In earlier articles, we've seen the benefits of structured
settlement 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 structured settlement
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 structured
settlement annuity, they will be able to make more money investing
on their own.
Private Equity Fund Of Funds With that in mind, let's take a look how a structured settlement
annuity compares with one of the most popular investment
vehicles, the equity income mutual
fund.
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Curve Equity Exposed Fund First, let's look at who issues the annuity and the mutual
fund.
A structured settlement 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.
Competitive Rates of Return With concerns over inflation and making sure that investments will meet our future needs, many people have turned to the equity market for higher returns. It makes sense when you consider how well the S&P 500 index has performed historically. Traditional Annuity Benefits Equity index annuities offer the same benefits as traditional annuities. deferred growth and early withdrawal of funds without penalty. This early withdrawal is usually conditioned upon the annuitant's death or admittance to a nursing home.
Equity Income Funds 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.
loss provision. It is known as the equity index annuity. This new type of annuity is not a security, as you might suspect, premium traditional annuity. It is an annuity because it meets the strict insurance department requirements for interest guarantees and guarantees against loss of principal, and it provides traditional annuity benefits. Let's look at what makes this such an attractive savings option.
Capital Casebook Equity 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.
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Private Investment In Public 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.
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Equity Mutual Funds What about keeping up with inflation?
A structured settlement 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."
Birmingham Contact Equity But what about the dreaded T-word....Taxes??
A structured settlement 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.
Private Equity Investment Firm What about flexibility?
A structured settlement 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.
Complying Deal Equity Funds Michael DeGeorge has done extensive research on structured
settlements and shares a wealth of information on his website
http://structsettle.gitgoingnow.com. Download
your free Structured Settlement Annuity information
today.
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