Financial Planning AnnuitiesWhy Invest in Annuities

Hello, this financial adviser Patrick Munro
telling you today about how to invest in annuities. Annuities are the ultimate safe money vehicle
for folks to invest their money in. And what happens is you're placing your money, usually
through a financial adviser, through, putting it in to an insurance company. An insurance
company will invest that money under government guidelines so that you can not lose principle.
Each state has a state guarantee association and what they are able to do is make sure
that you and your money is safe going forward.

Because the idea is to put money into the
annuity while you're young and have it there for your future. When you stop working, you
can turn on an income stream because you'll no longer have an income from your work activity,
you'll be retired. The opposite of that is you put it in the stock market and you lose
the interest, there may be a chance that you have to delay retirement. So annuities, of
course, are the best vehicle for that type of accumulation going forward and having a
safe, secure retirement.

That's why you should invest in annuities..

Financial Planning AnnuitiesWhat Is the Formula for an Annuity

This is financial advisor, Patrick Munro,
talking about what is the formula for an annuity. Many people don't understand how annuities
work, so let me put it simply to you. If you place money with an insurance company, because
an insurance company is the the type of company that handles annuity, it is placed in a vessel
or a policy that grows tax deferred over time. You receive a document to show how much money
you left with the insurance company, and they also give you an annual statement every year.
Well, when you're younger and you place more money with the insurance company, it continues
to grow, and because you're not taking it out during the "accumulation period" which
is the first part of our formula, then you don't have to pay taxes on it, which makes
for a better retirement going forward.

Keep in mind that most annuities, with the exception
of variable annuities, offer you principle protection. The second part of the formula
is the distribution phase. So we have the accumulation phase while you're putting money
in, and now the distribution phase. This is when you take money out in retirement.

So
that is the formula for annuities. This is financial advisor, Patrick Munro..

Financial Planning AnnuitiesWhat Is Fixed Annuity

I'm financial advisor, Patrick Munro, today
talking to you about fixed annuities. Fixed annuities are a great investment for folks
to consider investing in, because you have the power of triple compounding. Really, you're
able to put money away and it begins to compound; therefore, you're making money on your own
money. Because it's in an annuity, you don't have to pay taxes on the internal rate of
growth, so you get another layer of growth inside the annuity; that it's not worn down
by the fact that you have to pay taxes on it.

A fixed annuity is a better product than
a variable annuity, which we'll talk about later in this series, because it is not tied
to the ups and downs of the market. You'll always know that you've got a fixed rate of
return, so hopefully, if you bought the annuity from a professional, they'll give you a better
rate of return than is available for the cost of living and inflation, which is a big concern
amongst savers. So fixed annuities are backed by insurance companies. You only want to work
with A rated or better insurance companies for your fixed annuity, and make sure that
you buy from a licensed professional that will help you make this very valuable choice
in going forward for your financial future.

I'm financial planner, Patrick Munro, telling
you about the benefits of fixed annuities..

Financial Planning AnnuitiesWhat Is an Immediate Annuity

This is financial adviser Patrick Munro telling
you today about immediate annuities. Immediate means immediate in the sense of getting your
money in an income stream. Once you have a lump sum of money and you want to keep it
for the future, but you only want to receive a payment that is for your budget, in other
words, you turn it into an immediate annuity. An insurance company is a company that does
this.

For example, if you take a hundred thousand dollars based on your age, you want to receive
an income stream for ten years, twenty years, or for your entire life, that's what the insurance
company will do. They'll keep the balance of the money back growing at an interest rate,
while you take a payment for your budget going forward, therefore making your money last
a lot longer. If you had the money in your own care and attention during that period
of time you might run the risk of well, blowing the money or spending it on something that
you end up with very little principle. This is a safe way to put the money in the hands
of a financial custodian for your financial future.

Keep in mind that while the annuity
money is with the insurance company, the only time you pay taxes on, is when you take your
payment out at the ordinary rate of income tax. It's a better way to make your money
last longer, using immediate annuities. I'm financial planner Patrick Munro..

Financial Planning AnnuitiesWhat Is an Equity Index Annuity

This is financial planner Patrick Munro talking
about what is an equity index annuity. Actually an equity index annuity is an annuity that
allows you to participate in the power of the stock market but meanwhile have the benefits
of a fixed annuity. Equity index annuities participate in indexes such as the most common
S and P 500 index. Many people have heard about the S and P.

Inside here are blue chip
companies that you'll recognize. IBM, Caterpillar. Blue chip American companies. And what happens
with an equity index annuity is that you're allowed to participate in market ups but not
the downs which is very key when it comes to preservation of your principle.

Your retirement
principle. It gives you a better rate of return than a certificate of deposit or a fixed annuity
and normally there's a cap on how much you can make in the market. That's the limitation.
However the cap is normally very generous. Set by the insurance company that has attractive
rates.

A word of caution. You have to work with an insurance professional that's very
much licensed to work with this hybrid product. Equity index annuities. This is Patrick Munro,
financial planner..