If you’ve been looking for the most safest and secure annuity plan out there, you probably have heard about hybrid annuities. In general, it’s a combination of an immediate annuity, a fixed annuity and an indexed annuity. But how does this really work and what are the plans available for you?
Find out in this article at http://openblog.in/2012/08/hybrid-income-plan-hoes-does-it-work/.
Overall, everybody is worried about the liquidity of their investments, not only when purchasing annuities. They want to know that they can get access to their cash in case there’s an emergency or need comes up in some other way. The amount of liquidity your annuities could have, talking about annuities, can differ due to these factors: 1) annuity type you invested in; and 2) conditions and terms of that investment.
English: Types of Annuities (Photo credit: Wikipedia)
Liquidity in the Several Annuity Types. You’ll find 4 various kinds of annuities, each with different amounts of liquidity. For you to get the most from your investment, make sure you know what type of annuity you’re in and what it is going to do for you.
Immediate annuities, for instance, are like pensions that you pay out a lump sum of cash in return for guaranteed income for life. Many people are pleased by the security offered by this kind of investment, because it’s impossible to outlive your money when you get a pension. Nevertheless, in return for this much security, you don’t have any liquidity in any way. As you invest your hard earned dollars, you can’t access it it at all.
Getting a fixed annuity is much like purchasing a CD simply because you know exactly what you are getting in the near future. You’ll typically earn approximately 3 – 4.5% interest. With these, you can in most cases take 10% of your money out a year without having to pay a penalty. Several accounts even allow you to take 20% or even more 50%, depending on the terms. In cases where you take out greater than the allowed amount, however, you’ll pay an additional fee.
When it comes to variable annuities, which are similar to mutual funds, you can take your cash out at any moment. However, you’ll need to draw it out at market value, which may mean that you have less cash than you did when you began. Plus, there can be surrender charges and you will have to also pay for taxes on any gains.
An indexed annuity is a hybrid kind of annuity that enables you to take the market upside without having the downside. In return for this security, you won’t take all of the upside, however. When it comes to liquidity, this works like fixed annuities in that you can get a particular percentage each year with no penalty, plus more should you be willing to pay the penalty.
Liquidity vs. Time. Liquidity is extremely important, however you should also keep in mind that you can find only 2 approaches to become profitable: You can either take a lot of risk, or you can leave your hard earned dollars in the market for a long time period.
Should you do this for 3 decades, you can make 9% return on your money. Let it rest there for 20 years and you may earn 8%, and Ten years might get you 7%.
The Liquidity Amount You Will Need. Financial specialists say that it is not good for most retirees to take a lot of risk with their investing, as they do not want to shed their nest egg. On the other hand, it is also not adequate to choose a 30 year investment plan, since they’ll need their money before that. A lot of people go with a number of investments, pairing more liquid investments with long-term ones and varying the risk.
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