Most educated investors have the same goal with their investments. Long-term growth and wealth accumulation. Some people have no aversion to watching their investments bounce up and down on a day-to-day basis. Still others insist on more stability even at the risk of a lower return. The older an investor becomes the more likely their tolerance level will change towards a more conservative approach. If you are the type of investor who docent like the volatility that stock prices and market swings are bound to endure, investing in annuities just might be the investment vehicle for you.
Tax sheltered annuities are a type of annuity that allows and person to make contributions form his or her income into a retirement plan. Contributions to such accounts are deducted form the employees income and the benefit is those contributions are not taxed , until they are withdrawn . The employer can also make contributions with tax ramifications for the employee and have additional tax free funds accruing.
In the United States., one specific tax-sheltered annuity is the Internal Revenue Code’s Section 403(b) plan. This plan provides employees of certain non-profit and public education institutions the benefit of having a tax-sheltered method of saving for retirement.
“There is usually a maximum amount that an employee can contribute to the plan, but sometimes there are provisions that allow employees catch up to make additional contributions to make up for previous years where they did not make the maximum contribution”
There is much hype about investing in stock markets and index mutual funds these days. They all sell the same thing, higher returns for you investment dollar. The fact is a properly balanced investment portfolio will include investments that cover the entire spectrum of investment returns and volatility. While it is nice to experience the double and triple digit returns some stocks can provide, one cannot discount the safety and security a tax-sheltered annuity can provide. All investment carry and inherent risk and all should be properly researched and assessed before sending your money. Remember wherever the reward is great in investing the opposite in risk factors will coincide. This rule applies to beginner investors or the seasoned stock market guru Happy investing !
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