[ #Investing In The Unusual — #Annuity ]
In the last article, we discussed investing in farmland as a method of passive income.
There are lots of different ways to make money from farmland, and it’s not just from the crops.
We shift focus to another unusual way to passively invest and make money.
An annuity is an insurance product, a contract that you purchase but can then give you passive income for life as monthly payments.
You payout a lump sum and your money earns interest. Sometime in the future, you’ll start getting monthly payments on that interest.
Terms with annuities vary. They’re not always a good deal, so talk with your financial advisor before investing in these. Annuities aren’t for everyone. They can come with high fees and you need to live long enough to earn back your initial
investment.
However, if you plan to live a long time as everyone does and will be able to do that, an annuity can make a lot of sense.
There are several different types of annuities, so ask your financial advisor which is best for your needs. Under the right circumstances, an annuity can be a great way to earn passive income. It’s money you don’t have to pull from your retirement
account. You can use it for long term care or an estate that can be inherited.
Annuities grow tax-deferred and the interest is compounded. When you start getting those payments, you’ll only pay tax on the interest if you paid for the annuity with after-tax dollars.
When you’re looking for annuities, there are three basic types:
• Immediate or Deferred Payout: these are exactly as they sound. Immediate payout annuities begin paying you back within 12 months of your investment, while a deferred payment plan will begin paying at some future date.
• Fixed or Variable Interest: the fixed rates last between one and ten years before the rate can change.
However, the rate cannot fall below zero. Variable annuities let you invest in a variety of sub-accounts like securities portfolios, money market securities,
and fixed interest accounts.
These change depending on the market, and they do have the potential to fall below market value and lose some of your principal.
• Liquidity Options: most annuities allow you to withdraw either your interest amount or up to 15% per year without a penalty. Any withdrawal may be subject
to taxes — and a 10% federal penalty if you take it out before you’re 59.5 years old.
Most annuities do have a surrender charge if you make an early withdrawal over the free 15%. This charge usually decreases over time. You may even find a company that offers a 3–5% bonus added to your principal if
they’re charging a high surrender rate.
These companies usually have longer surrender periods and some charge a slightly higher fee.
There are also annuities without any surrender fees, if you need sudden cash. These don’t offer that bonus and may charge higher fees.
In our next article, we’ll talk about “Robo-Stocks”.
[Edυcαтe yoυrѕelғ вeғore тαĸιɴɢ rιѕĸѕ. ѕтαy cαreғυl! тrαdιɴɢ ѕтocĸѕ cαɴ нαve α loт oғ rιѕĸ, ιғ yoυ doɴ’т cαre ғor yoυr мoɴey ɴoвody wιll]
<<NOT A RECOMMENDATION>>
Consult your Stock Broker or Lawyer or Professional Consultant for advice.
Cited :
Advantage, Annuity. https://www.annuityadvantage.com/blog/tax-deferred-annuities/.
annuityadvantage.com
