lot of people invest in mutual funds, and it's pretty easy to
see why they're so popular. A mutual fund is a simple way to
diversify. In other words, they help minimize your risk by not
putting all your eggs in one basket.
So what do you need to know about mutual funds?
A mutual fund is a pool of investments-usually a combination
of stocks, bonds, and cash instruments. They are bought and
sold by an investment company based on the goals of the fund.
The risk, size of the company and industry are all things the
fund manager thinks about when making investment decisions.
When you put money in a mutual fund, you're basically buying
a small amount of each investment in the fund's portfolio. You're
counting on the company that creates the fund to investigate
industries to invest in based on the fund's investment strategy
and decide which ones to invest in.
There are three main types of IRAs:
IRA: The contributions you make may be tax deductible.
So instead of paying taxes now, you'll pay taxes on the
money your IRA earns when you withdraw it. If you're in
a lower tax bracket at that point, you'll pay taxes at a
lower marginal income tax rate.
IRA: You pay taxes now so that you don't have to pay
tax on any of the profits earned between now and when you
start withdrawing the money.
IRA: This type of IRA is a simple solution if you've
got a 401(k) or other retirement plan from a past job, and
you want to move the money without paying penalties. This
is especially helpful if you have several 401(k)s. It gives
you more options for how to invest your money, and helps
keep things simple by consolidating them into one account.
are also IRAs for self-employed people, small-business owners,
and non-working people whose spouses contribute on their behalf.
Here are the basic things you need to know about 529 college
They are state-sponsored investment programs designed to specifically
help people save for college. Each state chooses an investment
company to manage their plan, so you get the benefit of no-hassle
What's even better for prospective college students is that
the money you put in and the money earned qualifies for tax
advantages, which helps to stretch your dollars even further.
You can contribute to a state's 529 plan no matter what state
you live in. Some plans offer preferential state tax treatment.
And most 529 plans allow students to use their funds to attend
any accredited college in the U.S.
An annuity is
a contract issued by an insurance company and generally composed
of two stages: the accumulation period, during which the contract
builds a cash value and money is added, and the payout period, when
the funds are distributed. Annuities offer tax deferral during the
accumulation phase, flexible payment options, and guaranteed death
annuities offer a guarantee of principal and interest. Contributions
earn a stated interest rate for a specified period of time while earnings
grow tax deferred. Fixed annuities are for conservative investors.
annuities offer single or flexible premiums, a broad range of sub-accounts,
tax deferral on earnings, and a death benefit. Values change according
to the performance of the selected sub-accounts. Generally, variable
annuities have higher expenses than a fixed annuity. Variable annuities
are long term investments designed for retirement purposes and are
best suited for investors willing to tolerate risk.
Value Adjusted Annuities (MVAs)
offer fixed interest rates combined with an interest rate adjustment
factor that can cause the actual crediting rates to increase or decrease
in response to current market conditions at the time of withdrawal.
MVAs are appropriate for individuals who are willing to tolerate minimal
risk for a higher initial credited interest rate.
indexed annuities present interest based on the upward movement of
an equity index, but still maintain the minimum guaranteed interest
rate feature of a traditional fixed annuity. Equity indexed annuities
are for individuals who are moderate risk takers - they want the guarantees
of a fixed annuity while their earnings benefit on possible market
annuities have no accumulation phase. It is purchased with a lump
sum payment and income payments are started right away. Immediate
annuities are suitable for individuals who recently received a lump
sum of money and are in need of a steady stream of income.
there are many uses for life insurance, its traditional function remains
the same. Life insurance protects individuals during the loss of a
loved one and helps provide a sense of security for their future.
That is why having a thorough understanding of life insurance is important
in providing your customer and their families with optimum protection
and peace of mind.
coverage for a specified period of time, usually 10, 15, 20, 25, or
30 years. Once the period for the policy runs out, the life insurance
coverage expires. Some policies can be automatically renewed at the
end of the coverage period, and some can be converted to permanent
insurance without the need for a medical exam.
flexible premium options and a death benefit. Allows changes to the
death benefit, the amount of premium, and payment frequency. Most
policies pay a minimum guaranteed interest rate.
benefits and cash values that vary with the performance of underlying
sub-accounts. The death benefit and cash value are not guaranteed
and can fluctuate according to the current market. Most policies
offer a guaranteed minimum death benefit for protection against
the flexible premium and death benefit options of universal life with
the investment flexibility and risk of variable life. Most policies
offer a guaranteed minimum death benefit.
a fixed guaranteed rate and builds guaranteed cash values. There are
two variations of traditional whole life:
Whole Life (Also known as first-to-die): Insures two lives and
pays the death benefit to the surviving insured person when the
first one dies.
Life Insurance (Also known as second-to-die): Insures two people
and pays a death benefit only when the second person has died.
It is designed for married couples that want to provide funds
to pay estate taxes that may be due after their deaths.