A couple of days ago I was talking to an old friend of mine about her investments.  No, I am not a financial planner, but being knowledgeable about personal finances, I have friends and strangers who often ask about their various holdings and problems.  So as she spoke, I listened intently and found out that she had been sold (because no sane person buys these things) annuities by a broker/planner. This, she said, was pretty much what her entire portfolio was made up of.  I gasped! 

You see, in my opinion, annuities are a rip off - period.  They convert capital gains into ordinary income thereby destroying the value of tax deferral. On top of this, they have much higher fees to cover the huge commissions advanced to the brokers who sell them, have stiff surrender penalties, and when they are inherited by heirs, they have no step up in basis. This means that your heirs (likely your children and grandchildren) will owe all the deferred taxes! Of course this is opposed to stocks, real estate or other assets where the value to your heirs is that on the day of your death.  Like I said, they are a rip off.

Now it brought to mind that all of us need to really focus on investing - to beat inflation - on top of finding investments that provide a decent return.  When you add hidden fees, commissions and inflation together, you probably need to earn above 12% per year to net out a decent 6% return.  Not easy and in fact, impossible to do consistently or safely. 

So what can you do?  I will say it in one single word: Gold.  Buy it from a reputable source (not one of those guys on TV where the mark up is 25-30% to pay for the ads) and watch it go.  I predict that in the next couple of years the price will hit $5000 per ounce as the dollar's value continues to erode.  And then to diversify, I suggest buying foreign blue chip stocks from better managed countries like Switzerland, Germany, Japan, and my particular favorite, our northern neighbor Canada – a country which  pays dividends.  You can do this through a number of reputable firms like Euro-Pacific or Fidelity and then just hold them.  No extra fees, commissions, or costs while your sitting tight and making money. Meanwhile, your friends who keep doing what they've always done get wiped out.

No, this is not conventional advice and I could write a book (and probably will at some point)
about why I am giving you this advice, but for now I am just sharing the bottom line:  Avoid
unscrupulous brokers and planners, avoid unnecessary fees, a pox on all annuities. Buy gold and foreign stocks in more stable currencies than ours, and make some real money!