How To Choose An Annuity Provider
If you have decided to save for retirement, you may have checked out the various possible investments—stocks, bonds, bullion, CDs, and so on. But the annuity stood out to you as a stable source of future income with regular payments, and you decided to go with it as you’re a conservative kind of person.
Now you have a quandary: There are countless insurers out there offering annuity contracts, and you have no idea which one is the best company to deal with.
Don’t worry. Though there may be many insurance companies out there, it shouldn’t be difficult to find the annuity contract that’s right for you based on a few simple guidelines.
Premium Payments
First and above all else, you have to choose an annuity provider that’s realistic for your income bracket. Some companies promise higher interest payments and more favorable terms, but their premiums can be quite large. It would make no sense to render yourself incapable of providing for yourself now by paying massive premiums with the idea that the annuity payments would enable you to provide for yourself later on.
Always make sure that your premium payments are manageable, and take into account the potential requirement for extra expendable cash for emergencies in the future. Leave plenty of breathing room in your budget after you have accounted for your premium.
Reliability
With the financial sector crash of 2008, it’s important that your annuity is provided by a stable company. A fly-by-night company may offer you better terms, but will they be around in 25 years from now? Try to find a stable company that’s been around for years, so that you have the peace of mind of knowing that your annuity payments will be available years from now.
Transparency
Transparency is always important in a company, but it is especially important if you buy equity-indexed annuities or other variable interest rate annuities. Your annuity provider should be clear about what kind of management fees it charges for handling the annuities, what the qualifications are of the annuity fund managers, and what sectors and even what specific companies are being invested in with the annuity funds. Responsible fund management is crucial to getting good returns on your premium payments.
Flexibility
Many annuity providers will only pay to the premium payer and not allow for any beneficiaries to be listed on the contract. If you have a family, you may wish to provide for your loved ones after you have passed on. In this case, flexibility is important, and you should look for an annuity provider which allows you to list your family members as beneficiaries on the annuity contract, and at a reasonable price for this added benefit. If you cannot do this, your annuity payments will cease with your death and your loved ones will not be taken care of.
Hopefully these basic principles are helpful when you decide on the annuity provider that’s right for you. Just remember, many annuity companies are the same, and if you stick to these criteria you will have a good financial foothold on the future.
Buy Stock for Children
Children receive the same gifts each year, toys, colors, books, candies; name it, they have it. What else can you give your children then? If children already have their basic necessities then it is better to give them something that they can use sometime down the line.
Why not buy stock for children and give it to them as gifts for their birthdays? You could start with companies that they are aware of, like maybe Toys R Us, or a brand of chocolate that your child loves. If you buy stock for children at an early age, by the time they even fully understand what stocks are, their investment will have grown and hopefully multiplied. Investing in stocks earns more than saving the money in the bank.
You can buy stock for children with online stock traders who sell stocks directly. In addition, this method costs less than having to go through a stock trader. Dividend Reinvestment Plans or DRIPs are also popular options in buying additional shares and investing your earnings.
You may start by giving your children or grandchildren money to buy their first stocks. Then for their birthdays or during Christmas you could buy them some more. Each year, as their earnings increase and as they grow, you could begin explaining to your children or your grandchildren about stocks by showing them how to buy more shares. This way they will have the real life opportunity to learn the value of money and investing which will benefit them greatly in the future.
Another idea is to use pictures and colored markers to explain to the child how the trading system works. Online trading is actually a fun way to introduce this to children because they can easily see the numbers from the screen. Older children are able to distinguish how much earnings they have received from their stocks. You could set up a small game where you put all the companies' names in a box and ask your children to buy and sell stocks among themselves. Do not forget to teach them the rules like how much stocks are allowed to be purchased at a certain price level. Do not underestimate your children's ability to learn these financial details. When you make it into a game more children can easily understand all of the rules of buying and selling stocks.
As they grow older, you may give them the freedom to choose stocks for themselves or maybe to rationalize with you when making choices. Of course you have to keep everything simple and easy to understand so that your children will not be overwhelmed. The important thing is to show them the value of investing while having fun as well.
As parents it is important to provide your children with their basic necessities. However, it is also a good idea to help them become independent and savvy about their money. The best gift to achieve this end is to buy stocks for your children.