funds...

    Most of the higher commissions are paid by companies that have no network to get their product to market...they have no sales structure, so they have to and can pay a huge % to get their products shown to the customer...

    What I'm saying is that is an internal cost, one co could pay 10% commission but do a better job than a co that pays out 5% but has high internal expenses or poorer investment results....

    I don't use that a gauge for quality, is all I'm saying...
     
data-matched-content-rows-num="2,1" data-matched-content-columns-num="1,4" data-matched-content-ui-type="image_stacked" data-ad-format="autorelaxed">