<prompt> Human: Hi! So Im trying to learn more about where to keep money for the future. Ive started putting my IRA contributions into a Vanguard targeted retirement VFORX and Ive been throwing any extra money that I dont need into VASGX. I dont really know what Im doing, but the expense ratio is 0.17 and it tracks the SP so its probably not bad!So I was asking my father what hes been doing with his money. He said hes got it in annuities. Im not super clear on what annuities are. Ive read up a bit but all I can gather is that you give someone your money and they let you have a little back each year at a low interest rate? Is that the gist of it? Also its my understanding that annuities might be good for people who arent good at managing their money? Do annuities tend to beat inflation?Anyways he said hes got it with American National Insurance, in the BenchMark 500. I have a feeling that this is a bad deal but Im not sure. Can anyone help give me some perspective? And if this is bad, what should he do? Just stick it all in a Vanguard fund?If it helps, my father isnt the type of person who spends more than he can afford. Im not sure how much he has in these annuities, but Im guessing maybe 2-5 million? Should he get his money out of this ASAP?I really appreciate the advise and help! Thanks PF!  <response>: With an annuity, you give someone a lump of cash today to get a periodic payment in the future. The payment can change depending primarily on the interest rates that are used to convert between the lump sum and the periodic payment.Generally, there are penalties for terminating an annuity contract. I dont know the specifics, so there may be a penalty for only a certain period of time or forever.Annuities generally have lower rates of return than the stock market but they are less risky because insurance companies are typically very conservative and rarely, if ever, go belly-up. The low rate of return may be fine if thats all the risk that your father wants.The main problem with annuities in my view is that they can have high commissions and high expenses. High commissions may mean that the insurance salesperson pushes you toward a product that is not appropriate. High expenses mean that more of the money that was used to purchase the annuity is going to the insurance company rather than back to your father.Lastly, unrelated to the annuity, parents can have powdered butt syndrome which means that they dont much care what you have to say in adult matters because theyve been doing it since before they were powdering your butt as a baby. If youre jumping into your fathers finances without his request for your help, be prepared for any and all of your tactics to fall on deaf ears. He may have already thought through all of this and decided annuities are his preferred option. So I encourage you to do a bit more reading and start the conversation with so whyd you decide to go with annuities?. 