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Hmmm. It sounds like METLIFE has struck a deal with these manufacturers
to prompt sales along more than what a "basic boring sale" might do. Since this
6% is being put aside for the lifetime annuity, let me play advertiser for
a second to guess at what the brochure might say:
"Not only are you planning for your retirement, but you are getting
all your money back from the purchase you made!!! That makes your
purchases practically free!!! Here's how...
1) 6% of the sales cost is put into an annuity.
2) That annuity will pay $X per month per hundred dollars of
purchase over an average lifespan of Y months.
3) Y months times $X is a total of $<number here that is
bigger than the original purchase price>."
4) You're getting back more than you paid!!!
Its all true, but it (presuming the advertisment went like this ;-) totally
ignores the time value of money and the long-term inflation factors.
Now, my opinion? Frankly, I'd rather if the manufacturers just knocked
6% off the purchase price (by either a direct sale or a mail-in rebate) and
let _me_ decide how to invest the saved money for the long term.
-craig
p.s. Gee, this might be getting on to something. Keeping my slimey
advertising hat on for a moment, a 10% manufacturer's rebate on a car (lets
say a $1500 rebate on a $15,000 car which isn't out of the norm these days),
if put into a 30 year Treasury zero at 8% (instead of being cash rebated)
would give the car owner $15,000 at maturity -- the car is basically free!!!
;-) Its the same "money now is worth more than the same money then" issue.
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| re -1
Yes-- You are correct. They seems to have signed up some companies for
this promotion.
I called the 800 number listed in the advt and they said that they will
mail me the details. I asked them " what is the catch" They replied
there is none. They also said that there is a one time fee of $25 .
For those of you who have not seen the advt, here it goes ....
This is portion of the was the full page advt in the USA TODAY dt Mar25th.
"THIS IA AN AD FOR EVERYONE WHO ISN'T PLANNING TO WIN THE LOTTERY OR
INHERIT A MILLION DOLLARS IN 30 YEARS.
When it comes to money you have always had two options. Save it or spend
it. Wouldn't lie be sweet, if you do both at the same time ? Start
offers you the opportunity to do just that. Whenever you buy a product
or service from Spiegel, MCI,USTRAVEL CLUB, MED,HERTZ and an ever
growing list of companies,up to 6% of the money you spend can be
deposited in to a tax differed annuity in your name.
The annuity is offered and guaranteed by Metropolitan Life. And given
the time and power of compounded interest,the amounts you can
accumulate are astonishing.
Let us say you and your spouse are both 33 years old and have two kids.
Your monthly car payments are $375 and $425. Your long distance phone
bill runs about $50. The annual vacation you take without kids costs
$2000 a piece and for the holidays you all fly home at a cost of $400
each.
Over the course of the year you may spend about $100 a month on stuff
for your kids, the house, and gifts for friends. We will assume that
your spending increases at 3% per year. By making these purchases
through START companies- leasing your cars through GE capital small
fleet, using MCI for long distance,booking your vacations through US
travel and so on.. at the age of 65 your annuity would be worth $213,448
( based on met life guaranteed minimum interest of 3% ).
assuming the interest rate of 8.07% ( the industry wide average for
last 5 years, you would have even more remarkable sum:424,630.
As you can see this is not a program for people looking to get rich quick.
But it is perfect if you don't mind getting rich slow.
What is the catch " There isn't one. A vacation at club Med costs the
same whether you join START or not so does a necktie from Spiegel or an
airline ticket from US travel.
What is isn't for the participating companies ? You. Times being what
they are every START company has come to realize that they don't need
you as much you need them. They need you more.
So if you give them your business, they will give you some thing back
up to ^on everything you buy from MCI,HERTZ,EDDIE BAUER,GE APPLIANCE
and an ever growing list of companies..
For details call 1-800-955-7010...
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Just thought of something else that differentiates this from a plain
old sale -- I suspect that this 6% would be classed as taxable income.
$25 dollar fee to get it started. That's not that bad, but it does
mean that your first $416 in purchases just makes up for the entrance fee.
Also, of course, compare what you buy _today_ with the companies that
are on the list. My family, for example, certainly doesn't spend $800 a month
leasing cars nor do we take $2,000 per person vacations like the family in
their brochure. Now if they sign up diaper companies, I might be interested!
:-)
-craig
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| As Craig mentioned in his first note, you have to be very careful with
what kind of sales count for the 6%. It's probably only good on the
full Hertz rate, not on a negotiated discount rate that you get as part
of some organization.
I had a call from a charitable organization who said they could get me
a 5% discount off my long distance bills which they would take as a
contribution (a free to me contribution). After asking to speak to a
supervisor, I confirmed that the discount was off the normal rates and
would affect the 10% I already get from the company (thus not free).
If the 6% is accumulated from ANY and ALL sales then this offer looks
GREAT!
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