Ruminations

For individuals who have a minimum of $100,000 that they can put aside for at least seven years until after age 59.5, Farmers Insurance is offering , until the end of April 2010, a single premium deferred annuity with a promotional first year yield of 4.9%.  This annuity has a minimum guaranteed return of 1.5% per year (i.e. one will never earn less than 1.5% per year.) Every year, on the anniversary of the purchase, Farmers Insurance resets the interest rate it offers on this annuity to its "going rate" at that time (for the past year, for example, the "going rate" has been approximately 3%.)  In view of the huge amounts of money that the government has been pumping into the financial system and the eventual prospects for inflation, this annual interest rate reset is potentially good because it is a form of hedge against inflation.  After the first twelve months, an investor can, if they need, withdraw upto 10% of the amount invested without Farmers Insurance imposing a penalty on that withdrawal (though the IRS will penalize an investor on such a withdrawal if they are younger than 59.5.)  An additional benefit of investing in an annuity is that the yield earned is income-tax deferred, which means one earns more money than if they had a similar amount of money invested in a taxable CD.  Another benefit of investing in the Farmers Insurance annuity, is that there is no limit on the amount one can invest in this instrument, the minimum is $100,000 and the maximum can be $5 million or $10 million or more.  For more information or to purchase this annuity, contact www.farmersagent.com/hboroumand.