Chap 6 Annuities

Chap 6 Annuities - Making a case for annuities 11:34 AM CST...

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Making a case for annuities 11:34 AM CST on Saturday, January 17, 2004 By SCOTT BURNS / The Dallas Morning News Remember when investments produced actual income? You know, dividends and interest. Put together a good nest egg, and its dividends and interest would pay your bills. You could live as a "coupon clipper." If you wanted to get fancy about it, you could say you were a rentier – or at least a person of independent means. That is not the situation for those with savings today. The current dividend yield on the Vanguard 500 Index fund is 1.39 percent. The current yield on the Vanguard Total Bond Market Index fund is 4.61 percent. A conservative 50/50 Couch Potato portfolio yields a piddling 3 percent. Indeed, the 15 percent tax rate on dividends may be a cruel joke. Using the Morningstar stock database, I found that only 1,949 of 5,882 domestic stocks pay dividends. Of those, only 238 had yields of 5 percent or more. About half of those are real estate investment trusts, not companies that retain a portion of their earnings. Fixed income is equally pathetic. You must buy a five-year note to get a 3 percent yield in Treasury obligations.
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This note was uploaded on 10/05/2010 for the course FIN 3000 taught by Professor Ackute during the Spring '10 term at Kennesaw.

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Chap 6 Annuities - Making a case for annuities 11:34 AM CST...

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