|
Below, you'll find extensive information on leading
annuity buyer settlement structured articles and products to help you on your way
to success.
Comparing Structured Settlement Annuities To Other Investments
By Richie Lindsay
In earlier articles, we've seen the benefits of annuities over lump sum payments. For some, this protects them from the temptation of spending the bulk of their payment on unsound or unwise investments. Protection and incoming cash flow over the long haul are what annuities provide. However, not every person faced with a lump sum payment necessarily will be tempted to spend the money rashly. Obviously, there are people who are savvy investors and think that given the opportunity with a lump sum payment over a annuity, they will be able to make more money investing on their own.
With that in mind, let's take a look how a annuity compares with one of the most popular investment vehicles, the equity income mutual fund.
First, let's look at who issues the annuity and the mutual fund.
A annuity is issued by a life insurance company. An equity mutual fund is issued by and investment company that pools the assets of multiple investors in equity securities.
Next, let's look at the long term capabilities of each to provide a lifetime income.
An annuity payment plan is created up front and is a predictable and dependable source of income that can not be outlived. A mutual fund can be a high paying investment. However it can also be highly volatile and unpredictable based on market conditions and can actually lose money and stop your
earnings if the fund performs poorly.
What about guaranteeing the payouts?
An annuity is guaranteed by the issuer of the annuity based on the terms of the structured settlement. A mutual fund is solely dependent on market activity and thus can not be guaranteed.
What about costs?
The annuity has no cost associated with it. A mutual fund can be subject to a number of fees, like a sales load, yearly management fee, and marketing expenses. Even the lowest cost index funds have some costs associated with them.
What about keeping up with inflation?
A annuity can have a cost of living adjustment incorporated into the annuity at the time it is designed. An equity mutual fund can outperform inflation based on how the underlying securities perform. However it is difficult to predict what the return will be and remember "past performance is not and indicator of future results."
But what about the dreaded T-word....Taxes??
A annuity is tax free as long as the money received is the result of personal physical injury or physical illness. As income is earned from an equity mutual fund taxes, capital gains, income etc, must be paid.
What about flexibility?
A annuity payment amount and schedule may not be altered at any time. Conversely, money can be moved in and out of mutual funds. However, taxes, sales loads etc may be applicable with each transaction.
To read about relationship advice, saving a relationship, saving a marriage, shyness cure, stop being shy , shy men and other information, visit the Knowledge Galaxy site.
|
|
We strive to provide only quality articles, so if there
is a specific topic related to structured settlement that you
would like us to cover, please contact us at any time.
And again, thank you to those contributing daily to our
annuity buyer settlement structured website.
|
