Investing In Annuities

Deciding on whether an annuity is right for you is a significant decision. Many people choose investing in stocks over annuities. Lets be clear stocks are not annuities and annuities aren’t stocks. This week the stock market suffered its most significant drop in history. For those investors fully invested in the stock market, obviously is was not a good day. Declines and market corrections are very much a part of the stock investing landscape. It is part of the business although many investors try to ignore the obvious.
The stock market will suffer declines and along with so will your portfolio. If you are able to ride out these declines where you can potentially lose thousands of dollars over the course of a day, carry on.

Two things generally happen when the stock market corrects. Either investors sell and hold cash to reinvest at a later date, or they hold and hope for a bounce.  This creates a buying opportunity or a time to revaluate your investment strategy?

Conversely most annuity owners have quite a different thought on the black days of a market sell off. It is one of security and stability. Annuities can offer protection from market sell offs and provide a measure of sanity for times like these.  Immediate annuities offer Interest rates and monthly payments that will remain constant. The insurance company that issues the policy makes those guarantees. That generally feels much better when the rest of the investment community is in a state of panic as stock market order takers stumble over one another to sell off their clients holdings.

Each investor has a tolerance threshold in matter of risk. Each investor should define that threshold before investing in any investment vehicle. Deciding to hold both stocks and annuities is a viable option and an option used by many. The economy is not on solid ground nor does it look like it will grab a foothold in the near future. Asset allocation is paramount to your success when planning your future. It may be time to allocate a few more investment dollars towards investing in annuities. It may be a slower ride , but avoiding bumps in the road might be worth it.

There may come a time when you have a need or desire to selling your annuity. Before considering selling your annuities make sure you exhaust all your questions and options you may have to your financial adviser. Selling your annuity is not likely something you have done before and its best to understand the principles and mechanics of how it works.

First ask your self, why am I selling this annuity. When you purchased your annuity I suspect you did lots of research and had a plan for the money you would be paid. Are you selling to invest the money in another higher paying vehicle? That’s not a bad reason.

Sometimes all the best planning and preparation falls prey to the thing we call life. Unforeseen events change our plans, sometimes without permission. Perhaps medical bills, major transpiration expenses, legal expenses or just plain day-to-day expenses. First things first, there is nothing fundamentally wrong with selling your annuity. Just be sure to complete your due diligence.

Perhaps the most significant benefit to selling your annuity is you will receive your money today, rather than at some point in the future. The idea behind your initial annuity purchase was and is a very good idea. However as stated sometimes the world we live in doesn’t follow along with our plan and decisions have to be made. Inflation should be a careful consideration in your decision to sell an annuity. The money you receive today may be worth more now than later or just the opposite.

Carefully consider your options of selling your annuity or leaving it as is. Don’t beat yourself up because your plan didn’t quite work out the way you wanted. Planning for retirement is a difficult challenge as most people work their individual plans for years. Over the course of time, life change and so do plans

This is a question adults ask frequently of themselves, yet its answer isn’t always clear. Retirement years seem far off and making ends meet from day to day seem to present obstacles constantly. Even when you are laser focused on your goal, more obstacles appear making planning for your retirement more difficult. A great plan today may erode your purchasing power tomorrow. Inflation eats away your potential purchasing power and Social Security a main source of todays retirees may indeed only provide minor income by retirement age. So how do you handle this dilemma?

Fixed annuities issued by reputable insurance companies provide long term investment vehicles, with tax deferred advantages, insurance company backed guarantees, flexibility to access your accounts and security of knowing you have invested your hard earned dollars with a reputable company.

The ability to defer taxes on earnings is a significant advantage in log-term investments. Unlike many other long term investments fixed annuities allow your assets to grow in two ways. Your premium is earning interest and your interest earnings are earning interest instead of being taxed and reduced. Over time the magic of compounding may help accelerate you assets more so than taxable vehicles with the same interest rate.

An example, invest $15,000.00 in a tax deferred annuity at 5% and in ten years that sum will grow to %24.433.00 vs. $21,057.00 in a taxed instrument. Spread out over more time and difference is very significant.

Many Fixed annuities offer premium rate guarantees and minimum interest rate guarantees. You premium will never fall below your initial investment and the company at purchase sets your minimum interest rate. These guarantees provide peace of mind even in the toughest of markets.

Payout structures offer a variety of options. This is an important feature. No one can predict how log they will live and you wouldn’t want to outlive your retirement sources. Accessing your money in the event of unforeseen life events is included as well.

Fixed annuities offer many advantages for any investor and in our assessment be a part of your retirement planning. As always check, research and ask specific questions about the fixed annuity you plan to purchase before you buy.  Present hypothetical situations to your broker or agent. You are entitled to know exactly how the fixed annuity will react in every situation, every circumstance and every significant event in your life.

Understanding different types of annuities is important. Immediate annuities are policies that are purchased form insurance companies. Often they are refereed to as Single Premium Annuities or Single premium Immediate Annuities. Immediate annuities are commonly used as retirement investments and purchased with a single payment. An immediate annuity provides regular income for the time period determined by the annuity owner. You can choose payments over your lifetime or whathever time frame suits your needs. You can also designate payment to be made to your spouse or other family members.

The immediate annuity provides regular income that should continue for the rest of one’s life or for a time period that the policyholder selects. The minimum investment for immediate annuities usually starts at $ 10,000.00 US dollars.

Interest rates and monthly payments will remain constant with immediate annuities. The insurance company that issues the policy makes those guarantees. Obviously the amount of the payments made depends on your initial investment, as well as the current rate of interest when you purchased the policy.

Something else to consider is where you buy your immediate annuity policy. Private purchases have a tax advantage in that a large portion of the monthly payout will be tax-free. Policies purchased within a company pension pan are fully taxed. Immediate annuities offer a wise investment with peace of mind for your future. Not all insurance companies offer immediate annuities. As always check with your investment adviser or make sure you shop carefully before making a purchase

The debate will rage on as long as we invest out money. Are there better investments than annuities? What are the best annuity rates? What are the best stocks for long term growth? The questions are a bit more complex than that so lets take a look. Stocks seem to be the darlings of the investment world and with good reason. A properly designed portfolio can appreciate rapidly. It can also lose value just as quickly. If you are aged 25 at the time, those drops may not concern you. Mutual Funds while not quite as volatile in most cases can and do lose value as well. Investing log term can smooth out some of these downturns in the market. The issue becomes your investment strategy and risk tolerance. Most people have a hard time doing that and that is one reason many choose annuities as an alternative. While the rate of return is higher with stocks and mutual funds annuities offer stability and preservation of investment capital. The formula for investing is very simple. Higher return equals higher risk. How one distributes their investment dollars is the key and balancing your portfolio is the answer.

Lets assume you want to take advantage of the higher return rates that stocks may offer. Your broker has told you of a company and their fundamentals look strong. Their projections and forecast look for a significant appreciation. There is absolutely no reason you can find not to buy the stock. What do you do? .

On the other hand you find a safe secure index annuity that wont pay as much in return as the stock but your principal is protected and guaranteed. It is a dilemma every investor is faced with and one you must decide for yourself on how to settle.

Talking with your financial adviser will help. Balancing a portion of your investments towards the safe and security of index annuities and a portion or percentage in growth stocks might just be the right might for you. The investment in index annuities will smooth out the rough spots and you will reach your retirement with a nice nest egg and not wondering what might have been. There is nothing wrong with investing in annuities in and of themselves. There is nothing wrong with investing in stocks. The combination between the two, guarantees as safe, secure future in your glory years