What is the storage phase?
The storage phase is the period of years during which the individual attempts to accumulate money to retire or other long -term goal. Although this term can be used in conjunction with any type of investment, it is most closely associated with the Annuity products. The storage phase will culminate in the period of payout, during which the accumulated funds are transferred to the flow of income. Investors must ensure that they receive enough money during the accumulation phase to satisfy their expected income needs during the paycheck phase.
Most annual products are classified as delayed annuity, which means that investors do not receive an immediate return on their investment. Usually, the annuity has a specific accumulation period that may take several years or even decades. Buying contracts can regularly contribute to annuity during this phase. In some countries, the national government or employer of the owner of the contracts may also contribute an account. The accumulated funds are invested either in securities such as stocks and dLuhopis or interest that pays savings accounts.
In general, the annuity and other types of pension accounts are postponed taxes. This means that the account owner does not have to pay taxes on interest or dividend payments if these amounts of money are reinvested to the account rather than to be downloaded. As a result, investors enjoy tax growth during the storage phase; This means that money is growing faster than they would invest in a standard taxable account.
While many annual products and pension accounts are individually owned, market accounts of some companies that can have more owners. These products are usually placed on the market to couples, so both contract owners can contribute regularly to the account. Generally, the owners retire at the same time at the same time and both owners rely on the account payments as a primary or secondary income source. Some people even buy longmore successful annuity and contribute throughout the stages of accumulation with the intention of creating a future source of income for their children or recipients.
Despite the name, it does not always lead to the storage phase of positive revenues. Securities such as stocks can rise and reduce value over time. As a result, the investor could lose money during the accumulation period if the market value of the securities in the account drops below the original purchase price. In some countries, insurance companies sell investors' protection insurance against these losses. Insurance usually pays for insurance by performing regular premium payments during the accumulation period.