Question

Research what are the pros and cons of an Annuity as an investment. Is this a good investment?  

Is leasing a car a good investment?

please include work cited.

Answer 1

Following are pros of annuities;

1.It can provide additional Income post superannuation or retirement with some attractive pay in.people might get able to secure fixed income in various types of Annuities like if you buy a annuity Of $75000 and you get at the age of 65 years fixed sum of $578 per month

2. it is more attractive then investment in stock market firstly it generates Certain sure sum ,and secondly it is less cumbersome to manage it.

3. There is higher payments in in case of prevailing higher interest rate.

4. It take inflation consideration to meet cost of inflation in such case if you pay extra you would be able to generate compensatory pay in future in inflation conditions.

5. Annuities carries risk of loss so this are type of insurance in nature.

6 contribution made in Annuity does not require immediate tax tax incidence tax is deferred until you receive money.

7 Variable annuity offer death benefits in case of eventuality beneficiary can get good amount of insurance.like you pay premium of $1000 and get insurance death benefit mean while you die before maturity.

Cons of having annuities:

1 Generally higher cost are associated in form of fees and commission, administrative fees investment management fees surrender charges etc.turn out in a expensive investment.These cost ranges between 1-2% of investment.

2 It does not match with the expectation as in stock market where higher growth, more liquidity , flexibility and less or no tax are some more attractive features.

3.Once you tied your money in annuity then it is difficult to take out it , once money is gone then it is gone for a specified period unless you pay fees for it.

Still annuity is good investment it provides fixed assure income in future with growth prospects these are secure and easily manageable particularly in old age.these are very good investment for lower earning income group and middle class group.

Leasing a car is good investment you may hire more cars for your value of money and usually you have to pay only depreciation on it rather than entire purchase price. suppose you lease a car $50000 car for 5 years and it's estimated value after 5 year is $10000 then you have to make payment on difference $40000 as lease payment . It also save annual maintenance charges to be incurred every year if you purchase a car there is flexibility in disposing leasing asset through selling it further for getting a car you have to pay only down payment sum. So leasing is good investment for particular class of people who don't have enough money to buy new car .one of the con of leasing a car is that you can not make equity of your money. So it is relatively dependent that Leasing a car is good or not otherwise.