can anyone help me answer this?? (variable annuity)?

Question

a.)explain how buying a variable annuity is much like investing a mutual fund.
b.)Do you,as a buyer,have any control over the amount of investment risk to which you're exposed in a variable annuity contract? Explain

Answer 1

It is much like a mutual fund. The difference is that management fees are usually higher, but gain can be tax deferred. That does not really make sense unless you have already contributed the maximum that year to other tax deferred or tax free accounts like 401k, IRA, etc. where you may be able to invest in mutual funds or other investments with lower fees.



The only control you have over investment risk is in the funds you select to contribute to or transfer between. You have no control over how any specific fund does. Even a conservative bond fund can lose money if the stock market takes off and people bail out of the bond fund to get into equity funds, leaving those remaining taking the hit for the fund having to sell bonds at a bad time when there value is down.

Answer 2

A variable annuity is an investment product where you accumulate your next egg in a tax deferred structure. At the time of withdrawal, you are allowed to buy an annuity generating a steady stream of income.



Consider an investor who buys a $100,000 variable annuity contract. The money is then invested in mutual funds for ten years and he doesn’t generate any returns (let’s assume he is very unlucky). If the investor receives a bonus of 5% per year based on his original amount, in ten years, the annuity will be calculated based on an amount of $150,000 even if his sub-accounts generated a 0% return. If the investor wanted to cash his investment and walk away after ten year, he would only cash his $100,000. However, if he stays and decides to take the annuity, the amount of the distribution will be calculated based his investments + his bonus of $50,000.

Answer 3

Hey,

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Penny stocks, also known as cent stocks in some countries, are common shares of small public companies that trade at low prices per share.

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Cheers.

Answer 4

A tax-deferred annuity is an investment with an insurance company. A variable annuity (VA) is an annuity with a number of mutual fund investment choices, typically called sub-accounts. You can control the risk through your asset allocation policy: that is, how much you commit to stocks/bonds, for example. Diversification, of course, does not guarantee a profit. Statistically, time invested will do that.



VA Advantages

1. earnings accumulate tax-deferred

2. guaranteed death benefit and/or guaranteed income stream you cannot outlive



VA Disadvantages

1. earnings accumulate tax-deferred. Yes, I put this bullet in both spots. Earnings, when withdrawn, are taxed as ordinary income, so you don't get to enjoy tax-favored treatment afforded to long term capital gains and qualified dividends paid by mutual funds outside a VA or retirement plan.

2. Expensive to own. Annual expenses tend to be, roughly, 1.5%-2.0% higher than investing in the same mutual fund outside a VA. But for many, for a portion of assets, the guarantees are worth the extra cost.



Hope my answer was clear and earns your Best Answer vote!



DISCLAIMER FOR PROFESSIONALS: While the information in this response was obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. The opinion voiced in this answer is for general information only and it shall not be construed as tax, legal, or investment advice for any individual. Questioners are urged to consult with their professional advisers before making any decisions regarding their finances.



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Answer 5

Penny stocks are loosely categorized companies with share prices of below $5 and with market caps of under $200 million. They are sometimes referred to as "the slot machines of the equity market" because of the money involved. There may be a good place for penny stocks in the portfolio of an experienced, advanced investor, however, if you follow this guide you will learn the most efficient strategies https://tr.im/fb19f

Answer 6

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RE :Can anyone help me answer this?? (variable annuity)?

a.)explain how buying a variable annuity is much like investing a mutual fund.

b.)Do you,as a buyer,have any control over the amount of investment risk to which you're exposed in a variable annuity contract? Explain

Follow 6 answers

Answer 7

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RE Can anyone help me answer this?? (variable annuity)?



a.)explain how buying a variable annuity is much like investing a mutual fund.

b.)Do you,as a buyer,have any control over the amount of investment risk to which you're exposed in a variable annuity contract? Explain