Vanguard’s annuities have been making the news headlines during the past several years. If you are considering purchasing an annuity from this company, it is important to learn what other customers and investors think, how reputable the company is and if the product is worth its cost.
Vanguard is the largest fund company today. It is especially known for its low-cost index funds. According to research gathered by the Wall Street Journal, Vanguard has seen increases in investments in the past several years while its main competitor has experienced massive withdrawals. This is a strong indicator of the company’s reputation for quality products and smart financial planning.
The company offers both fixed and variable annuities. Most of the reviews circling around the web focus on the variable annuities. If you are somewhat familiar with investments, you know that variable annuities seem risky. However, Vanguard balances investments correctly and wisely to offer better investing without sacrificing a guaranteed income. While other companies may claim to do this, the results yielded by some are often unsatisfactory.
Value For Investment
Expert investors say that Vanguard offers some of the lowest prices in the industry. Kiplinger published a review penned by financial adviser Steven Goldberg. Mr. Goldberg said that for a balanced portfolio of stocks and bonds, Vanguard’s new rider for guaranteed income actually results in annual costs between 1.45 and 1.55 percent. In comparison with most other annuities featuring a guaranteed income, this is an average of about half of the annual cost.
Pros And Cons
The main pro is the low cost of these annuities for the great benefits. According to Vanguard, their annuities may cost up to 70 percent less than the industry’s average products. This means more money to keep for retirement. Their solid reputation is also a benefit. When Hartford and other companies started buying back annuities in recent years, this caused enough of a scare to make a company’s reputation either an advantage or disadvantage. Another benefit is that you have 17 different investment portfolio choices to give you more options that work for your specific needs and retirement goals.
One of the main cons is with variable annuities themselves and their potential to fluctuate. When investors sign up for them, they could feasibly wind up paying up to about 3.5 percent annually if they want a guaranteed income rider. The high annual cost is basically to provide insurance on future income. Most of the complaints from around the web regarding Vanguard annuities are from people who did not benefit from variable annuity provisions rather than the company itself.
Is Vanguard The Right Annuity Company For Me?
A variable annuity from Vanguard or any other company may or may not be the ideal choice for you. It is best for aggressive investors who want to put 100 percent into it for the guaranteed paycheck. It is not a good choice if you are planning on a conservative portfolio. If conservative is your preference, you should look into immediate or deferred-income annuities. They are simpler as well.
For longer terms that are structured similar to a certificate of deposit, Vanguard’s fixed annuity is a better choice. If you decide that a variable or fixed annuity is right for you, Vanguard is one of the best companies to work with. They give you stability, quality financial products, lower costs and the assurance of a guaranteed future income.