Ask Terry Questions Variable Annunity Investing

Variable Annunity Investing

By Terry Savage on August 12, 2014 | Investments

I have a Variable Annunity through Met Life. It invests my money a series of Variable Funding Options. I have the
ability to select whice group of funds in whice to invest in. The problem I have is that I can only make a change at
before the end of the trading day. I have been trying my best to time or (guess) what the market will do the next
trading day. I am trying to be out of the market at least 50% when I feel the market drops and if I feel like it is going to drop a lot, then I will take out 75% and place it in cash. Needless it is hard to “time” the market like
this. My question is “should I just leave 100% invested all the time. Would this be the best method?” Thank you so much. Herb S.

Terry Says:  You shouldn’t be using a variable annuity as a trading vehicle.  That’s the first problem here.  I don’t know your age, or what other savings you have, but if you have an IRA and want to time the market (not a technique I recommend) you should roll it over to Fidelty or Vanguard and you can trade online — and save a lot in costs for a trading account.  Or you can roll your IRA to another online brokerage firm if you really want to shave costs.

The variable annuity is designed to give you tax–deferred exposure to growth of your money.  So, yes, you should be paying attention to how it is invested — over the long run.  That might mean making some changes from time to time.  But remember that to “trade” successfully, you have to be right THREE times:  when to get IN, when to get OUT — and when to get in AGAIN!  That typically puts the odds against you.  Not to mention the costs of using this type of account to achieve these goals.



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