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When considering the formula for present value of an seven percent return annuity, there are many factors to investigate along the way. While some may consider this to be a cumbersome activity, history suggests that investigating the present value of an annuity due will pay often off if not immediately then down the road. For example is one considering the purchase of an existing annuity due, or is one considering the sale of an existing annuity due, or the purchase of a new annuity? Or is one considering evaluating an existing annuity for estate tax purposes? What discount rate assumptions are proper and what financial crediting factors are appropriate?

 

 
 
Tags:  seven percent return  7 percent return  7 % return  7% return  seven percent annuity return  7 percent annuity return  7 % annuity return  7% annuity return 
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Published:  April 20, 2012
 
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Slide 1: ==== ==== When considering the formula for present value of an seven percent return annuity, there are many factors to investigate along the way. While some may consider this to be a cumbersome activity, history suggests that investigating the present value of an annuity due will pay often off if not immediately then down the road. For example is one considering the purchase of an existing annuity due, or is one considering the sale of an existing annuity due, or the purchase of a new annuity? Or is one considering evaluating an existing annuity for estate tax purposes? What discount rate assumptions are proper and what financial crediting factors are appropriate? http://www.sevenpercentreturn.com ==== ==== We have heard this question many time, and for good reasons! There is a lot of confusion about annuities and what they are for. After all, if you ask your grandfather, he may tell you that annuities are just for income when you retire. If you ask some financial advisors, they may say that annuities are expensive and the last thing you should own. Yes, some of these and other statements may be true but that can probably be said of many things that have to do with money. Banks who sell CDs may tell you to keep as far away as possible from the stock market - you may lose all of your money (which, of course does not have to be so either). Before we go on, please note that the type of annuities covered here are called fixed or index annuities (not variable or income annuities). Unlike what some may have said, annuities, actually, possess the potential for nice returns and should have their place in most people's portfolio. I would even add that owning an annuity may not be affected by age either. And before some of you get all bent out of shape about this statement, please read on. Thank you! First, who should own an annuity and much should one put into it? Well, although we said that people at almost any age can own an annuity, there are some things to consider. Please keep in mind that to every rule, there are exceptions. How much of your portfolio should be in an annuity? I would say that if you are under age 30, an annuity should not make up more than 15% - 20% of your portfolio. That decision can be based upon the amount of risk a person is willing to take as a percentage of their portfolio. We have met 70+ year olds who were "big" risk takers and no matter what the advice, all they wanted was the potential for super gains - and of course super losses. These people are not usually good candidates for fixed annuities or at least not in their present state of mind. We have also ran into 35 year olds who absolutely did not want to risk their principal and felt very comfortable with more average to below average returns. Many of these people often held their money in bank Cds (at very very low interest) or some other low risk investment. For these people, annuities may be a great choice. So you see, your decision seems very simple. If you want risk, annuities (fixed type) are not for you, but if you want very low risk and still get a decent return then annuities can be a great choice for you. Here is a simple investor example: John has $100,000. He wants $80,000 in higher risk
Slide 2: investments and the rest place in a more conservative vehicle. John may make a wise decision if he decides to get into an annuity for the some or all of the remaining $20,000. The type of annuity will depend on his goals for the money. What kind of return can you expect from an annuity - the fixed kind? There are basically two types of fixed annuities - interest only annuities and index annuities. If you want a predictable return then interest only annuities may work well for you. These will guarantee a rate of return for a period you select and they tend to pay better than bank CDs. The other type of annuity, the index annuity, can be a little more complicated but just know that is usually has the potential for better returns than an interest only annuity. An index annuity is normally tied to an index (S&P 500, NASDAQ 100..) of your choice and pays out an interest based upon the performance of that index. With most of these index annuities (please ask) your principal plus some interest is guaranteed no matter how well the index performs. That performance can be zero to double digit returns and can never be negative. Make sure to ask for a full proposal before depositing any money with any company and ask a lot of questions. There is so much more that can be said about annuities but to keep things in focus, I will save these for another time. As you can see, whether you should put your money into an annuity is not a matter of how good or how bad they are but rather whether they will work for you, your goals and dreams of the future. Annuities can, and we feel in many cases, should be part of people's retirement portfolio. Philippe Deray - About the Author: Philippe Deray is President and CEO of MCD Financial Services and MCD Life. Our web site address is http://www.mcdlife.com Our Focus is helping individuals select the right annuity With many years of experience in the insurance business, we have developed proprietary methods to help individuals plan for their future and that of their families with annuities and other insurance products. All of our clients are required to fill out a qualification questionnaire before placing money into ay of our annuities. Company Profile MCD Life is a successful, dynamic company built on the principal of serving our customers FIRST! Our primary mission is to bring peace of mind to our clients by offering innovative, value-added products and information that place emphasis on short and long term benefits, benefits backed by selected companies with high quality assets and written guarantees. Article Source:
Slide 3: http://EzineArticles.com/?expert=Philippe_Deray ==== ==== When considering the formula for present value of an seven percent return annuity, there are many factors to investigate along the way. While some may consider this to be a cumbersome activity, history suggests that investigating the present value of an annuity due will pay often off if not immediately then down the road. For example is one considering the purchase of an existing annuity due, or is one considering the sale of an existing annuity due, or the purchase of a new annuity? Or is one considering evaluating an existing annuity for estate tax purposes? What discount rate assumptions are proper and what financial crediting factors are appropriate? http://www.sevenpercentreturn.com ==== ====

   
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