| It's natural to want to protect your hard-earned nest egg, and annuities companies will try to show you how to do that "without having to gamble in the Wall Street casino." If Caesars Palace had a game that paid out an average of 21% three out of every four bets and lost 14% on the fourth bet, people would camp out on the Strip waiting to get in. Now imagine that's the case, and some slick "advisor" walks down the sidewalk offering everyone a 6% fixed rate on their money - or offering 10% if the game is a winner but capping their loss at 5% if it's a loser. The guy wouldn't drum up much business. Annuities are very popular, which is not surprising. They are marketed well. Last year, more than $434 billion worth of annuities were sold, mostly because investors are worried about the stock market "casino." Sure, markets tank from time to time. Nasty bear markets do occur - though the average bear market lasts less than 10 months. If you can't stomach a drop in the market, you should be in safer assets like cash or bonds. What you shouldn't be doing is giving your money to an industry that slammed on the brakes selling its products when there was a threat that those products could get them in trouble. That's right. In 2016, the Department of Labor passed a rule that said advisors must only sell products that were in their clients' best interest. In the fourth quarter of that year, annuity sales dropped 16% and variable annuity sales fell 22%. Two years later, the rule was killed. Annuity sales spiked 40% in the fourth quarter of 2018 and are now at record levels. What does that tell you about how good these products are for the consumer? Some people are happy with their annuities because they like the reliability that some annuities - mostly fixed annuities - provide. That's fine. I'm not necessarily telling anyone to get rid of their annuity (they'd probably pay a huge surrender fee if they did). But for most investors, sticking with the market and moving some money that's needed for immediate expenses into cash or bonds is a better way to go. You won't pay crazy fees and commissions, and you'll have much more upside, which should more than make up for the occasional bear market. Annuities are expensive, they're complicated, and they underperform the market. I highly recommend that most people avoid them. Good investing, Marc | 
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