What is the divided annuity?
Divided annuity is an investment strategy that contains at least two annuity cooperating to achieve a particular purpose. The purpose of the divided annuity is to provide the flow of income and at the same time to rebuild the Prince. This is achieved by investing in immediate annuity and deferred annuity at the same time with one initial premium payment. One annuity pays income, while the other generates interest to re -build the principal for the original amount invested. This strategy has several advantages and several disadvantages.
When investing in divided annuity, two types of annuity are purchased, one of which is the only premium immediate annuity. One premium means that it is purchased with one lump sum, rather than making payments, while immediate annuity is one that begins to pay off at the time of purchase, without waiting time. In this way, the investor is able to start receiving income from his investment immediately.
The second type of annuity purple use of the divided annuity strategy is persecuted delayed fixed annuity. PostponementIt means that the annuity payments are delayed for the specified period of the selected investor and the fixed term concerns the fact that the delay time is determined and cannot be changed. The money in the deferred annuity simply sits and grows. The period of time is calculated so that the whole director used to finance both anuit is replaced by this increasing interest rate.
both annuity in the divided annuity strategy have limited conditions. After the renewal of the original director, they are carefully calculated to end at the same time. The advantage of immediate annuity, which is also limited, is that this allows for larger payments from a single investment. Payments from lifelong annuity would be much smaller. Once this deadline is over, the renewed director may be re -invested in another divided annuity, or in another way that will benefit from the investor.
Strategy of using the divided annuity is conservative, often sold for pensioners, alE is ideal for those who are afraid of survival of their money. The disadvantage is that the generated income flow will be much less than if the whole investment generated income. However, once the deadline is completed, the whole director is restored and can be invested again. It also has several tax advantages for the strategy, most of every payment of immediate annuity is exempt from tax, because the conformity and interest on postponed annuity is postponed tax.