A mutual fund is an investment vehicle operated by an investment company which pools the assets of many individuals. The money raised is then invested in accordance with pre-defined goals. Money market funds: These funds invest in a variety of short term, money market debt such as Treasure bills or commercial paper. Growth funds: have an emphasis on long-term capital growth, usually through investment in common stock. Income funds: Focus on providing high, current income, using bonds and other income producing securities. Balanced funds: strive to provide income and long-term capital gain. Both stocks and bonds are used. Keep in mind that mutual funds have risk and you can lose money.
Non-qualified tax deferred annuities have basically three crediting methods: interest rate crediting, indice crediting and separate sub account crediting. Interest rates are generated by the company’s predominately government bond portfolio. Most indexed annuities invest their interest rate returns in domestic and foreign index options. Some indexed annuities that credit zero in a given year, still charge policy expenses and which could result in a loss. Variable annuities use equity and bond instruments in their separate sub accounts selected by the variable annuity owner. These separate sub account allocations are subject to market risk, i.e. you can lose money.
Business Development Officer, T.D. McNeil Insurance Services, Fresno, California
An annuity is a contract with an insurance company. The main purpose of the contract is to provide a lifetime income. In order to meet this objective the insurance company puts money into one of several funds depending upon the desires of the customer. Some of these funds allow the customer to select individual investment sub-accounts. These sub-accounts look a lot like mutual funds however; they are agreements with the insurance company. Mutual funds are managed funds that invest in securities or cash.
That is an excellent question! A mutual fund is a financial vehicle that takes a sum of your money, and then invests it into stocks and bonds that the fund managers choose. There may be gains, or losses, depending upon the choices, how well they perform, and the fees that you pay for the fund to be managed. An annuity is a contract with an insurance company where you basically give them a lump sum of cash, and they in turn promise you a given rate of return on that money, and a guaranteed period of time to pay you from it. You can have small gains, or large gains from an annuity, but cannot lose anything, as they guarantee at the minimum what you gave them to fund the annuity. The insurance company invests the money that you give them, and they assume the risk of gains or losses. I hope that helps. If you would like more info, please contact me, ok? Thanks for asking!
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Non-qualified tax deferred annuities have basically three crediting methods: interest rate crediting, indice crediting and separate sub account crediting. Interest rates are generated by the company’s predominately government bond portfolio. Most indexed annuities invest their interest rate returns in domestic and foreign index options. Some indexed annuities that credit zero in a given year, still charge policy expenses and which could result in a loss. Variable annuities use equity and bond instruments in their separate sub accounts selected by the variable annuity owner. These separate sub account allocations are subject to market risk, i.e. you can lose money.