| Hi Taylor
- I am about 46 years old and I make about $90,000 a year. I was told
that an annuity would be a great investment for me. I know that it
deals with insurance products, but is this something that I should
do? - John
Hi John - Since I don't know your entire financial situation,
I can't say for sure if this is something you should do or not, but
I can tell you why I am not a fan of annuities for the vast majority
According to the American Association of Individual Investors, the
average annual fee for an annuity is 3 percent, and that doesn't include
any management fees that your advisor may charge. In addition to those
high fees, if you need your money back before the lock-up period ends
in seven to 10 years, you will face extremely high surrender charges.
I don't know about you, but I don't like the thought of giving my
money to someone and them charging me a huge fee when I need it back.
Annuities pay great commissions (over 10 percent in some cases) to
the salesperson, which is why they are pushed on just about every
single person who walks through their door. I believe that for the
majority of investors, a well-balanced portfolio of stocks and bonds
tailored to your specific goals is the best, and most cost-effective,
| Hi Taylor
- I'm 16 and I just got my first real job. I'm only making $7.50 per
hour and I want to start saving for the future, but I'm not sure where
to start. My parents pay for my car insurance and phone, so I don't
have any bills. What should I do? - Kelsie
Hi Kelsie - Congratulations on getting your first job and for
having the forethought to save some of that money for the future.
For every paycheck that you make, put 40 percent into a savings account,
have fun with 50 percent, and then give the last 10 percent away to
Not only will this allow you to enjoy some of the money you are making
now, but it will also help you get into the routine of saving a good
portion of your income. The last 10 percent is something that you
won't hear from a lot of financial advisors, but it's important as
it teaches you that no matter how successful you get, there are others
in our community who are less fortunate and need help.
If you keep using this simple budget for the next two years, you'll
be surprised at how big of a nest egg you will have to open up your
first investment account when you turn 18.
Information presented is for educational purposes only and is not
an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.