<p>What is the value of tax savings if your earning will be negligible in an annuity? A decade ago, I had some 401k to rollover. A close friend pitched a certain tax-deferred annuity. I didn’t trust it but the person was a close friend. I decided to put half in a no-fee Health Sector mutual fund and the other half in the annuity. As of today, the mutual fund investment tripled in value. Compare that to the annuity’s measly 5% return after a decade. Well, it was negative during 2010 to 2011 but thanks to QE it now passed break-even. The upside is your heirs are supposed to get the highest market value of the annuity so no need for you to worry if you die during a market crash.</p>
<p>I suggest max out your 401ks, IRAs, Health Savings Account and scale in some money in good dividend stocks and/or ETFs as long as it doesn’t have a bubbly P/E.</p>