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Do annuities make good investments? How are they used for retirement income later in life?
What is an annuity?
An annuity is a type of retirement savings vehicle usually offered through insurance companies and, in one way or another, guarantees a steady income after you retire, whether in monthly, quarterly, or yearly pay-outs.
There are various type of annuities, including:
Fixed or variable
Deferred or immediate
Period certain
Lifetime
Joint/survivor
While these terms can be combined to create your own personal cocktail of retirement needs, the features which make the biggest difference are: whether or not you’ll be receiving payouts immediately or in the future, and whether you prefer a guaranteed payment amount or an amount based on stock market performance.
When people talk about annuities, they are most certainly talking about deferred annuities. It’s reported that around 90% of the annuities sold are deferred annuities instead of immediate annuities. Let’s cover that first. [ continue reading… ]
It’s easy to lose sight of the simple things when it comes to finances. More often than not, we start to focus on complex strategies for growing wealth or try to get involved in the latest fad. The reality, though, is that the foundation for long-term wealth is built from the basics. That’s why it makes sense to remind ourselves what we usually believe to be obvious sometimes.
Before you get too advanced, have a quick read through these five basic rules for growing your wealth over time and make sure you are following all of them.
1. Earn More Than You Spend
This is the foundation of all financial advice. Let’s be honest: if more people were following this piece of advice, we wouldn’t have nearly as much debt. Everyone “knows” that you should earn more money than you spend each month. Duh! It’s one of those things that seems to be easier said than done though. [ continue reading… ]
Your gym membership would probably never cross your mind as a bill that could negatively affect your credit report, but maybe you should add this monthly obligation to the list of things to stay on top of if you are thinking about getting a loan soon. While your monthly gym membership payments aren’t going to show up on a report with the three major credit bureaus, your failure to cancel your membership could, in fact, ruin your credit. This could go for other monthly services that you sign up for as well. [ continue reading… ]
Mortgage rates continue to be temptingly low. In fact, the topic of historic low rates is published from major publications every day these days. Now certainly seems like a good time as any to refinance your current mortgage, but before you make an appointment with your lender (that’s if you can get them to return your call these days), take the time to ask yourself the following questions. They will help you determine if refinancing is a good idea or a potential financial disaster. [ continue reading… ]
One of the things that many of us aspire to be is, surprisingly, average. We want to have the same things that those around us have. (Or at least, have the same things we think those around us have.) This is natural. We all like to feel as though we belong.
However, it’s not always best to be average — especially when it comes to money.
After all, do you really want to spend money on something just because someone else is? Do you really want to buy something just to maintain appearances?
Average = Debt
Even though the pandemic bumped up the savings rate and reduced the debt levels for many people, there’s still quite a bit of debt out there. On average, the American household has tens of thousands of dollars in credit card debt.
The average American borrows to pay for college, to buy a car, and to buy a home (not to mention borrowing for other things, like furniture, vacations, and weddings). [ continue reading… ]
Whether she intended to or not, your mother spent your entire childhood imparting crucial financial wisdom to you — if only you’d listened to her.
Yes, sometimes she wasn’t even specifically trying to teach you how to manage money. But make no mistake. Even her words of wisdom that seemed to have nothing to do with finance were laying the groundwork for you to have a good handle on your money. Moms are that smart!
Make sure you thank her if you ever heard your mother tell you one of these old sayings. Without even knowing it, these words of wisdom gave you an excellent financial education. [ continue reading… ]
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