An Annuity Calculator to Determine Future Value

By Stock Research Pro • April 17th, 2011

The annuity calculator below will help you determine the future value of an ordinary annuity by entering the number of periods for the annuity, the periodic interest rate, and the periodic payments. Knowing the future value will help you to compare an annuity opportunity against other types of investments and determine whether a particular annuity investment will help you meet a financial goal.

About Annuity Investing

An annuity is a contract between an investor and an insurance company where the investor makes either a single lump-sum payment or arranges to make a series of payments over time. In return, the investor receives periodic payments beginning after a pre-determined date. Under the terms of an ordinary or “fixed” annuity, the payments the investor receives provide a stream of consistent payments. An example of an ordinary would be a bond that pays coupon payments in exchange for a lump-sum payment up-front. Variable annuities, in contrast, provide payments that can fluctuate over time, depending on the current direction of the market. A third type of annuity, immediate annuities, gives the investor an immediate stream of income either for the investor’s entire life or for some pre-determined amount of time.

The Benefits of Annuity Investing

Many financial planners believe that annuity investing can play a vital role in good retirement planning. Some of the specific benefits of annuity investing can include:

  • Tax deferral- Annuity investors do not pay taxes until they begin withdrawals. The investor determines when that happens.
  • No limits on contributions- While contributions to 401(k) plans and other types of retirement savings accounts have strict limits, annuities allow investors to contribute as much as they want.
  • Support for beneficiaries- Annuities provide investors with a good solution for both ensuring that they will have an income stream for retirement and taking care of family and dependants. Annuities can be ideal for estate planning.
  • Flexibility- Annuities provide investors with options regarding both contributions and the way in which the investor will receive payments.
  • ______________________________________________________________

    The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.

    delicious | digg | reddit | facebook | technorati | stumbleupon | chatintamil

    Leave a Comment

    You must be logged in to post a comment.

    « Historic Stock Market Returns | Home | Investing in Dividend Paying Stocks »