Understanding Annuities

Even in today’s uncertain economic environment, saving or putting money aside for the future is still a paramount necessity. Unfortunately, saving can become overwhelming for some people when deciding where to invest. A simple and generally uncomplicated investment option to consider is annuities. Why? Well annuities offer guarantees.

To futher help you understand Annuities- An annuity is a contract between an individual and an insurance company. The annuity is an investment or savings instrument, and an annuity pays to a designated person, also known as the annuitant. The annuitant receives a specified amount of income for a specified time, or a lump sum at a predetermined date of maturity.

Annuities typically offer tax-deferred growth of earnings and may include a death benefit. Annuities fall into one of three types – fixed, variable, and equity-indexed annuities. With a Fixed Annuity, the insurance company guarantees that you will earn a minimum rate of interest during the time your account is growing. At the end of that time, the annuitant receives guaranteed periodic payments. These payments can occur over a specified period, such as 20 years, or for an indefinite period, such as your lifetime.

With a Variable Annuity, you choose to invest your purchase payments from a number of investment options, which are typically mutual funds. The rate of return and the amount of payments you’ll receive will vary and depend on the performance of the investment options you selected.

If you choose an Equity-Indexed Annuity, this is a special type of annuity in which your investment return is based on an equity index. This allows your interest to change based on the index to which your equity is connected.

Annuities will not provide a tremendously high rate of 15% to 25% returns, nor do they claim to double your money in three years. Instead, investors are provided with a guaranteed interest floor, generally around 3%, and a guaranteed amount of income available at a certain time. For this reason, annuities serve well for retirement, education savings, or for seniors wanting a safe and guaranteed return. I hope this article helped on understanding annuities and stay tuned for more free investing tips and smart investment strategies.

A Struggling US Economy and the Stocks that Love It

Federal Reserve chairman Ben Bernanke predicts the current recession could end this year. Perhaps this message accidentally went into the economy’s junk e-mail box. We’re over three months into 2009 and the economy continues to struggle. According to the U.S. Bureau of Labor Statistics, the unemployment rate has grown from 6.6% to 8.5% since October ’08, its highest mark since 1992. Retail sales are down almost 11% from a year ago. Core inflation has risen 1.8 percent in the past 12 months and 0.2 percent in March. This US economy update can be summed-up by a quote from the tv show Seinfield, “That’s not good for business. That’s not good for anyone.”

However, a few values can be discovered if you sift through the mess. We’ll start off in the food industry. It’s not like Americans need more reasons to stuff their faces with fast food, but due to the sagging economy, it’s becoming a good value and they’re flocking to them like lemmings to a cliff. McDonald’s stock price (MCD) has stayed consistent during this turmoil between $55-$65, probably due to it’s high-value dollar menu. Consumers can chose from a Double Cheeseburger, McChicken Sandwich, fries, soft drink, 2 pies, and sundae all for $1 each. Wow, your wallet can gain girth proportionally as you do.

In this economic crisis, consumers are choosing fast food chains over moderate to expensive restaurants. Burger King’s stock price (BKC) has risen to $23.56 from $17.33 in November as Brinker International, who owns restaurant chains including Chili’s has traded as low as $3.99 a share and has suffered a $22 million loss in 2009.

The US economy is also pushing consumers to used cars instead of a new car purchase. As new car sales have been struggling, certified pre-owned car sales have been climbing the past few months. Lexus was up 10.3% the first two months of 2009 compared to 2008. Mercedes-Benz vehicles were up 28% from a year ago as well. BMW has increased 12.5% and even Ford, the only US auto company not benefiting from federal aid, was up 10.8%. March was the 17th consecutive month that new-vehicle sales dropped. Toyota, Nissan, and Honda sales have all fell at least 36%.

The video game industry is also worth watching in this economy. Not only is the number one game maker, Electronic Art’s stock price (ERTS), in a steady decline from $48.97 to its current price of $19, the video game market as a whole is down 17% from April 2008. Conversely, Game Stop (GME), which conducts a good portion of its business in used video game merchandise, has increased from $17.50 in November to as high as $32.42 in April.

Consumers are also staying away from high-end retail stores such as Nordstrom (down 8.5% in ‘09), Coach (down 14% in ‘09), and Tiffany Co. (down 20% in ‘09), in favor of lower-priced bargain stores such as Wal-Mart and Wal-Mart owned Sam’s Club. Wal-Mart’s stock price (WMT) traded evenly between $47-$57 in ‘09 as sales increased 1.4%. Sam’s Club sales have increased 6.2% from last year.

So, if you have learned anything from this US economy update, you’ll be feasting on a double cheeseburger, rocking out to ACDC on a pre-owned guitar hero video game, watching falling prices at Wal-Mart, and cruising around in style in your used Ford Focus. Enjoy the deals in this struggling US economy.

Gregg Andreski

G-20 Summit’s Effect on the Stock Market

The annual meeting of the G-20 Summit conferred in London this year included twenty prominent nations, including the seven major industrialized nations met. The group, comprised of finance ministers and bankers, discussed the world stock markets & economic crisis, financial instability, reasons for the international financial failure, and methods to re-stabilize the stock market prices and banking industries through open world trade. Many opinions and options were discussed, as there has never been a financial meltdown to this extent. This has had major repercussions, causing a near panic worldwide. Sanctions for those companies and banks that helped to create the disaster were also a main topic, but little was settled as to how to proceed in order to procure results.

In November 2008, prior to the G-20 Summit, United States stock investors promoted an overnight Wall Street surge encouraging worldwide advances of Asian and European markets. The international stock markets were optimistic in regards to the United States recession, which lead to the international recession, and many feel the recession may be near an end and starting to level off. Since the summit, experts in Japan, England, and Australia, as well as other nations, have begun to see minor stock increases. The slow return to a more healthy economy is hoped to be apparent by summer.

Arab stock markets increased gains after the G-20, related to increased oil prices. Foreign stock exchange markets including Asia, Europe and the United States showed hopeful gains immediately after the summit. The future still remains uncertain, but increasingly optimistic due to policies instituted during this conference.

Obama’s “Glimmer of Hope” – What Must Be Done?

On Friday, April 10, President Obama declared that he could see a “glimmer of hope” for the US economy. This comment came after a day of encouraging data on trade and unemployment. He cited improvements in small business financing and a rise in mortgage refinancing as one of the reasons for his optimism. He said that “whatever we do must ultimately translate into economic growth and jobs.” 

What can President Obama do to “generate economic growth and jobs?”

First, he should recognize that businesses create most of the jobs in the US.  Businesses need two things to thrive. The first is money to purchase and make goods or services that they sell. The second is customers who can purchase those goods and services.

In order to provide money to businesses, he should limit the income tax on businesses. Money that businesses pay in the form of income taxes could be used to make more products or produce more services. When this happens, jobs are created.

Many feel it would be wise to reduce the amount of regulation for businesses to an absolute minimum. Complying with some government regulations requires cash and manpower that could be used to produce goods and services.

It is also important to reduce the amount of taxes that people must pay. Taxes require consumer money that could be used to buy goods and services. If people buy goods and services, businesses must hire people to produce those goods and services. Thus, jobs are created.

These three simple steps would do much to get the economy of the United States moving again. If President Obama takes these steps, the glimmer of hope in the tunnel of this depression will hopefully soon become a bright light guiding us into the future.

Visit Stock Market News and Stock Prices for latest StockNod market updates.