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Investing

The Advantages of an Annuity over a Certificate of Deposit

When it comes to your money, you have a ton of options. Should you invest it? Should you choose to invest in an annuity? Should you invest in a Certificate of Deposit? Here’s an explanation of what they are and a few reasons why you should invest in an Annuity over a Certificate of Deposit.

What They Are

A Certificate of Deposit, or CD, is a time deposit. They’re similar to a savings account because they’re insured and risk free. They’re different from a savings account in that the CD has a fixed term (monthly, quarterly, annually, or longer) and a fixed interest rate. It’s held until maturity and can then be withdrawn along with the interest accrued.

An annuity is when an individual pays a life insurance company a single premium. That premium will later be distributed back to the party over time. You can set the annuity to be distributed over a specific amount of time via fixed payments, until your death, or until the contract’s final date.

Interest Rate Bonuses

annuity

Image via Flickr by 401 (K) 2013

Annuities and Certificate of Deposits have similar interest rates, but fixed-annuity accounts offer a first-year bonus rate. It may not sound like a lot initially, and that’s the truth. However, your the interest compounds over the year of the annuity. Fixed-annuities also offer a minimum rate of return, which helps you budget future income. Certificate of Deposits are subject to whatever the rates are at that time.

Emergency Access

Sometimes, the unexpected happens. In times like that, it’s nice to know that you have options. With a Certificate of Deposit, you don’t have that option without incurring penalties. With tax-deferred annuities, that’s not the case. Depending on the type of annuity and the provisions, there may be some options that allow you to withdraw a portion of your funds completely free of any sort of penalties.

No Impact on Social Security Benefits

With a Certificate of Deposit, the interest income is included in the calculations used to determine taxation on your Social Security benefits. Taxable and tax-free earnings are both reportable and must be included in this calculation. With a tax-deferred annuity, the interest income isn’t reportable until it’s withdrawn. It’s not included in the calculations for Social Security crossover taxation, which preserves the value of your Social Security benefits.

Taxing and Reporting

Certificates of Deposits are reportable and taxable as it’s earned, regardless of whether it’s received or you’re leaving it there to build up. The interest income from tax-deferred annuities is not required to be reported and is not taxable until it’s withdrawn. The advantage here is that when it’s withdrawn, the account holder is likely no longer in their peak earnings years, so they’re in a lower tax bracket.

Multiple Types to Fit Your Needs

Unfortunately, there’s only one type of Certificate of Deposit. You’re extremely limited with your options. With annuities, that’s not the case. As you might imagine, it’s important to know the Fundamentals of Annuities. There are multiple types of annuities:

  • Immediate Annuities – These begin payments for life or for a specified amount of time. Payments can be received monthly, quarterly, semi-annually or annually.
  • Deferred Annuities – These can be funded through a single premium or through flexible payments distributed over months or years. These can help you accumulate money for retirement.

For premium payment methods, there are several options:

  • Single Premium Annuities – These can provide you with a way to turn a large amount of cash into guaranteed income. This option is great for those with cash from a legal settlement, a business sale, or money that has been inherited, and can fund either an immediate or deferred annuity.
  • Flexible Premium Annuities – These are funded over a period of time and allow you to pay premiums of different amounts, either on a schedule or randomly. These can fund fixed or variable deferred annuities.

When assets are invested, there are several options:

  • Fixed Annuities – These guarantee you a specified rate of interest for a certain amount of time and can preserve your assets and protection from market volatility.
  • Variable Annuities – These provide you with a greater opportunity for asset growth through multiple investment choices. Of course, with greater growth comes greater risk.

In many ways, it’s plain to see that annuities hold a clear advantage over certificates of deposits. If things come to a pinch, you’ll be able to get the money you need. Annuities won’t impact your social security benefits, you’ll get interest rate bonuses, and the interest isn’t required to be reported until you withdraw it later in life. What has your experience been with these two financial products?   

Author Bio: 

Author Jane is a freelance writer who loves to write about anything from tech to mommy stuff. She is featured in many blogs as a guest writer, and can write with authority on any niche or subject.

Investing

Investing in Gold by Collecting Gold Coins

Have you ever considered buying coins as a hobby or for investment purposes? If you haven’t, then you should start doing that now. Today, our bank and stock trading accounts are present online. Moreover, most of our purchases happen electronically. Nowadays, we hardly get to see our money as a tangible object. For this reason, buying and investing in physical or solid gold such as gold bars and coins gives you an extreme sense of satisfaction. So, how can you buy the aforementioned-gold and use it for investment purposes? Let’s find out.

Why Invest in Physical Gold?

One of the few investments that you can physically store, gold is able to preserve or increase its value over time. So, you can investment in gold by simply buying it. For investment purpose, you can buy physical gold such as gold bars or coins. Buying and investing in physical gold such as gold coins is a sensible thing to do due to the following reasons:

  • When other investments decline, gold tends to go up
  • Gold provides a defensive wall against inflation
  • Until you sell the it, you don’t have to pay tax on the gold you hold
  • If you want, you can keep your gold assets/investments a secret
  • You can use the physical gold owned by you buy and sell in case there’s massive currency devaluation or other similar adverse financial situations

The astounding increase in gold and silver prices has led many people to buy platinum, gold and silver coins. You can buy these investment instruments at a fair market prices form a reputed coin dealer. However, you should thoroughly research the dealers before buying from them as there are many fraudsters looking to sell you the coin for much more than it’s actually- worth.

Before you buy the coin from any dealer, find out as much about the dealer as you possibly can. To ensure you aren’t paying ‘more’ for the coin, find out how the price of the coin offered by dealer compares to the price to the coin offered elsewhere.

How to Make an Informed Decision

When buying physical gold, it is important to ensure that you’re purchasing the gold at a fair market price. By doing this, you’ll brighten your chances of making a profit on the gold in the future. Now, to make an informed purchase, you need to consider three crucial factors. The first is the actual cost per ounce of the coin, the second is the timely delivery of the metal and the third is the collector’s value of the coin versus the bullion value. By considering the aforementioned-factors, you’ll be able to make an informed purchased which in turn will help you make a profit on your gold investment in the future.

Collecting coins made from gold is a good way to invest in gold. Using the aforementioned-information, you can buy the coins in a way that allows you make a profit from your gold investment in the future.

Investing

How To Create A Binary Options Trading Strategies To Profit From Simple Market Trends

If you have spent any time reading about financial trading then you will no doubt have come across references to the trend. The trend is the directional basis in which financial markets move and is considered to be one of the most important factors when identifying future market moves.

Analysis of the trend is used by all styles of traders.  It can however prove particularly powerful when combined with binary options trading methods. The ability to identify whether a market will move higher or lower when combined with the Call and Put digital contracts available in the world of digital options can make for a simple strategy from which the individual can earn high profits.

Trends basically refer to the dominant direction that the price of an asset has moved over time. This is driven by a strong momentum and demand from either buyers or sellers in the marketplace. It is commonly observed that once a trend is in place, it is more likely that it will continue than break down. In most trading approaches it is assumed to be better to always trading in the direction of the trend in order to gain the backing of the market. This not only lowers the potential risk, it also gives a greater chance of the opportunity proving successful.

When analysing an asset it is important to realise that trend can exist across all different time periods on the chart. While trending on higher time-frame charts will determine the overall direction that the price of an asset will move over time, many shorter term instances will also exist. These will be the result of price rallies and short term changes in sentiment towards the asset. What this means is that it is possible to trade both long and short term strategies using these signals.

As the trend signals the direction in which a market is most likely to move, it provides a power indicator which can be used to create basic binary option trading strategies. If the market has been moving higher, then a ‘Call’ option contract can be used to profit. Similarly if the price is heading downwards then the binary trader can make use of ‘Put’ contract to capture the move. When trading in this way the ‘Intra-day’ market trend should be the focus of the trader. However results can be improved by keeping a close watch on the wider market picture and dominant direction that the market is moving.

There are many technical indicators which can be used to identify the trend of the market. The most common of these is known as the ‘moving average.’ This indicator is plotted onto the chart and is able to calculate the  market direction by using a basic mathematical calculation. This takes into account the preceding daily price movement of the asset to provide a view of the average gain of the price. By configuring the parameter settings it is possible to find out the direction that the price has been moving over a set number of preceding days.

One way that is often used to capitalise on this movement is to find opportunities by waiting for a low time-frame moving average to cross one from a higher time frame. Once this happens it is taken as a signal to enter the market in the direction that the cross occurs. Essentially this provides a signal that the near term market direction is gaining increased momentum.

Trading with binary options brokers provides a modern and easy way in which to speculate on the price movement of assets. Unlike many methods of trading you only have to forecast a higher or lower movement in price to earn a high fixed return. For this reason they are particularly suited for use with strategies which can identify strong market momentum. By predicting whether the market will finish higher or lower, simple strategies for binary options can be created which exploit the use of the trend.

Guest Post provided by Phil Moore. Phil is a full time trader and investment contributor for the website BinaryOptionsProfits.net. You can visit the site now by going to http://www.binaryoptionsprofits.net.

Investing

Different Options for Loans That Financial Experts Suggest to Clients

Managing financial is the most critical thing, and we acknowledge this statement as a fact. So, career in the sector of finance is not at all easy. A lot of challenges are there, waiting for the people who have chosen the job of financial advisor. If you are passionate enough, you shall definitely enjoy these challenges. For a financial expert, it is absolutely important to be passionate about his job. You must love your job and you must be ready to face new challenges. Financial advisors face trouble, when it comes to suggesting the right kind of loan to clients.

Both individuals and organization need to opt for the loans for many reasons. In general, it can be stated that people opt for loan in order to deal with unexpected financial crunches. In many cases, people opt for loans, when it comes to purchasing an asset. For example, you may need to go for a loan if you are planning to have a brand new car or property. A business needs to opt for loans, when it plans to expend or buy new business assets. A professional financial expert should analyze needs and financial conditions of the clients before suggesting right type of loan.

Studying Client’s Credit History

The most important thing is studying credit history of the clients. If your client is thinking of opting for a loan, he should have good credit history. This means he should be punctual about paying the credit card bills on time or before the time. Making a habit of paying bills late will create bad reputation. As a result, it would be hard to find a suitable lender for that person. Moreover, bill payment on time will improve credit rating. This rating has been taken into consideration by banks when it comes to scrutinizing loan application of a person.

Loans for Good Credit

A financial advisor has limited service to provide to those, who already possess exceptional credit score or rating. Such persons can get loans from banks for personal reasons or business reasons without facing any hiccups. Some formalities are required to be maintained, and that would help to obtain the desired loan amount. Having good credit score will give you good sleep as well.  The rate of interest on repayment premiums shall be low as well as affordable. Thus, there should not be any hassles when it comes to repaying the loan with perfection.

Loans for bad Credit

Problems start appearing when a person has bad credit score and bank turns down loan application of such person. Financial advisors can provide different kinds of solutions to the clients in such cases. They can advice to go for the payday loans. Payday loans UK is an excellent option to get small amount personal loan without undergoing the hassles of credit checking. The application can be made online anytime. Applications also get approved within 24 hours usually.

Author bio

Trafford G. Marx has been as a loan recovering agent since a few years now. In this post he has shared some simple points for those who are planning to take a loan. He has suggested Payday loans UK to the readers owing to its quick approval procedure and easy application system.

Investing

A Brief Summary of the Dodd-Frank Act

The Dodd-Frank Act, formally the Dodd-Frank Wall Street Reform and Consumer Protection Act, is a federal law in the United States which became official statute on the 21st July 2010, when it was signed by President Barack Obama.  The impetus for the bill was the economic crisis of 2007 and 2008; in the wake of the financial trouble, the US government were keen to introduce new regulation, in an attempt to prevent such a repeat.

Dodd-Frank ushered in the most sweeping financial regulatory reform since the Great Depression in the 1930s, with nearly every part of the United States’ financial services industry facing changes due to the bill.  As with most financial regulatory legislation, Dodd-Frank has its critics and supporters.  Some argue that the law is not tight enough and, as such, will not be able to prevent another financial crisis. Others say it is too restrictive on financial institutions and will therefore restrict economic growth.

Dodd Frank

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Dodd Frank was part of reactionary US financial legislation sought to ensure that such a financial crisis would not reoccur.  The final bill that was signed into law was intended to ultimately protect consumers and the general public, by promoting stability in the financial markets.  The law improves accountability and transparency in the financial system, ends bailouts of “too big to fail” institutions, and protects against abusive financial services practices.

Watchdog

Dodd-Frank created the Consumer Financial Protection Bureau.  The Bureau is an independent watchdog group housed at the Federal Reserve.  It has the authority to ensure that consumers and the general public have access to clear and accurate information with regards to mortgages, credit cards and other financial products.  It also protects against hidden fees, abusive terms, and deceptive practices from institutions.  Such transparency is intended to end predatory lending and ensure that consumers will not find themselves in insurmountable debt.

Bailouts and Supervision

Another aspect of the regulation ends taxpayer funded bailouts.  Rigorous standards and supervision are established to protect consumers, investors, and businesses.  Individual institutions are no longer eligible to be propped up with bailouts.  The Federal Reserve can still provide support throughout the financial system as a whole, however, tough new capital and leverage requirements are instituted which means growth is restricted. Failed financial firms are now able to liquidate in a safe manner.

Other Features

Other features of Dodd-Frank also eliminate loopholes that allow risky and abusive practices to go unnoticed and unregulated.  Shareholders are now afforded an influence on executive pay and corporate affairs.  However, these votes are non-binding.  Stringent new rules on credit rating agencies, which create transparency, have been designed to protect investors and businesses.  A council has been created to identify and address systemic risks before reverent bodies are able to cause a threat to the stability of markets and economies.  Regulators are given strong oversight powers to aggressively pursue fraud, conflicts of interest and manipulation of financial systems, which are deemed to be at the expense of the American public.

In general, the reaction to Dodd-Frank is generally thought of as a win for consumers and consequently, a loss for banks and financial institutions.  The overall aim of the law is to hedge against the next financial crisis.  This will be the ultimate test for Dodd-Frank.  But one thing remains clear: the provisions of the law will (at least for now) protect consumers, increase accountability and the transparency of banks and financial institutions.

Sources: http://www.lseg.com/markets-products-and-services/post-trade-services/unavista/regulation/dodd-frank-swaps-confirmations-documentation-reconciliation-and-compression, http://www.sec.gov/spotlight/dodd-frank.shtml, http://www.cftc.gov/lawregulation/doddfrankact/index.htm