Tuesday, May 24, 2022

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    What’s your preferred annuity?

    Money is the priority of the growing world. People are engaged in finding new ways to make money, save them, and then investing in the luxuries of life or maybe multiplying it. Any rational investor tries to make money even when they are asleep, this proliferation can be achieved through ANNUITY.

    An annuity is a contract where the investor gets into the obligation of regular payment of the required sum of money to the specified organization. Listen down are few types of annuities like-

    • Fixed annuity– This variation of annuity earns a fixed interest rate for a fixed number of years. Here the payment of interest is the obligation hence this annuity is independent of market performance.
    • Variable annuity– When investing in a variable annuity, the obligation to interest payment is not regular, unlike a fixed annuity, a variable annuity is highly market-linked. If the markets function well, the annuity amount is reduced and when the markets are in bearish mode the annuity amount gets increased accordingly. 
    • Indexed annuity– As the name suggests the indexed annuity is one in which the rate of interest is charged on a stock market index basis (Sensex). If the indexes work well then, more annuity is generated and if markets function poorly so is the annuity amount.
    • Immediate annuity– Under immediate annuity, as the name suggests the payment is made in lump-sum amount, and then shortly investor starts getting the return out of it.

    There are many more annuities like Deferred Annuity, lump-sum Annuity, etc. Any rational investor should prefer annuity after looking at various criteria like Source of income, short-term and long-term money requirements, pros and cons, and the attached terms and conditions also.  

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