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Tracking Your Annuity Investment

By Compuquotes Team on March 27th, 2008
Annuity

Nearing retirement? Are you trying to find some sort of a pension plan that will tide you over in your twilight years? A lot of investors are looking at annuity investments to help them plan for their retirement years. Someone looking to invest in an annuity needs to know a few basics for tracking the investment.

In the first place, what is an annuity?

It is usually offered by an insurance company to prospective retirees or those planning to retire soon to plan for that retirement period. Annuities may either be fixed annuity or variable annuity. Simply put, the fixed option guarantees income when you retire - at your choice of amount, period, and even frequency. On the other hand, a variable annuity is more flexible as it safeguards the investor against inflation. Sort of insurance with guaranteed pre-determined income and other benefits, a variable annuity allows for regular payments at retirement or other future dates, with option to defer payment for later to ensure practically payments to you for the rest of your life.

What should you keep track of in your annuity investment?

After you've chosen the type of annuity product you think is best suited for you, you need to keep track of a few things. How do you pay for or fund the annuity? If it is a fixed annuity, you need to keep track of the time period wherein you earn interest or returns from your investments. You need to keep track of the time of withdrawal of the funds and the amount in each withdrawal if ever.

To help you in tracking your annuity, you can monitor stock market changes, year-on-year inflation, market interest and prime rates, and other factors that may affect the value of your initial investment. Thus, you need to keep track of market changes and market risks that will somehow affect your investment. In tracking an annuity investment, remember that this type of investment is tax free during accumulation or build-up. And as you invest, check out online resources of the provider that will help you track your investments over the web. Check out their customer relations record, too.

What should you consider in annuity investment?

Try and think to consider a few things when investing in an annuity. What is your investment objective - a guaranteed income at retirement? Look at the risks attendant to any financial investment such as inflation and fluctuating purchasing power of your currency. This will help you determine if you will go for fixed or variable types of annuities. Consider the fees and charges. Look at the investment or insurance company's track record in claims satisfaction, financial management, resources growth, and rates of return they guarantee. See if the provider is rated by reputable audit and standards firms; if yes, you are at least assured of the kind of figures that tantalize you from the provider's annual reports. Find out and study the range of financial products available for choice and see if you can readily shift or change from one product to the next should you have a change of heart later.

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