Timeline for Fixed-Indexed Annuity Interest Calculation
Current License: CC BY-SA 3.0
11 events
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| May 21, 2017 at 22:06 | history | edited | JTP - Apologise to Monica♦ | CC BY-SA 3.0 |
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| May 19, 2017 at 19:22 | comment | added | JTP - Apologise to Monica♦ | I purposely chose 3 month duration. Which avoid most of any "falling rate effect" that the longer maturities would. Not to mention, once you go long, there's rate risk on the other direction. | |
| May 19, 2017 at 18:40 | comment | added | xiaomy | Also just to point out a technicality, last couple of decades saw a general trend of interest rate drop which led to favorable fixed income return and it's perceivable that we are in the early stage of rate increases. So going forward bonds probably wouldn't perform the same way as it did. | |
| May 19, 2017 at 18:37 | comment | added | xiaomy | Sales would definitely go down but it might be a stretch to say that they wouldn't exist without deceptive marketing. It really depends on how risk-averse one is. Naturally we would price a peace of our mind much more favorably during and after a crisis. That's why FIA was so popular after '08. | |
| May 19, 2017 at 17:22 | comment | added | JTP - Apologise to Monica♦ | Maybe that's my problem. If these products weren't sold via deceptive practice, they wouldn't exist. At least in the Whole Life thread, I can contrive examples where the product has a potential use. In this case, it lags the risk free rate. | |
| May 19, 2017 at 16:56 | comment | added | xiaomy | Your numbers are a classic argument of why young(er) people should invest in stocks in their pension plan, and keep it untouched in downturn. Unfortunately people get freaked out in crashes and tend to sell low buy high. Our utility function is not symmetric, losing a buck hurts a lot more than winning one. This FIA product caps growth, in exchange for guarantee of principal, and there are people out there that it caters to. Sales guys might be engaging in deceiving marketing behaviors for the high commissions but I don't see an inherent issue of the product. | |
| May 19, 2017 at 13:53 | history | edited | JTP - Apologise to Monica♦ | CC BY-SA 3.0 |
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| May 19, 2017 at 0:13 | comment | added | xiaomy | There is also yearly point to point product that wouldn't have as big a problem. | |
| May 18, 2017 at 22:27 | history | edited | JTP - Apologise to Monica♦ | CC BY-SA 3.0 |
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| May 18, 2017 at 12:48 | history | edited | mhoran_psprep | CC BY-SA 3.0 |
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| May 18, 2017 at 12:11 | history | answered | JTP - Apologise to Monica♦ | CC BY-SA 3.0 |