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What to Expect When Buying an Annuity

April 1st, 2011 Comments off

Annuities are popular saving tools for those interested in creating streams of income at a later date. When an investor buys an annuity he or she should expect a future income stream at date he determines at his discretion. Annuities can be an investment vehicle that offers stability, while giving an immediate income stream, or tax deferred tax benefit. Developing a retirement account that is able to grow by deferring taxes until a withdrawal is made can be something the investor would crave.

Any investor seeking to create a diverse portfolio that accumulates funds tax-free for increasing future income streams, should expect these benefits purchasing any number of these annuities. An annuity is a contract between an individual and an insurance company for that promises to pay a fixed income. With annuities, the level of predictability helps calm fears of the markets ups and downs for those who are about to retire. The actual amount of return repayments will often depend on the amount of money initially invested, the length of time that has passed, the type of annuity purchased, and the performance of the market.

There are various types of annuities that exist and all with slight variations that may appeal to each investor, depending on his aversion to risk and financial goals. Variable annuities for example, allow the investor a little bit of control to where to place his or her money. The investor may elect to place a percentage of that money in a higher risk fund as well as an index or bond fun. Similarly, an investor may elect to place funds in an indexed account of which the performance is tied to the investor.

Fixed annuities can offer a predetermined rate of return for the investor – say at 3% annual growth. While this might be lower growth to other investments, it is often a favorite of investors who want to keep their money safe and allow for the funds keep pace with inflation. Since market volatility is bound to occur from time to time, those investors who have place some of their earnings in fixed annuities will maintain a steady stream of income and negate much of the financial losses that traditional stocks may experience.

With annuities, the investor can get his funds back when he retires in a percentage that is entirely based on his discretion and on his fluctuating needs from year to year. Developing income for retirement with annuity accounts can create periodic payments the investor knows will be there for a particular time period. A diverse portfolio with several annuity accounts can all have various distribution or pay days that can supplement other investments the investor has made. With the predictable fluctuations in the market, fixed annuities generate the attention of conservative and frugal investors who would like to foresee a steady and dependable rate of return.

Further, he can either elect to be paid out all at once in one lump sum or in installments for period of time, say 10 to 30 years. For example, an investor can expect at the age of 62, 6% a year for the next 25 years from his account. Of course, the longer the investor waits to make good on those withdraws, he can expect more during the distribution phase.

How Can Annuities Help You

April 1st, 2011 Comments off

Annuities are smart investment tools delivering both tax benefits and income growth potential for the big and small investor. In addition, annuities make it simple to create retirement income streams that supplement other retirement accounts. If a potential investor is looking to diversify his or portfolio, decrease taxes, and create immediate or deferred income streams, than purchasing an annuity might be the right type of investment for them to consider.

An annuity is a contract purchased by an investor from an issuing insurance company for a promise of repayment at some later date. They allow for accumulated funds deposited within the investments during the accumulation phase, to grow and defer any taxes on that growth until the investor makes a withdrawal. This “tax free” growth period can have a tremendous positive effect on most investor’s future payouts.

Certainly a favorite among savvy investors, annuities can help the investor grow his retirement funds at a predictable rate while avoiding taxes. Maintaining a stable level of predictability helps to calm the fears of market downswings for all investors who are averse to high risk accounts. There are various types of annuities that exist, with all slight variations that may or may not appeal to each investor, depending on his aversion to risk.

With annuities, the investor can get his funds back when he retires in a percentage that is entirely based on his discretion and on his fluctuating needs from year to year. Variable annuities, for example, allow the investor to place his funds in several mutual fund accounts that may appeal to his level of risk, growth objectives, and retirement needs. Nevertheless, the amount of those return payments ultimately depend on the amount of the initial investments, the type of annuity chosen, the length of time that has passed, and the performance of the market.

A portfolio with several annuity accounts can all have various distribution or pay days that can supplement other investments the investor has made. With the predictable fluctuations in the market, fixed annuities generate the attention of conservative and frugal investors who would like to foresee a steady and dependable rate of return.

Further, the investor can either elect to be paid out all at once in one “lump sum” or in periodic installments for period of time, say 10 to 30 years – or until his or her death. For example, an investor can, at the age of 65, decided that he will withdrawal 6% a year for the next 20 years from his account. The longer the investor waits to make good on those withdraws, the more percentage or amount he would be able to take each month.

They offer a more safe return on their initial investment and are particularly beneficial to those retired or near-retirement, as they have less room for wide market fluctuations. When the stock volatility displays itself, as it often does from time to time, those investors who have place some of their earnings in fixed annuities will maintain a steady stream of income and negate much of the financial losses that traditional stocks may experience. Most investors will find that fixed annuities can play an important role in their retirement goals. They provide delayed or deferred income streams while increasing that growth without the hassle of taxes.

Why Invest in Annuities

April 1st, 2011 Comments off

Annuities have garnered the attention and affection of savvy investors over the years as a proven, safe, and worthy long term investment. Annuities can add depth to a solid portfolio and add an immediate or deferred income stream. A widely used option among investment prone pre-retirees and those already in retirement, annuities are contracts that promises to make periodic payments to the investor for an established amount of time and at a particular rate of interest. This level of predictability helps calm fears of market volatility.

Annuities make for worthwhile investments because they offer tax-deferred growth. So, this means, that whether your annuity grows 3% or 10% every year, for 20 years, you will not be taxed on that growth until you make your first withdrawal. This ability to grow every year without the taxman being involved every year can increase your investment as the years go by. In addition, when you finally do pay taxes, you may be in a lower tax bracket. Therefore, one the whole, annuities make it simple to create retirement income streams as they provide for accumulated assets to grow without getting taxed on that growth prior to making a withdrawal.

Of course, the amount of those return payments ultimately depend on the amount of the initial investments, the type of annuity chosen, the length of time that has passed, and the performance of the market. With annuities, the investor can get his funds back when he retires in a percentage that is entirely based on his need for cash from year to year. Further, he can either elect to be paid out all at once, in one-lump sum or in installments for period of time, say 10 to 30 years. Case in point, the FDIC can, upon turning 60 years old, can decide that she will withdrawal 6% a year for the next 20 years from her account. Based on that percentage and based on the amount of time chosen, the investor will receive a period check with that reflects 6% until the amount of the annuity is exhausted.

Thus, creating retirement income through various annuity accounts can create various streams of periodic paychecks that the investor knows will be there for a particular time period. In addition, unlike some other saving vehicles, some annuities allow for added security when the investor dies, as the remaining payments can be passed to a beneficiary. Fixed annuities are backed by gathering the money from many investors into a pool and delivering payouts from that pool. Because of this, they offer a fairly safe return on their initial investment and are particularly beneficial to those retired or near-retirement, as they have less room for wide market fluctuations.

A retirement portfolio with several annuities can all have various distribution or pay days that can supplement other investments the investor has made. With the predictable fluctuations in the market, fixed annuities generate the attention of frugal investors who would like to foresee a steady and dependable rate of return. Yet, the investor less averse to risk can also increase his growth by investing in variable or indexed annuities which are often tied to the performance of either a group of stocks or the overall market. Either way, annuities offer an investor some very good benefits and the ability to diversify his or her investment options that also provide deferred tax benefits.