Quote: Originally posted by jones69 on Feb 23, 2012
Savagegoose, you made some good arguments and I thank you for doing it.
While I decided to process only facts at first, I see it is that human mind processes fear first and desires instant gratification,
all this explains why cash sum has become such popular, even the mathematical evidence is given.
Yep, negative outcome (tax,inflation,collapse of society etc.) is remotely possible but why to worry about it TOO much before that actually happens ?
If you visualize bad outcome, it may manifest easier, so better think positively instead. Have a good one, as they say at the cashier.
I did know about historic extremes regarding interest rates, tax brackets or hyperinflation events while I wrote my 1st comment
but decided to deleted guesstimates such as currency controls away from calculations made.
We are living time of offshore investments, globalization and improved communications, not 1930 or 80 again.
The real factors such as inflation still exists in food and power. Now it is cost-push inflation too because of more people will fight for "stuff".
Inflation confiscates your savings and purchase power. For this reason having more starting capital and doing investing in tax free cocoon
will most likely beat cash option, even the given sums or investments would be exactly the same, due to taxman.
You might be wizard in investing, but I am not in the long run and I will not become better even after being lucky to win huge amount of money.
E.g. commodity broker or bank goes under and your investments go poof too, even your were account fully funded, you can not recover there unless with annuity.
I have had experience with 10 bagger stocks in my portfolio, but it still takes forever to get into millions if you pay taxes all the time, this why annuity is my choice because there are not such middlemen that can go completely fail. Your cash investments nullify too if US treasury notes cease to have any value left, but that is never going to happen, because US dollar is backed up by US military, petrodollar recycling etc. You can get insurance by possessing the real gold at hand before that bad day happens.
Annuity means that you can rise from the ashes next year(s), even if debtors would their share paid out first, you can come back into business because of automatic firewall. Annuity is better in tax terms than cash.Not only taxes are more predictable but when also more money works for you, it will increase cash flow.
I hate losses and also short-term paper money fluctuation, but saving the capital on purchase power terms means you have to stop making losses from the day one.
Timing the market is nearly impossible for the long run. I try to be positive and base my decisions on some facts, even in todays "rigged" investing environment.
Surely you will have a blast with REIT income or land line telecoms for short term, until interest rates do rise again or government stops moneyprinting, both that they can not do right now without rising the prize of gas etc. Watering paper money is in global fashion now, just look gold since 2001. The same ounce it is.
Companies come and go, companies can not tax you directly, but countries can tax you, even you live abroad as American.
American infrastructure is surely aging, but authorities will collect taxes from you with cash option, just to pay my annuity :)
With annuity you will get the proceeds from investments indirectly but it also means it gives you some protection and continuity. Mad Max scenarios aside.
Some governments are more corrupted than others as as are politicians, but not too much here where I live so I did not give a tought to that aspect, my bad.
But how can you make a killing with you cash option when American businesses are paying such lousy dividends, especially if they are dishonest entities, why on earth would support them if you know them as liars ?
With annuity I feel like have really earned my income, after getting loaned out money back from road improvements etc. that will benefit everyone, bankers can go hell.
I would sleep better knowing that with annuity I do some good, even it is so that I will receive less money to spend for the first years than with lump sum.
Even it is actually the very opposite case after receiving annuity it few years and some malinvestments. You are here for your life, not for 2-10 years of spending & bust.
Cash option is promoted for in media and in advertisements. Ask yourself why is that ? With cash option lottery needs to put less money down and
specialists will suck you dry with % fees etc, no wonder why false advice for choosing lump have been favoured in the media and thus programmed into public mind.
You played for advertised jackpot, which was annuity payment BTW.
Why would you then compromize your efforts by choosing cash option instead, or did you fool yourself at the first place ? Or are you over 50 years old / soon to die without anyone left behind ? Then cash option makes some sense.
What you can not get you instantly with annuity, ask yourself do you really need it ? Remember operating costs down the road if you buy used space shuttle.
I would buy a ticket to Virgin Galactic instead, actually get into the space or rent what I need before buying it. Renting makes sense today and so will annuity.
I am sure somebody will post some annuity calculations with a better local state knowledge than I do, but I suggest you to consider annuity before turning it completely down. Taking cash sounds desperate to me. I have no debt or big problems, for which I am grateful, so if I could live with modest millions for every year, so can you !