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4 things to consider before buying an annuity

4 things to consider before buying an annuity

Life after retirement can be financially challenging as one no longer receives a fixed monthly paycheck. That’s why i ndividuals must plan properly and invest in the right schemes early on. An annuity ensures guaranteed returns or income to individuals during their retirement years. But that does not mean one can sign up for any plan in the market. Individuals must take some time to research while keeping a few important things in mind.

Future financial needs
The most important factor to consider when investing in annuities is one’s future financial needs. Individuals must ask themselves what their lifestyle will be like after retirement and what kind of expenses they will have to meet. Based on this, one can decide how much to invest in an annuity plan and when to start withdrawing . If someone cannot determine their future financial needs, they can consult a financial expert for guidance. Although the professional may charge a fee, they can help one assess their needs and pick the right annuity, which is very important.

Current financial situation
Before purchasing an annuity, individuals must also assess their present financial situation. If someone has outstanding credit and finds it hard to meet expenses, they should consider waiting a while before buying an annuity. Those still determined to buy a plan in such a situation can invest a lower amount. This way, they can start planning for retirement without worsening their current financial condition.

Types of annuities
Before investing, individuals must also know the different types of annuities. Broadly, annuities are categorized into three types: fixed, variable, and index annuities.

  • Fixed annuities are meant to give individuals a fixed, predetermined amount of money as returns after retirement.
  • Variable annuities are like mutual funds. Their returns depend on the performance of the investment and the market conditions.
  • The returns of index annuities depend on a stock market index, like the S&P 500. They are considered less risky than variable annuities.

The market also has other types of annuities, which one can consider after learning about their features. Individuals can consult a professional to choose the right option based on their current and future financial needs.

Annuity provider
After choosing the type of annuity, individuals can begin looking for providers. Insurance companies generally sell annuities, but individuals can also purchase them from brokerage firms, banks, and mutual fund companies. Regardless of who an individual purchases an annuity from, they must choose a good provider. For this, they would need to conduct thorough research about the different providers they come across.

One way to get good insights about the providers is to read their customer ratings and reviews. Doing so lets one know whether the provider is reputable and provides quality services. Besides reading reviews, investors must compare different providers’ annuity rates to find the best offer. When talking to different providers, one must ask them about all the details regarding the annuity contracts. While such in-depth research can take time and effort, it helps one choose the best provider and avoid unnecessary fees.

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Top automated investing services that make investment easy for all

Automated investing services or Robo advisors are becoming popular by the day, and financial experts around the world only expect to see a surge in their usage. This is because these intelligent services offer one crucial advantage that many investors benefit from: low-cost financial advice. With many top financial services companies jumping in the race to provide customers with the best automated investing services, there are plenty of great options available for every kind of investor.What is a Robo advisor and how much does it cost?A Robo advisor is a digital platform that provides algorithmic-driven money management services that require virtually no human supervision. It does this by collecting client data like financial situation, future goals, and other details through an online survey. This data is then used to automatically manage clients' assets and provide them with the most suitable financial advice. Robo advisors are immensely cheaper than human financial advisors. Most services only charge an annual management fee that is anywhere between 0.25% and 0.5% of the account balance. Depending on your need, you can even find good Robo advisors that offer services free of charge and low minimum balance value. Top Robo advisors in the marketThere are several low-cost Robo advisors that you can choose based on your needs and preferences. Here are some of the best automated investing services or Robo advisors available in the market today.BettermentBetterment is one of the oldest and the most popular players in the industry. It allows clients to invest in a range of funds chosen for you to improve returns. It offers automatic rebalancing, tax-loss harvesting, a personalized retirement plan, and can even sync your outside holdings like bank accounts and any other investments. At extra cost, you can up your investing game by talking to a certified financial advisor on the phone.Management fee: 0.25%Account minimum: $0https://www.betterment.com/investing/SoFI InvestA go-to choice for student loan refinancing, SoFi has now expanded its services into automated investing with its user-friendly investment management system. The company provides goal-based planning, automatic rebalancing, and diversifies your money to help reach your financial goals. Plus, you’ll receive member benefits like career services, discounts on SoFi products, and the opportunity to speak to a human advisor—everything at zero cost. Management fee: noneAccount minimum: $1https://www.sofi.com/invest/automated/WealthfrontWealthfront is one of the largest automated investing companies that offer both short and long-term financial goal planning. Its software builds a diversified portfolio of low-cost index funds to improve your returns and offers time-tested investment strategies that automatically look for profitable opportunities. Management fee: 0.25 percentAccount minimum: $500https://www.wealthfront.com/Charles Schwab Intelligent PortfoliosCharles Schwab is one of the most trusted financial services companies that launched its own Robo advisor that helps build, monitors, rebalances a diversified portfolio based on your goals, and provides 24/7 customer support from US-based service professionals. With Schwab, you are not charged any advisory fee or commission and can invest in a portfolio of low-cost exchange-traded funds (ETFs).Management fee: noneAccount minimum: $5,000https://intelligent.schwab.com/

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4 mistakes to avoid when buying life insurance

Life insurance is one of the best financial support tools, providing protection and security to an individual's loved ones during unforeseen circumstances like the policyholder's passing. While this insurance offers various benefits, navigating its different aspects can be challenging. Lack of research before choosing a policy may often lead to mistakes that may result in higher premiums or complications during the claims process. Avoiding such mistakes is important to ensure the financial safety of beneficiaries. Not knowing about the types of policies Before purchasing a life insurance policy, an individual must research the types of policies that they can buy. Life insurance policies are basically divided into two types - term life insurance and permanent life insurance. Term life insurance A term life insurance policy is designed to offer coverage to an individual for a limited period. This period is predetermined and is usually 10, 20, or, in some cases, 30 years. If an individual passes away within the policy's coverage period, their beneficiaries will receive the sum assured. Permanent life insurance A permanent life insurance policy offers coverage without any preset time limit. This means that regardless of when the policyholder passes away, their beneficiaries will receive the sum assured. Not reading the fine print Individuals must remember that a life insurance policy is a type of financial contract. They must pay regular premiums so their beneficiaries can receive the sum assured. And whenever one signs a financial agreement, one must thoroughly read the contract - especially the fine print. This is because the fine print, including the terms and conditions, could mention certain hidden and extra fees that the insurance provider may be charging. Secondly, it would also allow the policyholder to understand their coverage properly. Upon reading and understanding the contract, one can be assured they are getting the exact coverage they want. Reading the fine print would allow individuals to stay aware of such key details so they do not receive any surprises later on. Not comparing different policies Many insurance companies and providers offer life insurance policies, each promising the best coverage rates. With so many options, choosing a provider and a policy can be challenging. So, it is better to explore the providers and compare them based on their credibility. One must also compare the policies from different providers based on the coverage, terms, and premiums to make an informed decision. Waiting too long to buy a life insurance policy One of the biggest mistakes to avoid with life insurance policies is waiting too long to buy one. At a young age, when individuals start earning, most of them feel that it is too early to purchase a life insurance policy. But here is where they can go wrong. Unbeknownst to many, age is one of the biggest factors that affects premiums in life insurance policies. The younger the policyholder will be, the lower the premium they will be offered. So, it is in one's best interest to buy a good life insurance policy as soon as possible.

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