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Certificates - MMA - Annuties Section
Articles:
Investments - MMA Money Market
Accounts -
A money market account is an FDIC-insured deposit
account that allows
you access to the money you have deposited.
Withdrawals are limited to
six monthly, three of which may be by check. It's
sometimes called a
money market deposit account to distinguish it from
a money market fund, which is a type of mutual fund.
Most of the institutions that sell money market
accounts in the U.S.,
offer daily compounding, others offer monthly
compounding or
quarterly compounding. More-frequent compounding
produces a higher total yield.
The minimum deposit requirements. Across the United
States, ranges from $0.00 to $10,000.00.
Some money market accounts are offered only locally;
others are offered nationally. |
Deposti Certificates
ANNUITIES
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CDs Deposit Certificates
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CDs deposit Crtificates for 1 month
A 1-month CD (certificate of deposit) is a time
deposit, FDIC-insured
to $100,000 per person, with a fixed maturity date
of one month. It
pays interest than a savings account and a penalty
is charged for
withdrawing funds before the maturity date.
Of the institutions that sell 1-month CDs, most of
them offer daily
compounding, others offer monthly compounding and a
few institutions
offer quarterly compounding. More-frequent
compounding produces a
higher total yield.
Minimum deposit requirements for a 1-month CD are
ranged from
$500.00 to $25,000.00.
CDs Deposit Certificates for the terms of: 1-month
CD, 2-month CD,
3-month CD, 6-month CD, 1-year CD, 2-year CD,
2.5-year CD,
3-year CD and 5-year CD.
And of course, the longer the term is for a CD, also
the higher is the rate.
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ANNUITIES
Annuities are considered a CD alternative,
annuities have become very
popular today. They pay higher rates than CD's and
defer taxes, many
people find annuities are a better option than
CD's or money
market accounts.. Like a CD, you can place lump sums
of money in
annuities. You must leave the money in the annuity
for a period of
years, usually between 2 and 5 years. The longer you
leave your money
in, the higher your interest rate will be. Depending
on the annuity
purchased, a yearly amount is allowed to be
withdrawn without a
penalty. This amount is usually around 10%.
There are other annuity options, such as fixed
payment annuities and
even equity-indexed annuities.
Definition:
An annuity is a contract between an individual
("annuitant") and an
insurance company. The annuitant agrees to pay the
insurance company
a single payment or a series of payments, and the
insurance company
agrees to pay the annuitant an income, starting
immediately or at a
later date, for a specified time period. Under
current tax law, money
put into an annuity grows on a tax-deferred basis
until the annuitant
begins receiving his accumulated fund as an income.
That means that
one hundred percent of your earnings are reinvested
in an annuity and
allowed to compound-- or grow -- without having to
pay taxes on
earnings.
Variable annuities
You give the insurance company money. In
exchange, the company
either pays you an interest rate on your money and
your money grows
like savings account, or pay you a monthly income .
Taking monthly
payments is called annuitization. You have various
options when
choosing annuitization. This monthly income could
last for a set
number of years or for the rest of your life. It may
also be for the
life of yourself and your spouse should you choose
to do so. Most
people begin receiving annuity income when they
retire and continue
receiving it for the rest of their life.
The money you invest in an annuity grows on a
tax-deferred basis.
Your annuity income is taxed as normal income when
you begin receiving
it (though no income tax is paid on that portion of
the income that
represents the money you originally paid in to your
annuity). Since
most people receive annuity income after they retire
when they may be
in a lower tax bracket, they generally pay less tax
on annuity income
than on income they earn while working full time.
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In the past, annuities were considered investments
only for people
neare retirement. But today, annuities are
investments for people of
all ages. Annuity can be invested in a variety of
different
investment instruments, . The following are good
uses for annuities:
Higher interest-rate than Certificates of
Deposit(CD's) and money market funds
Long-term savings grow faster without current
taxation.
To save more for retirement.
To guarantee yourself an income for the rest of
your life.
You want to protect your "principal" with a
guaranteed rate of return
while investing in the equity markets.
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Other Advantages that Annuities can provide:
An annuity can provide you with a guaranteed
lifetime income,
regardless of how long you live.
Unlimited contributions. Unlike other
tax-advantaged investments,
such as IRAs, you can contribute an unlimited amount
of money to an
annuity during the year.
Most annuities have a provision that allows you to
withdraw a
certain amount per year penalty free.
No probate in case of death, as long as you specify
beneficiaries.
Which means your family will find it easier and less
costly to obtain
the value of the annuity.
Annuities are generally no-load, no-fee , unlike
other investments,
where some money is used to pay an initial or annual
charge.
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