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I was going through some mail some of which was for my Roth IRA. Now I was very fortunate my parents encouraged me to start a IRA while I was young and I am very much better for it. What my parents didn’t know was that they were being sold crap and the worse case I am stuck with crap.

Now I wont go into what a Roth IRA is, but what my IRA ended up in is a Variable Annuity (VA). Now a VA has some nice features, like tax deferred growth but hey a Roth IRA CAN NOT be used for this purpose so that benefit is lost but the cost of it is still there. In the end my mail pointed out the following: the cost for the underlying funds were all at least %1, BUT thats not all the annuity charge was over %1.6 for a total of %2.6. Do I see any benefit from the things the annuity offers? No I do not, I am only 23 why do I need principle protection? Or death benefit protection? I have no one to take care of if I die, and because its a Roth IRA I have 37 years before I withdraw the money so why bother with ‘principle protection’ ill be up way over my principle anyway!

I have a few other beefs with Hartford:

• Their web-site only uses SSN numbers for logins
• They don’t use consistent names on the documents they send you vs online. The fund you own on the website might use a different name than the Q1 report.
• The funds drift! One of my funds turned from value to growth!
• Deferred sales charges!

I did some looking into this and I decided to put my money for this year in Vanguard 2050 fund. The total costs for this fund is 0.2%. A full 13x’s cheaper to own for the same expected growth. Oh and if I decide to move my money to another company I can do a rollover and no fee kicking you in the pants when you leave. So how I see it everything a person my age needs for a Roth IRA without the downsides. My only worry is how many people are getting screwed by salesmen selling VA’s because VA and whole life policies pay the largest commission to the seller.

Here is a example, it assumes $100,000 invested and that all funds return 10% annual before expenses. Note I believe in the Efficient Market Hypothesis so all these funds over the long term should show the returns of the market. I run over to the nice calculator at Dinky Town and in 37 years find:

So that somewhat small difference in price resulted in almost $2 million in lost return.  All that money (that should be your money) went to someone else. So Hartford I will never recommend you to anyone for your bad website, your bad (but common) fees.

After this rant you might wonder why I still leave my money there, well the reason is the deferred sales charge, my parents rolled over my IRA and I went along with it, well Hartford (and most VA turns out) will charge you 8% of your money if you withdraw before it has sat for a few years. This amount goes down a little every year. So I do plan to move the money out when it hits 4% charge.

Last Bank of America whats the point of raising the rate on my CC I have with you that i never use? How is that going to get me to use it? More and more I think I should live a cash only life. Debit card for buying things online. I would love to hear what all of you think about this or the above rant, please comment below or email me directly.