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Mutual Funds
Annuities
Annuities
are investment contracts issued by an insurance company. They
allow you to save money in a tax-deferred account to be used at some
future date in time. There are two basic types of annuities,
fixed and variable.
A
fixed annuity is a contract whereby your principal is
invested in the insurance companies general account.
The insurance company guarantees a preset rate of interest
for a specific period of time and the company also guarantees
the return of principal you paid into the contract.
A variable
annuity is a contract whereby you put your principal into a
family of professionally managed investment options know as
"Separate Accounts" and they range in risk from
conservative to aggressive. The value and income from a
variable annuity is based on the performance of the underlying
investment option and is not guaranteed.
The
advantages of owning an annuity:
- Tax
Deferred Growth--no
need to report earnings on your income tax return until they are
withdrawn.
- Systematic
Withdrawals--the
annuity can become an income stream you can never out live when
you annuitize your contract.
- Death
Benefit Guarantee--If
death occurs before you start the income stream (annuitization)
then the contract value will be paid directly to the designated
beneficiary avoiding probate.
- Under
Florida Law Annuities are protected from creditor judgments.
- Seniors--Unlike
CDs the entire annuity's contract value is not counted when
determining the level of taxation of Social Security Benefits
only the amount of the benefit that is withdrawn in
that given tax year.
- In
a variable annuity you can move your money between the various
"Separate Accounts" without triggering any current
taxation.
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Mutual
Funds
A
mutual fund is a professionally managed portfolio of stocks, bonds,
U.S. government securities, foreign securities or a combination
there of.
The
benefits of owning Mutual Funds are:
- Professional
Management--Most
people don't have time to manage an investment portfolio even if
they had the expertise. The alternative is to invest in a
mutual fund where experienced, full time investment
professionals research the securities markets, making investment
selections in accordance with the fund's objective. You'll
spend less time worrying about investing and more time enjoying
life.
- Diversification--Remember
the old saying, "Don't keep all your eggs in one
basket!" Diversification is one of the most
important benefits of mutual fund investing. By investing
in a wide variety of securities the fund reduces the risk of any
single investment choice having a large negative impact on your
portfolio.
- Liquidity--When
it comes to investing in stocks and bonds, there is no more
liquid investment than a mutual fund. As legally required
by law, open-end mutual funds must repurchase any or all shares
as requested by the owner on day the fund receives the
request and the market is open.
- Automatic
Reinvestments and Withdrawals--Earned
dividends and capital gains may be used to purchase additional
shares of a mutual fund automatically. On a regular basis
shares of your fund may be redeemed and periodic checks will be
sent to any designated person.
- Ease
of Record Keeping--Regular
statements detailing any transactions such as contributions,
dividends, withdrawals, exchanges, charges and tax information
are sent to each shareholder.
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