Fixed annuity basics
By financen | September 30, 2009 - 10:37 am - Posted in Annuity

Nowadays consumers have a variety of choices. There are a number of annuity products available in the market. One of the most popular annuity products is fixed annuity. It has proved to be a very valuable tool in case of retirement planning. Fixed annuities are available in two major forms. One is for those who have a deferred payout and the other one is for those who carry an immediate payout. The immediate annuities look for payout income on inception. Deferred annuities tend to defer payment to a later date.

 

 

Fixed annuities are usually compared with the certificates of deposit by the investors who are seeking safety. Both of them are believed to be lower risk investments, although they are actually a lot different. Like any other financial products, one should always evaluate the pros and cons while determining the product and see which one is more applicable in case of your financial needs. There are certain factors which you should always consider, while you are trying to figure out a plan that suits the best in your case.

* The first major factor is to consider the rate of return. Fixed annuities usually tend to base their interest rates on the current market conditions along with the time to maturity. The longer you keep waiting for the maturity, the yield would be higher. The fixed annuity rates tend to be traditionally higher than that of the CD rates due to the longer maturity periods and rate conditions.

* Another major factor is that of liquidity. CDs might provide for a much shorter time horizon, yet it does not mean that they are liquid in nature. When you purchase a CD, you are bound to stay with the time period for that CD, which in most cases happens to be for a year. In case, if you withdraw any amount of the principal prematurely, you would be subjected to interest penalties. Fixed annuities offer penalty free access of around ten percent of the purchase price annually, whereas some might take it collective up to a definite purchase.

* Another important factor is that of tax liability. In case of tax deferred fixed annuities, the earnings within the annuity are not subjected to taxability until they are withdrawn. This may offer its own advantages, like tax control, along with a higher potential for growth.

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How to finance your real estate investments in a credit crunch
By financen | September 15, 2009 - 6:31 pm - Posted in Credit crunch, Real estate investment

The stock market is tumbling and most of the mortgage lenders are going out of business due to the credit crisis. In such a situation many people are having problems in investing in the real estate. Getting traditional mortgage from banks and lenders is becoming tougher because they now require 800%2B credit scores, personal guarantees, and collateral as a guarantee up to 40% of the purchase price. Most of the lenders are not willing to lend money in the market.

In such a situation, what should a real estate investor do? Private real estate money is the answer. Private real estate money can be used to purchase real estate investments. This kind of money is borrowed from the private individuals instead of borrowing money from the banks or other commercial lenders. Private lenders can be any ordinary person such as a doctor, lawyer, accountant, business owner, and possible retired person. Most of these private lenders are looking for better returns on investments than they can typically get from a bank CDs, money markets or even bond investments. Over the past couple years these type investments have yielded a paltry 3% to 6% pretax rates. Private money lenders can earn up to 9% to 15% on their money from the borrowers. That’s the reason the private lenders are interested in investing in real estate investments to get good returns on their money.

Before the private lenders invest their money, they would like to know a few things about the property. These include:

1. What is the purchase price?
2. How much is the property worth once fixed up and rehabilitated?
3. What will the rehabilitation cost be?
4. How much do you want to borrow?
5. What is your exit strategy i.e. do plan to flip to a first time buyer or hold to rent?
6. When will you pay off the private investor

You may want to have a short little presentation book or business plan laid out in a professional looking format to present to a private lender that addresses these issues. This booklet will show you have a well thought out plan and help to establish credibility.

In the new era of real estate investing, you should find out the new and different ways to financing your real estate investments and private real estate money is the key to your investing future.

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Term life insurance can be an economical life insurance policy option
By financen | September 1, 2009 - 4:33 pm - Posted in Insurance, Term life insurance

There are different types of insurance policies for all kinds of people. Some of them are expensive while there are a few others that can be quite economical. Term life insurance policy premiums are much cheaper than cash value policies. These kinds of insurance policies will take care of your beneficiaries after your death. If you are looking for a low cost term life insurance policy, here are a few basic things you should keep in mind.

If you purchase a term life insurance policy with a specified time period, you will be paying the premiums for that certain period of time. During this time, if you die, your beneficiaries will receive a death benefit.

Term life insurance policies, like all other types of insurance policies, come with certain benefits as well as loopholes. Take for instance you want a basic 10 year low cost term life insurance policy with the death benefit to stay the same throughout the term life insurance policy, and at the end of the term you would like to “convert” to a different term life insurance policy such as a cash-value policy, without taking another medical exam. In that case you would choose a level term convertible life insurance policy.

Term life insurance policies do not come with any tax benefits like universal or whole life insurance policies. This is good for someone who needs a life insurance but cannot afford the higher premiums. The points given below will help you in deciding whether a term life insurance policy is good for you.

1) If you are on a fixed budget and cannot afford higher premiums, then a term life insurance policy is the best choice
2) You are young and in a good healthy condition.
3) If you need a simple, low cost life insurance plan in order to protect your beneficiaries, then this kind of insurance will be the best fit for you.

Consult your insurance agent for a term life insurance policy and get all your doubts clarified before purchasing one.

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