How Do Annuities Work?

For people drawing close retirement, or who just need a dependable circulate of earnings, annuities offer an interesting option. The annuity is a funding agreement that returns normal bills to the holder, who makes an initial lump-sum fee into the account. The period and payout of annuities may additionally vary, and the consumer can choose from many forms of annuities: deferred or immediate, for example, and stuck or variable.

How Do Annuities Work?

Why Annuities?

Holding a big amount of cash for investment and assuring that the ones price range will allow an at ease future can be formidable to the ones who have very little enjoy as buyers. Insurance businesses have give you the annuity, which ensures a circulation of bills to be made month-to-month, quarterly or annually over the existence of the settlement. The annuity enterprise handles funding of the money, while the purchaser of the settlement gives up direct control over the ones funds and truly collects ordinary bills over the said term.

Fixed and Variable

A critical selection when looking for an annuity is whether to get one this is constant or variable. A fixed annuity assures the buyer that the payments will remain the same over the life of the annuity, which may be set for 10, 20 or 30-years. If the coverage business enterprise reports funding losses, it's legally bound to make the fixed bills. A variable annuity can pay more or less depending on the agency's investment results. The buyer can choose to underlie investments to render the returns greater or much less unstable. An annuity invested in stocks, as an instance, is vulnerable to wider swings in payout than one invested in U.S. Authorities bonds or cash marketplace securities.

Deferred Investment and Taxes

When a customer receives into an annuity contract, he can either begin taking on the spot bills or defer the income. A deferred payout that starts off evolved after the customer reaches retirement has time to grow with funding returns; further, a retiree commonly reveals himself in a lower tax bracket than the only that implemented at the same time as he turned into running. While the cash remains in the annuity -- the build up section -- there is know tax on the profits and capital profits earned through the investments. When the distribution section starts, taxes kick in on the upward push inside the annuity's price. Insurance groups additionally may also assure a full go back of the initial funding to beneficiaries if the customer dies earlier than the settlement will pay out.

Related Expenses

The downsides for annuity customers consist of the excessive fees that annuity companies commonly fee. The prices reduce the funding return over the life of the contract, or they increase the cost of the annuity on the outset, as do any sales charges. In addition, there can be management prices and a painful surrender fee if the purchaser chooses to cash out of the annuity early.

Cash Value vs. Annual Payments

Millions of Americans play nation and country wide lottery games each day. Some of those jackpots are worth loads of heaps, or maybe thousands and thousands, of bucks. Winners of these massive jackpots regularly have the choice of accepting the coins cost charge or annual bills. Each choice has execs and cons associated with it. Choosing among the 2 options is a non-public decision based totally on a number of concerns, along with destiny tax will increase, instantaneous monetary want, age and investment plans, among others.

Cash Value vs. Annual Payments

Cash Value

Most huge lottery jackpots offer the cash price, or lump sum, option to winners. When choosing this desire, the winner is paid in a single lump sum. The coins price payout of the jackpot is often a good deal less than the advertised jackpot amount. Generally, it's far envisioned to be approximately half of of the total jackpot amount. So if the marketed jackpot is at $a hundred million, the coins cost could be around $50 million. The coins value is estimated with the aid of the starting cash amount of the jackpot, plus the proceeds of the tickets purchased for the specific drawing.

Annual Payments

The 2d option for lottery winners is to take annual bills, or an annuity. This alternative will pay the winner a fixed quantity yearly till the full jackpot cost is reached. Annual bills last for 20 to 30 years, depending at the lottery software. The annuity value is paid through government treasury securities -- bonds -- purchased using the cash value of the jackpot. Over the time-frame of the once a year payments, those bonds earn hobby to make up for the difference among the coins value and the marketed annuity jackpot fee. Some annuities are set up to pay out the equal quantity every year, at the same time as others pay distinct amounts.


Both the coins cost option and the annuity choice are concern to taxation. Generally, whilst a lump sum is paid, the tax may be paid up front. When annual payments are decided on, the quantity paid every year may be added to the winner's profits tax go back every 12-months and paid at tax time. There is a federal tax on lottery winnings, which is at least 25 percentage and as much as a maximum of 35 percent (on the time of guide). Not all states determine taxes on lottery winnings. The states that do assess a tax as high as 10 percentage.


Each winner's preference between the cash price and annual payments is based on his private state of affairs. It is prudent to seek advice from an economic planner while managing such huge quantities of money to make the first-class selection. Take into attention that tax costs aren't set in stone and may boom or lower over time. These charges would affect the tax owed on annual bills each 12-months. Taking the annuity is really worth greater ultimately; but, investing the lump sum can have a more income's capability over the identical time frame if it is invested nicely. Age is likewise a issue. Senior residents may additionally want to take the lump sum in preference to payments over 20 or 25-years. Young winners might also opt for annual payments There are also diverse organizations inclined to pay lottery winners lump sums when that alternative became now not to be had to them through the lottery application. These businesses would count on the once a year bills owed to the winner in alternate for a lump sum charge. It is critical to review the precise phrases of the agreement and calculate the distinction between the two-alternatives.

Debunking 4 Credit Myths

Whenever I pass live on Periscope to educate human beings about how credit score works, I’m constantly left astounded via the questions people ask me. I’ve come to note that there is a lot of incorrect information obtainable about credit playing cards, how they work and how they impact your credit score rating. Let’s face it, you study parallelograms in faculty but nobody ever teaches you about credit score. That’s one of the motives people get themselves into so much problem.

Debunking 4 Credit Myths

When you do move searching out financial recommendation online, a variety of it's miles contradicting. You additionally have a lot of so-called financial experts perpetuating the same myths that get human beings into trouble.

Here are some of the most common credit constructing myths I listen all of the time:

You need to hold a balance to reveal credit usage.

Oh boy. Where do I begin with this one?

First matters first, a part of your credit score score is contingent upon you surely the usage of credit. That’s why a few people say that in order to expose credit usage, it’s pleasant that you bring a stability from month to month.

This is useless wrong.

The key to credit utilization is to use credit responsibly. Using your credit score card and paying the invoice in complete each month already shows responsible credit score usage. Additionally, in case you convey a stability you end up dropping money in hobby bills.

Paying your bill before it’s due will increase your credit score score.

This credit constructing myth is primarily based on a truth, however it misses the mark in the end.

Paying your credit card bill earlier than it’s due won’t increase your credit rating because the quantity you owe was already mentioned to the credit score bureaus.

However, paying your credit card before the last date for your credit card cycle may assist you increase your credit score score. Reason being that a $zero might be mentioned to the credit bureaus, which means it suggests that you owe not anything and therefore aren’t the use of a huge chunk of your to be had credit score.

You can bump tough inquiries off your file.

Whenever you practice for credit score, an inquiry is made on your credit record. You have hard inquiries like loans, mortgages and credit playing cards you implemented for. You also have smooth inquiries like the ones brought on by way of you or your organisation.

Your credit rating normally falls after a hard inquiry because you are asking for greater credit score and therefore taking on extra hazard.

One delusion that exists as it relates to inquiries is that you can load up your report with gentle inquiries so that it will knock off the tough inquiries.

At this factor, that is basically speculative. There is not any evidence to signify this truly works.

Closing vintage accounts can enhance your rating.


In reality, closing old money owed can decrease your score because a large part of your credit score score has to do with how lengthy you’ve had debts open and what you’ve executed with them at some point of that time.

While a few humans may additionally advise in any other case, there surely is not any trick or rapid music to building your credit score. In reality, the various myths which are out there are negative on your credit score health. Your great guess is to keep it easy by paying off your credit cards in full every month and now not spending extra money than you can manage to pay for.

The Easiest Way to Transfer Money From One Bank to Another

The simplest way to transfer cash from one bank account to any other depends on whilst you need the cash to reach and whether you need to pay a price. If the cash have to arrive the same day, the easiest technique is to make the deposit both in individual, thru a wire transfer or using a 3rd birthday party vendor like Western Union. However, there is often a fee for all of those besides in-individual deposits. If time isn't always of the essence, there are alternative unfastened and coffee-value alternatives.
Transfer Money

In-Person Deposit

One smooth way to switch money into some other person's bank account is to visit his financial institution and make the deposit in person. This works properly in case you live or work in an area with a department vicinity. Although approaches can range among economic institutions, all that is typically required is that you recognize the account holder's call and account number. Since you are depositing money in person, there may be normally no price for this provider. If you've got an account on the same bank, together with Wells Fargo, you can switch finances between the 2 money owed for free. At some banks this could also be executed over the smart phone with a customer service representative and online thru your bank's website.

Wire Transfers

If there isn't always a convenient department location nearby, you may twine the finances rather. This can often be accomplished on line on your financial institution's website. However, communicate along with your financial institution approximately its policy as some require you to complete this transaction in character at a branch location or over the telephone with a customer service representative. Not only mustthe recipient's account range, however additionally his financial institution's routing wide variety. This is the variety that electronically identifies the bank in which the account is positioned so the switch is nicely routed. If the recipient didn't come up with this wide variety, touch his bank for it. This wide variety is freely given and may even be posted at the financial institution's Internet site. Additional facts your bank can also request includes the recipient's name, cope with and speak to range. Banks usually fee a rate for sending twine transfers, which might be normally brought the identical day if you installation the transfer earlier than your financial institution's cut-off time for such transactions.

ACH, Email and Mobile Number

Many banks also provide you with the option to electronically switch funds on line or using an electronic mail address or mobile cell phone wide variety. For example, with Bank of America and U.S. Bank, you may transfer cash from your bank account to every other individual's without cost via presenting both his electronic mail cope with or cell phone wide variety on the financial institution's Internet site or the use of its cell app. There isn't any need to realize the recipient's financial institution account range. The recipient offers this information whilst he gets a text or electronic mail explaining how to finish the transaction. U.S. Bank, like many others, also lets you send money online directly to his bank account by supplying his routing and account numbers. This is popularly referred to as direct deposit or an Automated Clearing House, or ACH, transaction. Unlike with a cord transfer, the service is normally unfastened and transport can take up to several commercial enterprise days.

Third Party Vendors

You can also send cash from your bank account to a person else's with the aid of using a third celebration dealer such as PayPal, Western Union or Money Gram. With PayPal, you deliver the recipient's electronic mail or cell phone quantity. The money might be taken out of your PayPal balance, when you have one, or the financial institution account connected on your PayPal account. The price for using this service is a percent of the overall amount being despatched, so it varies. Both Western Union and Money Gram also permit you to ship money online out of your financial institution account to someone else's for a price, which varies based totally on how a whole lot you switch.

Safe Practices

Transferring money electronically is safe, so long as you undertake a few key practices. Only switch cash the usage of a good financial institution, ideally your own, and handiest to people or agencies you're familiar with. If your switch is stolen or compromised in any manner, immediately notify the bank you despatched it from. Although procedures can vary, stolen finances are commonly refunded after the financial group conducts an investigation.

4 Ways to Make Extra Money This Summer

One might want to make a little extra cash to fund your savings, or that eventual big spend this coming summer season. This could be easy if you are eager to find earning opportunities as well as be able to use your resourcefulness to put up that side business.

In the hyper-connected age we live in today, there’s can be little excuse to put up that side business you want. There are always more than one way to make a little extra cash, and here are four ways to make extra money to get you started.

1. Sell your photos to stock photography websites
Remember those stock photographs you saw online, or the wallpapers your gadget came with? Many of those were actually taken by people and sold online, as opposed to edited or taken specifically for turning it into a stock photo.

Note that stock photography websites like FotoliaEnvato Market, and Shutterstock will need hi-res submissions, so make sure that you get the best resolution when you shoot photos.

2. Sell your notes
There are sites that allow you to upload your old subject notes for other students to download at a price.

Websites like Notesale ask that you upload these notes as PDFs for anyone to download. You can set a price for these notes as well, but nothing outrageous, as your clients are students, after all.

3. Get Paid for Searching the Web
Since you spend a lot of time online in any case, why not make extra cash? If you’re window shopping, doing research, or just browsing through at random, you could make a little extra cash from sites like Qmee.

You’ll have to install an add on, and click the links that have cash rewards in order to earn money, which is sent to your Qmee piggy bank, which can be transferred to you via PayPal, or donated to a charity of your choice. There’s also a mobile app for your on-the-go needs.

4. Sell your old textbooks
A time-honored tradition exists for people who’d like to dispose of books they no longer need, or no longer want to read. When that happens, you head for Recto. Used bookstores line the streets, so you’ll have no shortage of places to dispose of old books, but keep these things in mind:
·          Books in better condition fetch a higher price.
·          Editions closer to the current will also fetch a higher price.
·          Sell directly to the buyers inside bookstores for better prices.

Recto is a bookworm’s paradise; you never know what you’ll find perusing the stores. Your best bet is to sell to the bookstores inside buildings, if you want the best price for your books.

There are also a lot of other alternative ways to make a little extra cash online, like writing reviews, or full papers for interested buyers.

When it comes to making extra cash on the side, one just has to do a little research and a little legwork. Most of these are also part-time, so feel free to invest as little or as much time as you like to earn that extra cash.

About the Author:
Kyle Kam is a Digital Marketing Specialist of, a financial comparison website aiming to help Filipinos save money through diligent comparisons of financial products.

The Parable of the Pencil

Have you been experiencing difficulty these days? Or wanting to give up? 

Wag kang panghinaan ng loob! Basahin mo muna eto. Sana ma-inspire ka sa kahit anong paraan.. 

The Pencil Maker took the pencil aside, just before putting him into the box.

“There are 5 things you need to know,” he told the pencil, “Before I send you out into the world. Always remember them and never forget, and you will become the best pencil you can be.”

One: You will be able to do many great things, but only if you allow yourself to be held in Someone’s hand.”

Two: You will experience a painful sharpening from time to time, but you’ll need it to become a better pencil.”

Three: You will be able to correct any mistakes you might make.”

Four: The most important part of you will always be what’s inside.”

“And Five: On every surface you are used on, you must leave your mark. No matter what the condition, you must continue to write.”

The pencil understood and promised to remember, and went into the box with purpose in its heart.

"A painful sharpening. You need it to become the best pencil you can be."
Now replacing the place of the pencil with you. Always remember them and never forget, and you will become the best person you can be.

One: You will be able to do many great things, but only if you allow yourself to be held in God’s hand. And allow other human beings to access you for the many gifts you possess.

Two: You will experience a painful sharpening from time to time, by going through various problems in life, but you’ll need it to become a stronger person.

Three: You will be able to correct any mistakes you might make.

Four: The most important part of you will always be what’s on the inside.

And Five: On every surface you walk through, you must leave your mark. No matter what the situation, you must continue to do your duties.

Allow this parable on the pencil to encourage you to know that you are a special person and only you can fulfill the purpose to which you were born to accomplish.

Never allow yourself to get discouraged and think that your life is insignificant and cannot make a change.

"In Getting Life Insurance, Choose the Right and Best Partner Company " - Tita Helen, Investment Advocate

I met Tita Helen (not her real name) during my presentation to her daughter which happens to be my friend. I was amazed on how passionate she is and encouraged her daughter to sign up for a plan right away. 

You see, things like investing is important to discuss among family members. Parents inspire their children or vice versa to take charge of their future. Do you agree? So make saving for the future a family affair. 

When I began to ask about her experience and where the passion is coming from, she decided to share it with us.

Here it goes:

It was in the late 1990s, when my husband and I got our very first life insurance policies. Life is good back then because of our business so we wanted to secure our family’s future especially for our children. We were able to send our four daughters to good schools and I must say, our family is well provided for at that time. 

But there was something unexpected happened to our family business and after a decade, we decided to stop its operation.

We were so devastated at that time. Monthly bills and children’s tuition fees continue to increase yet our bank savings accounts were dropped to almost zero. And we got no choice but to discontinue paying for our policies. I deeply regret that decision because I am a firm believer of life insurance because of the benefits our family had received over the years.

My husband began to look for a job and we decided that I will take care of our children instead. Thus, I became a housewife.

Two years later, I received an envelope from Sun Life (yes, we got our policies from them) thinking that since we were not able to pay anymore, it might be a demand letter or something obliging us to pay for the policies. So, I decided to keep the envelope and not to read it. 

And then, someone from their head office was calling us and asking if we have read the letter and encash the check already. So I asked myself, “What check are they talking about? Don’t they know we’re not paying our policies anymore?”

But I trusted my instinct to look for the envelope which I almost forgot where I put it. Luckily, I found it and was surprised to see the check that had an amount more than we actually paid for.

I read the letter, this was because of demutualization.

I got this from their website: “Demutualization benefits are benefits that were issued to eligible Sun Life policyholders during the company’s conversion from a mutual insurance company to a publicly traded company.”

Who would have thought there exists a company like Sun Life? It was when the time you had nothing or just simply started out again to cope up from business’ loss, and then you received something you never thought possible.

From then on, I always share this to my family and friends. And also, to our children. In getting life insurance plans, it is important to choose the right and best partner company that will fulfill its mission from generations to generations. 

Also, to start investing as early as they can so they will reap the rewards early too.

And I won't definitely forget what Tita Helen shared as she ended her story:

Do you know someone who has experienced the same?

photo: source