Annuities vs. Income Investing

Do you like betting against yourself? Do you believe someone can handle your money better than you?

Although there are times to let the professionals handle the situation, we can still learn the information to give us additional options.

Every American should have an income investing portfolio to assist them through life. Even passively earning an extra $300/month can change your life.

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Big numbers for retirement. When we talk about retirement, we speak of large numbers. We will need a massive nest egg to generate enough passive income to live comfortably.

Most people don’t have much in the way of retirement savings. The few that do usually save inside their 401Ks.

The savers may end up with $1.5 million in their 401K and then have the unwieldy task of converting their 401K into monthly passive income.

They can try doing it themselves (DIY) using the 4% rule. However, this method relies heavily on market forces and usually scares retirees into withdrawing less than they could have.

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Others will turn to annuity products to convert some of their nest egg into monthly income. Annuities are incredibly complex but could help many retirees who don’t follow the stock market or finance news.

The wonderful world of annuities. There are many types of annuities, so you’ll want to perform your due diligence before buying these products.

You have annuities that will index to the stock market and others that will last until the end of your life and your spouse’s.

Annuities come with high fees and lots of legal jargon. The goal is to convert a portion of your nest egg into guaranteed monthly income for life.

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Is guaranteed income the answer? Would you take less money if it were guaranteed? I would rather convert $50,000 into a 30-Year Bond at 4% than trust it to an annuity.

I don’t like betting against myself. I would only purchase an annuity with a guaranteed 4% yield if I didn’t believe I could do better.

Let’s run a rough simulation of a $50,000 annuity at 4%. The annuity pays you $2,000 per year or $166 per month. 

You have no way of adjusting the returns yourself. Of course, you could reinvest some of the monthly income into other high-yield products. But you bought an annuity because you didn’t want to invest in the first place.

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Oh, by the way, your original $50,000 is gone. This means you cannot leave it to your family members. You handed a small amount of your generational wealth to the insurance companies.

Can you do better with income investing? Hell yes! I am already destroying these numbers at age 41.

I have $48,000 in my Wells Fargo account. This is mainly an income investing portfolio, but I have index funds and dividend growth stocks inside as well.

At face value, I am earning an 8.5% dividend yield. My portfolio earns me $4,100 annually or $343 monthly—double the annuity.

Is my income guaranteed to arrive? No, it is not. However, I trust the system. I invest in a large slice of American products because I believe in America.

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Do you trust your insurance company more than the American economy? The more you invest, the more faith you build in the system.

I’m in control. I can do whatever I want with my $343, but I should reinvest a portion into the portfolio. This helps it continue to pay more every month.

If I reinvest 25-30% of my income, I will leverage the power of compound interest—my money makes money. Compounding is the 8th wonder of the world, so you will want to maximize its potential by reinvesting.

I can also shop for the best yield or take advantage of market mispricing. If mortgage prices are depressed, it may be time to pick up Mortgage REITs like AGNC, ACRE, or NLY.

Dividend Growth Investing vs. Income Investing

If you shop slowly for great deals every month, you’ll be surprised at how fast your income continues to grow. 

You can also invest in index funds, growth stocks, or dividend-growth companies if you’d like. Seriously, you can have it your way.

Your family keeps the wealth. Even better, your family can keep your fantastic portfolio. Not only are you growing a paycheck, but you are also building generational wealth and knowledge.

If you take an annuity, you are betting against yourself and your family. You didn’t get the information, so your family will have to seek it out now.

The Magic of Income Investing

I am 41 years old and love automated income investing. I am already passing this information down to my 16 and 12-year-old boys.

Heck, my sons are already receiving dividends from AGNC every month in their STASH (affiliate) custodial accounts. 

The passion of income investing. I am very passionate about income investing because it is available to everyone. There isn’t some invisible barrier preventing people from creating their dream lives.

Life is NOT a Game

The only hurdle is obtaining the information. You must read books, follow the markets, and consume financial media. 

The insurance companies make their profits based on odds—betting against you. They crunch the numbers and give you the low roll.

Conclusion. But don’t be mad at the insurance companies. You bet against yourself first. Why should they come to your rescue?

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I have been income investing for three years, and my life has changed drastically. I want to generate more revenue solely to invest in my portfolio. 

I budget, save, and invest passionately to keep growing my amazing paycheck. My wife and I earned $1,800 in December 2022 from income investing.

How much money do you think we will earn in 20 years when I am 62? Will an annuity give me a better return? Do you think social security will produce a higher paycheck?

I am betting on myself and my implementation of the information. I can run the numbers better than the insurance companies, can you? Good Luck!

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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing