tax deferred annuity

The benefits of owning an annuity are easy to understand and make the product a real possibility for almost everyone at some point in life.

The PROS as I see them:

Earnings Are Tax Deferred: As with an IRA, you do not pay annual taxes. This is one big advantage annuities have over other safe cash alternatives such as CDs or money market funds.

Capital Is Secure: Your money is safe because the insurance company must have adequate reserves at all times. Some of the industry leaders are more reliable than ever, which makes investing in them very solid choices. In addition, each state has a guaranty fund to back up deposits with insurers. Usually, the back-up fund is maxed at $100,000, however your state’s max might vary, so you should research the guaranty fund law before you invest.

Liquidity: Annuity contracts have a annual free withdrawal provision giving the account holder access to 10-15% of the account value annually without penalty.

Return Rate: Over the past few years, annuities have yielded moderate returns on investment. Think about the alternatives. CDs currently earn about 2 percent, which is taxable, compared to the average tax deferred annuity yield of about 4 percent. Also, as the markets normalize, look for the yields on annuities to increase along with everything else. In many areas, you will discover that annuities are a secure and dependable way to endure the market ups and downs.

Maximize Your Income: The Wharton Business School and New York Life worked together to discover the best method for maximizing retirement income. They found that a fixed annuity that changes into a lifetime income stream is one of the most effective choices. Annuities, after owning them for a year, can usually, and perhaps always, be changed into a monthly stipend that will continue as long as you’re alive. An immediate annuity also has that option, but you begin to get the money now.

single premium immediate annuity

One of the negative aspects of annuities is that investment representatives often suggest investment programs that are not good matches for their clients. You need to make sure you understand the downside of annuities so you will know whether or not you’ve obtained decent counsel.

I feel the CONS are:

They Are Long-Term: An annuity is not the right choice if you need all of your money back in one or two years. All annuities need to be saved for future income for a period of 60 months or longer.

Surrender Schedule: There is no upfront sales charge associated with annuity purchases. However, the insurance company will make you pay a surrender charge if you withdraw your money before the annuity matures. Such fees are normal, however be aware that some annuities have early withdrawal penalties that continue for a decade or longer. Such terms will limit your choices for quite a while.

Brokerage Commissions: an agent stands to gain a commission no matter who you choose to broker your annuity. I highlight this point because this is where conflicts of interest arise. It is very important to learn as much as you can about annuities so you can recognize a bad annuity when you see one. Representatives often have dollar signs in their eyes, which influences which annuities they show you and which ones they don’t.

Liquidity: Okay, I know what you’re thinking. Wasn’t liquidity listed as a Pro? Yes, I did. This can be an advantage or a disadvantage, and it relates to what I said about short term money. How will you use the money? How soon will you have to have it? What part of it will you need? Answer those questions and read the remainder of this article to decide how liquidity affects your situation.

I’ve made it as clear as I possibly can. Before you get going on your research, realize that not everything is black or white. Examining your particular finances will make that clear and help you determine if you should invest in an annuity and, if so, what specific product will be the best purchase.

For a Free copy of the Annuity Report, please be sure to visit Bryan Anderson at www.AnnuityStraightTalk.com – annuities pros and cons

Original Post: Mutual Funds Comparisons

What Are the Pros and Cons of Annuities?

Fund Operating Expenses

For certain direct expenses, the investor is charged directly at the time of the transactions. These charges and fees are usually declared in a table in the fund prospectus. However, there are some mutual fund expenses which are operating expenses and happen at regular intervals, irrespective of the number of investors in a fund. These expenses are paid out of the fund assets and are mentioned in the fee table in the prospectus under the heading annual fund operating expenses.

Management fee is a part operating mutual fund expenses to cover administrative expenditure incurred on advertising, brokerage fee, telephone, printing, etc. Distribution fees are also mutual fund expenses paid for marketing and selling of fund shares, compensating brokers and agents who sell mutual fund shares, paying for sending mailers, prospectuses to probable new investors, and printing of sales literature. However, according to government regulatory agencies, these expenses cannot exceed a stipulated percentage of the funds average net assets per year.

Other mutual fund expenses not included in management and distribution fees are legal expenses, custodial expenses, accounting expenses, transfer age expenses and other administrative expenses. The total annual fund operating expenses are expressed as a percentage of the funds overall average net assets.

For a fund to perform and do well, the operating costs have to be low. Small differences in fees can exemplify into large differences in returns over a period of time. For example, in an investment of $10,000 earning an annual return of 10% before expenses which is 1.5%, then over a period of 20 years the return would be around $49,725. But, if the fund had a low operating expense of 0.5%, then the investor would end up earning $60,858. Even though the fees and other mutual fund expenses seem like a minor expense, they create a serious drain on the performance over a period of years. It should be clear that mutual fund costs and other fees are detrimental to investment returns.

Original Post: Mutual Funds Comparisons

Mutual Fund Expenses and Fees

The Potted Plant Analogy

When you think of mutual fund investing, think of your mutual fund as a potted plant. The fund itself is a clay pot full of potting soil. The soil is made up of various components and nutrients. Your investment is the plant. When the components of the soil are good, the plant grows. When the soil lacks something, the plant withers, and dead wood must be pruned off.

Investors track mutual fund performance so they can tell if the plant is getting healthier or weaker. If the plant withers because the soil goes bad, mutual fund managers change the makeup of the soil to try to restore good health.

So Many To Choose From

What follows is a list of just a few of the different blends of individual investments that you will find in mutual funds. The makeup of mutual funds varies because each fund manager is a unique individual.

Bond funds the mutual fund contains bonds only. Experts in mutual fund investing generally advise that bonds are lower risk than other kinds of mutual funds.

Mixed Funds most investors prefer investing in mutual funds that contain a blend of bonds and shares of stocks.

Share Funds the mutual fund contains shares of stock in publicly traded companies only. The risk is much higher than mutual fund investing in bond funds, but the rewards can be much greater in the form of high profits a very healthy plant. Among share mutual funds, there is a great deal of diversity in various funds:

International mutual funds contain shares of companies that trade on the foreign markets.

Domestic mutual funds contain shares of companies that trade only in the United States.

Small cap funds contain shares of companies with capitalization under a certain dollar amount.

Large cap funds contain shares of companies with capitalization over a certain dollar amount.

Sector funds contain shares of companies in a certain line of business. For example, some investors prefer investing in mutual funds in the health care industry, with a portfolio of shares in pharmaceutical and managed care companies. The hottest trend in sector funds is green funds: mutual fund portfolios based on companies that are involved in the environmental industry. These funds include shares of companies operating in the fields of wind power, solar power, hybrid vehicle development, geothermal energy harvesting, earth-friendly construction materials, recycling and waste management.

Original Post: Mutual Funds Comparisons

Mutual Fund Investing

Make no doubt about it, looking at mutual fund performance is only a guide; you can still lose money. Less risky than the stock market because you are invested in a number of different companies, mutual funds can still lose money if not managed correctly

Mutual funds usually invest primarily in stocks and bonds. A fund manager usually has the responsibility in selecting the mix of stocks and bonds, guided by the mutual fund’s performance prospectus.

History Of Mutual Funds

The idea of pooling money together for investment purposes probably started in the mid 1800s in Europe. The first pooled fund was created in the US by the staff and faculty of Harvard University in 1893.

In 1924 the first mutual fund was created when three Boston securities executives pooled their money together to form the Massachusetts Investor Trust. The performance was terrific for this very first mutual fund in its first year. The original assets grew from $50,000 to $392,000 which was spread between 200 individual investors.

Today there are over 10,000 mutual funds in the US with 83 million investors and 7 trillion dollars in assets.

The Stock Market Crash Of 1929

Mutual fund performance went into the tank when the stock market crashed because most of the mutual funds had their portfolios full of common stocks just like the individual investor in the stock market.

In response to the crash, Congress passed the Securities Act of 1933 and a year later the Securities Exchange Act of 1934. These acts require that the fund be registered with the Securities Exchange Commission and provide prospective investors with a prospectus. A prospectus contains information about the mutual fund’s costs, investment objectives, risks, and performance.

The detailed guidelines for how to behave as a mutual fund were laid out in the Investment Company Act of 1940.

Individual Retirement Account (IRA)

The biggest growth factor ever to affect the mutual fund performance industry occurred when in 1981 the Individual Retirement Act was passed. This act allowed individuals who were already in a corporate pension plan to contribute up to $2,000 a year to a mutual fund. These individuals correctly felt that their $2,000 investment was buying them a small piece of many different businesses. In this manner, people felt they were stockholders who did not have to deal with stockbrokers.

Original Post: Mutual Funds Comparisons

Measuring Mutual Fund Performance

Intensive Process

Mutual fund pricing process is very intensive and takes place at the time business is closing for the day, which most often is around four oclock in the evening when the New York Stock Exchange closes. The actual responsibility of calculating the share price of the mutual fund is left to the mutual funds accounting agent who in turn gets the mutual fund prices from brokers or even from services dealing with pricing of funds.

Though it is necessary for mutual fund pricing to be done daily because it is required by the 1940 Investment Company Act, the process of disseminating these prices through NASDAQ is not compulsory. According to convention, such daily mutual fund pricing will nevertheless still be released by NASDAQ each day.

Essentially, companies offering mutual funds will offer to the public different share classes with each class in turn carrying its own fee structure. Though there is no way that these mutual funds can be classified as risk-free or beneficial, it is possible to classify them according to their functioning as well as type of fund.

The norm is that once the mutual fund pricing has been fixed at the beginning of the trading day, these prices will not change during the rest of the day until the time for next mutual fund pricing comes around which as mentioned is at the end of the business day. Whats more, barring a few companies such as Rydex Investments which prices its mutual funds twice in a day, the other available mutual funds have a single pricing window.

Nevertheless, it is anyone’s guess whether the practice of single day mutual fund pricing will still hold well in the near term, given that companies such as Rydex Investment are trying to change the trend by performing pricing twice each day. The fact is that most people that invest in mutual funds do so for the long term. For them to be worried about blips in prices in the short term is not any big deal, since they are in it for the long haul.

Still, intraday mutual fund pricing are providing a new direction. If the investor feels that he needs addition pricing points to cater to market movements during the day, such a form of pricing can help in the elimination of certain unknown factors though at the moment, investors are not too sensitive to time and they are happy with the single mutual fund pricing that is currently being practiced.

Original Post: Mutual Funds Comparisons

Mutual Fund Pricing

Cant Predict Future Growth

That is not to say that mutual fund ratings will help a person learn how the mutual fund is going to grow and neither is it an indication of expected performance of the fund though it is closely related to both these factors. You can judge how a mutual fund is going to perform if you look to its past performance both in terms of its own performance as well as in relation to other mutual funds.

It should be easy to perceive that two identical types of mutual funds that share a style as well as mutual fund ratings will generally behave along similar lines. They will also be found investing in similar type of assets as well as perform on an almost identical level. Thus, what one mutual fund does is generally mimicked by a similarly rated mutual fund and this means that even when one is losing money, the other will also do the same.

Mutual funds are of different sizes and styles and they include large caps, mid-caps as well as small caps and there are also real estate funds and even emerging market funds. The main point that one needs to learn about various mutual funds is that those funds that enjoy higher mutual fund ratings will generally perform much like other highly rated mutual funds.

Morningstar

There are also a few companies that make it their business of assessing mutual funds and these companies then provide mutual fund ratings according to certain criteria which may include past performance of the mutual funds, though this is a less than proven method of evaluating a mutual funds future performance.

Morningstar is a good example, since it is the most popular company providing mutual fund ratings and it is in fact the most popular company. Morningstar gives mutual funds different star ratings that begin with a one star or poorest performer and which goes up to five stars or best performers.

Remember, however that Morningstar provides its ratings based on a mutual funds past performance and thus its ratings may not always prove to be infallible with regard to how such mutual funds will behave in the future.

Original Post: Mutual Funds Comparisons

Mutual Fund Ratings

Mutual Funds Are Very Popular Today

Learning how to succeed in mutual fund selling is important because such funds though very popular. They need to be handled efficiently if the wholesaler wants to realize greater profitability. In addition, mutual funds do not require much investment. Even a thousand dollars is enough to get started which is why, today it is believed that as many as half of US households own some form of mutual funds.

You need to ensure that the mutual fund wholesaler that you deal with does in fact, have exhaustive and complete knowledge as well as proper qualification with regard to mutual funds since only an experienced and qualified wholesaler will help you to get the best out of your purchase of mutual funds. After all, the mutual fund wholesaler is the person who can help you review the mutual funds and tailor your investment to meet with your objectives and to also minimize risk to you.

Today, there are as many as nine thousand mutual funds. To get the best option from these thousands of mutual funds, you need to thoroughly check the background of various mutual fund wholesalers. In addition, you will also need to take into account other considerations such as investment objective of the mutual fund, your investment strategy and the reputation and fees of the mutual fund wholesaler.

Mutual fund wholesalers also need to be very smart about how best to allocate resources and this they can best do by knowing the ins and outs of broker/dealer relationships as well as how to maximize profitability. Thus, mutual fund wholesaler firms will always be tracking the costs related to working with brokers and dealers and then doing whatever it takes in order to minimize such costs. In addition, they will need to know how to accelerate complicated and multi-step processes which can further help improve their profitability.

Choosing the best mutual fund wholesaler thus requires checking out some of the two hundred companies dealing with the nine thousand mutual funds on offer and then evaluating them against their reputation, size and of course costs and choosing one that fits your objectives as well as your budget is all that is then required.

Original Post: Mutual Funds Comparisons

Mutual Fund Wholesaler

In order to invest in pioneer mutual funds one needs to know the pioneer mutual funds approach. Most Pioneer Mutual funds organization methods rely heavily on intensive research with teams of analysts located globally by providing unique insight into a variety of markets and businesses.

Pioneer Mutual Funds offer equity funds which invest primarily in common stocks. Pioneer Mutual Funds offer international and global funds. If you want to invest in both the United States and foreign markets global funds are an option for you. Choosing to invest in international funds will target foreign markets only.

Pioneer Mutual funds operating within fixed-income funds will invest in fixed income securities. A couple of examples would be bonds and preferred stocks. Pioneer Mutual funds asset allocation funds provide an already diversified portfolio of investments. These funds may invest in a wide variety of asset classes to meet investment goals. Pioneer mutual funds will also offer a range of closed-end funds. Shares of these types can only be purchased on the stock market and are not open to new investors.

Performance Factors

The Pioneer fund’s performance will always depend on the advisor’s skill in determining the strategic asset class allocations with the mixture of underlying Pioneer funds and the performance of those underlying funds. A potential risk is the underlying funds’ performance may become lower than the performance of the asset class that they were chosen to represent.

Another risk is the stocks and bonds can decline due to adverse distribution, market, or economic developments. An example would be in the case of International markets which are sometimes less liquid and more volatile than the U.S. markets.

Another risk factor will be that currency exchange rates will always apply to investments in international markets which contribute to making international markets more unpredictable and less fluid than investments in domestic markets. In addition, some of the underlying funds may be invested in either high-yield securities or emerging growth companies. Consequently investing in these types of securities will be more prone to greater volatility than either higher-grade securities or more-established companies. These risk factors may also increase share price volatility.

Original Post: Mutual Funds Comparisons

Risk Factors with Pioneer Mutual Funds

In India, a mutual fund company called the Reliance Mutual Fund is making waves. Reliance is considered Indias best when it comes to mutual funds. Its investors number to 4.6 billion people. Reliance Capital Asset Management Limited ranks in the top 3 of Indias banking companies and financial sector in terms of net value.

The Anil Dhirubhai Ambani Group owns Reliance; they are the fastest growing investment company in India so far. To meet the erratic demand of the financial market, Reliance Mutual Fund designed a distinct portfolio that is sure to please potential investors. Reliance Capital Asset Management Limited manages RMF.

Vision And Mission

Reliance Mutual Fund is so popular because it is investor focused. They show their dedication by continually dishing out innovative offerings and unparalleled service initiatives. It is their goal to become respected globally for helping people achieve their financial dreams through excellent organization governance and customer care. Reliance Mutual fund wants a high performance environment that is geared at making investors happy.

RMF aims to do business lawfully and without stepping on other people. They want to be able to create portfolios that will ensure the liquidity of the investment of people in India as well as abroad. Reliance Mutual Fund also wants to make sure that their shareholders realize reasonable profit, by deploying funds wisely. Taking appropriate risks to reach the companys potential is also one of Reliance Mutual Funds objectives.

Schemes

To make their packages more attractive, Reliance Mutual Fund created proposals called The Equity/ Growth scheme, Debt/Income Scheme, and Sector Specific Scheme.

The Equity/ Growth scheme give medium to long term capital increase. The major part of the investment is on equities and they have fairly high risks. The scheme gives the investors varying options like, capital augmentation or dividend preference. The choices are not deadlocked because if you want you may change the options later on.

Providing steady and regular income is one of the Debt/Income Schemes primary goals. The Debt/Income scheme has in its portfolio government securities, corporate debentures fixed income securities, and bonds. If you want a low risk, short term investment then this is the one for you.

The returns on Sector Specific Scheme are dependent on the performance of the industry at which your money is invested upon. Compared to diversified funds this is a lot more risky and you will need to really give your time on observing the market.

Although RMF is gaining good ground in the financial market, remember that they are a risk taking bunch. They give higher profit because they take a lot of risks. So, if you are faint hearted, then Reliance Mutual Fund is not for you.

Original Post: Mutual Funds Comparisons

Reliance Mutual Fund Tips

Greater Popularity

In the recent past, as people have become more aware of just what is a mutual fund, their popularity has increased. Today, almost every investor worth his salt will have made an investment in a mutual fund. You can also become an investor in mutual funds once you realize that putting your money into a mutual fund is very easy. You also do not need to be a big expert as to what is a mutual fund in order to invest your money wisely.

Once you have learnt about what a mutual fund is, you will become aware that there are in fact four main advantages to investing in mutual funds. They allow you to professionally manage your money; you enjoy great liquidity; they offer you great diversity and finally, the fees involved are very low.

Thus, you benefit both directly and indirectly by learning about what is a mutual fund especially when you realize that these funds are handled by professionals who will keep your investment at optimum levels and invest wisely on your behalf without your having to pay for such expert handling of your money. Whats more, you can sell off your mutual funds shares whenever you like as long as the stock market is open for business. In fact, it is certainly different to investing in real estate, CDs and even low volume shares where your money is tied up for longer durations of time.

Once you have learnt more about what a mutual fund is, you cant help but be impressed by the amount of diversification that is possible. This is because mutual funds themselves are invested in hundreds of stocks, money markets as well as bonds which a single person acting on his own will not be able to do efficiently and effectively. And, because mutual funds can reap advantages of large scale investment, they result in low fees that in many cases are in the range falling between two and three percent.

People who have become better acquainted with what a mutual fund is are taking to investing in mutual funds in greater numbers and this in turn sees people with low incomes to those with many millions investing their monies in mutual funds and coming out ahead in most instances.

Original Post: Mutual Funds Comparisons

What Is A Mutual Fund