The immediate fixed annuity is one of the most basic forms of annuity contracts offered by insurance companies. Of the various insurance products, the immediate annuity tends to be rather straightforward and easy to understand. On the surface this product can be a bit overwhelming for new investors, but once the basics are explained the concept becomes much easier to grasp.
Before explaining the immediate variety of this insurance product, it is probably prudent for us to discuss annuities in general first. The fixed annuity is one of the oldest financial products on the market and can trace its roots to Roman civilizations. In more recent times, the annuity was first seen in America in the mid- to late- 1700s, and was offered publicly in the early 1900s.
An annuity is simply a contract between an insurance company and an individual. The individual pays premium payments to the insurance provider in return for a future monetary benefit paid out in return. This payment back to the individual is the income portion of the annuity and is often referred to as the distribution out of the account.
Among fixed annuities, there are two major categories that they all fall under. This includes deferred annuities and immediate annuities. The deferred annuity refers to the distributions that begin at a point in the future. The immediate annuity, on the other hand, begins distributions immediately after the account is funded. Actually, a more accurate description would be that the distributions begin one time period after the creation of the account. With an annual annuity, the payments begin one year after account creation, and a monthly annuity begins distributions one month after creation.
Because an immediate annuity begins distributions payments immediately, they will almost always require a lump-sum payment to fund the account. Deferred annuity may allow either a lump-sum premium payment or allow you to spread the funding over a couple of months or years.
If you’ve been watching the market at all, you have probably been trying to decide whether to stay in or get into cash investments. The economy is still lagging, employment numbers falling, home prices dragging… it’s hard to figure out whether it’s even worth investing money in this situation.
Lately, many investors are moving into cash or things like gold, that do better in bad markets. Keeping cash on the sidelines, in addition to some stronger investments as part of your portfolio, may be a good idea. If you are not an experienced investor, who knows how to make money in down or level markets, you could get royally screwed by keeping money in index mutual funds for example. The old saw about keeping money forever in a “good growth mutual fund” is a lot of hoo hah in markets like this, because the fact is these types of mutual funds have barely performed over 5% in the past 10 year period.
With so much uncertainty, if you are depending on a job for your income, you might consider paying off debt instead of putting money in an investment account where you may or may not get 4% returns. You could also lose your shirt. Small investors are not the ones who will do well in this type of environment. Many Americans are just paying off debt and saving their money, to make up for not being able to get credit, not getting raises at work, or getting their wages cut or even getting laid off. Investing in this type of market is not always the best way to go.
If you really have extra cash you can afford to lose, it might be a good idea to look at the types of things that do well in an economy where people are not spending on big items, but have to purchase certain things like fuel, heat, and food. International investments may also be useful to look at, since many retailers now are seeing no growth in the U.S., but finding their growth is coming from sales in Asia.
It’s worth taking a look at the variety of investments out there that could do well in a continued downturn, however keeping cash handy and getting out of debt continue to be priorities before earning low returns in a volatile market.
The first thing that you as an investor must know about commodity ETFs is how the supply and demand of raw materials will work in the years to come.
The middle class is growing at a huge rate. Although there are times where countries fall into economic recession when things start to pick up again the demand for goods will start to grow. Countries that are experiencing an economic slowdown at any time should think of it as a delay. This delay will extend the commodity bull market as opposed to destroying it.
Keeping this in mind as an investor you should be thinking about where future resources will be coming from. At the moment China, India, Russia and Eastern Europe are areas that investors should keep an eye on.
Commodity EFTs can be used in two ways. Firstly many people choose to invest directly into futures. These highly leveraged investments have money left over. Investors then take this money and place it into interest-bearing bank accounts. The proceeds of this are then used to pay dividends and expenses.
Many people use this as a way to track one single commodity. Examples of commodities that are used in this way is gold and silver. Some people use this method to track a basket of commodities.
Anyone that is currently investing or thinking about investing in commodities should think about the tax implications of their investments. One way to do this is to hire an accountant and a tax lawyer to get the paperwork sorted out.
If you are an investor you should prepare for an increase in the demand of commodities in the future. These can be traded as if they are stock. Economists are predicting that commodity ETFs will be popular with investors for a good amount of years to come.
If you are burdened with huge debts and bad credit, what can be done to solve the problem? Having bad credit can be really tiring. Therefore, you would probably like to have a financial solution that will really work. When you are suffering from excessive debt, there is nothing quite as useful as a loan for debt restructuring, or a debit consolidation loan.
What are Some Ways That You Can Quickly Obtain a Loan Like This?
First things first, if you do not know much about this type of loan, as a customer, you need to learn more about the process of debt consolidation.
The process of debt consolidation is actually the process of collecting all of your debts together under one umbrella. Your debit consolidation loan will be for the total amount of all of your debts together – minus any tax, and education debts.
After you are rewarded the loan, you will then pay your debit consolidation loan back to the lender that extended it to you. In this way, instead of owing ten separate monthly payments, you will only owe one. The lender will have paid off all of your existing debts, and the only person you will owe, will be that company. The interest rate on your new loan should be much lower than it was previously. This is how a debt consolidation loan will help you to reduce costs, and help you better manage your debt.
Once you understand how debit consolidation loans work, you can then begin to look for a company that will provide you with your loan. The company acts as an intermediary between you and your creditors. It will help you by negotiating with your creditors on your behalf. The company will also be the supplier of your new loan. Once you have received your loan, you will have enough money to meet all of your outstanding balances at one time.
Finding a good debt consolidation business with honor and ethics, can be a difficult task. It is always necessary to carefully assess any business that you might work with. This is because whatever company you choose, has the potential to be your new lender. So you have to make sure that you do not make the wrong choice.
When you are investigating, you should check the credit worthiness of any company you are considering, by checking with the Better Business Bureau. You must also ensure that the company you are investigating, has been in business for at least 2 years. You want to take some time to complete some online searching. Read as many unbiased opinions, and customer reviews as you can find about the company’s services.
With all the talk about derivatives on Wall Street and Washington, the average investor might think that derivatives are confusing and complex and not available to them. The fact is that derivatives have been around for awhile and actually come in a variety of types. For example options, where you pay money up front for the option to buy or sell a stock, have been around for decades. Learning to invest with options adds a layer of protection for any investor with a significant portfolio, helps to diversify your risk, or even opens up a world of speculative investment for investors who don’t mind taking chances. Learning to use options is critical to the success of any portfolio today. We don’t think that that’s exaggeration. Hedge funds, pension funds, large institutional investors of all types are using options as a way to guarantee that whichever way the stock market goes they will have some protection. Given the way the stock market has been volatile in the past, it’s important to learn how to use these tools as just that-another tool in your toolbox.
Understanding options is not that difficult.
There are a huge variety of online tools available to help teach investors how to take advantage of this valuable investment vehicle. For example the options institute has an entire website devoted to nothing but educating investors on how to use options. The Options Industry Council(OIC) provides many top online educational tools including free webinars, recorded seminars, and virtual training platforms to help any investor try their hand at buying and *selling options* while taking zero risk with real money. In addition, you can find multiple books and magazines available for additional education. There are all kinds of books on the market on the subject getting started with options. Reading these, in conjunction with the virtual training tools available online, can help you get your feet wet and feel more confident in your ability to train options.
How do options work?
The simple answer is that an option is simply giving you a right to buy or sell a stock but not the obligation to do so at a specific price that you select. Options are available for individual stocks and ETF’s on the market. There are also options available for commodities and futures trading. When you research options online, you select an individual stock for example for which you would like to see the option chain. An option chain lists all of the outstanding options for the next several expiration periods. When you purchase an option, you are purchasing the right to buy stock at a particular price point before an expiration date. So if you select a stock that you expect to go up in the next several months, you would buy a call option.
When you are buying or selling options based on stock you have in your portfolio that is called a “covered” option. When you don’t hold the stock itself in your portfolio, these are called “naked” options. Selling options based on stock you have in your portfolio lets you take care of market downturns where you may lose money on your stock price but earn money on your option purchase. Unlike covered options, buying or selling naked options is an outright gamble on whether the price of the underlying stock will go up or down.
Some of the best brokerages where you can trade options are the discount brokerages. Brokerage companies like Trade King, Options Express, or Interactive Brokers are brokerage houses that allow you to trade options for very low cost. With options, you normally pay a commission plus a price per contract. If you are buying and selling options frequently, these costs can add up so it makes sense to use a brokerage with low fees. In addition, many brokerages offer extensive training tools as well, because as an investor gets more educated about how to invest in options, they are more likely to purchase these investments for their portfolio. Look for features like how to materials including publications and webinars, forums where investors both beginner and expert alike that exchange information, and other trading blogs that can show you hands on information about actual trades being made in the field. Some brokerages even allow investors to publish their trades, so that you can follow along with some of the top traders who are training with the same firm.
*Getting started with options* is fairly simple. It might take some time to learn the ins and outs and go through some of the training materials, but afterward you will have a knowledge base that will help you profit and build your portfolio exponentially.
Most brokerage accounts allow options trading for certain investors, and certain minimum balances may apply. Check with your broker, or investigate some of the other top brokerages for trading options. Here at Saving Cash Tips, we recommend Trade King, which is the brokerage we use ourselves. They offer an extensive variety of educational tools, forums and discussion groups, and research tools that are hard to find at other brokers. In addition the fees are rock bottom. Whether you decide to use options as a hedge mechanism or as a speculative vehicle to boost your returns, if you expect top returns you will definitely need to learn how to invest with options.