Variable annuities are not only planning for retirement investment option. In fact, there are many alternatives, such as mutual funds, stock exchange, a 401 (k) in cash or CDs. We recommend that investors with a degree of diversification of the portfolio to ensure that intrusions can be mitigated by another in a single device.
An alternative investment is often an equity fund is an investment in comparison because of itsSimilarity.
Both products allow the owner to manage their risk tolerance. Variable annuities provide payments for the duration of the investors, in order to withstand the performance of the underlying investments of the pension (which often fund). Diversification is achieved by investing in several sub-accounts.
The funds will be used to reduce the risks differently. With this product, many investors have their resources togetherWho buy securities of different causes. The funds are managed by a fund manager is actually sell. People who have access to a wider range of diversification, the situation would reach their own resources. You will be able to maximize performance and minimize the risk of their investments.
An offer of money in a variable interest rate and are for investment planning, suitable as a variable annuity. Are seen as moderatesThe average rate of growth of investment risk. Have management fees that are similar to variable annuities. This is usually 1 to 3%.
The tax treatment is an important difference between variable annuities and mutual funds. With non-fund-tax qualified income as ordinary income each year. Variable annuities, on the other hand, are tax deferred until withdrawal. Mutual funds do, but offer an advantage for small investors in relation toTax treatment. Income is taxed only when withdrawn. Mutual funds, variable annuities than they have no tax penalty of 10% if the income of the investor's withdrawal before the age of 59.5. The exchange between them will be taxed as investment income, if done outside an IRA or 401 (k). However, transfers between sub-accounts in a package of capital are not taxed.
Because of the tax penalty for withdrawals before the age of 59.5 Variable annuities areFund long-term goals of the long-term investments, especially retirement. Mutual are somewhat 'flexible meaning depending on the fund you choose, you can use to become short and medium term and long term needs.
The product of variable annuities tend to be less volatile than the economic benefit of investment funds. However, this stability at a price. Variable annuities are still the payments for the lifetime of the pensioner.After the death of the insured, the contract is completed and terminated unless a new option for the death to be inserted in the contract. Mutual funds, however, still have a value that is passed to the beneficiaries after the death of the investors power.
In short, a mutual fund is probably the best alternative to a unit-linked life insurance. However, there are differences between the products are carefully checked before signing the contract.Both respond to different needs for different investors.