2006-10-18 13:08:41 · 3 answers · asked by me 4 in Business & Finance ➔ Investing
An annuity is you receiving some sort of a payment every period (be it every 6 mos, a yeard, etc) until maturity date.
For example:
You win the lottery. Usually they do not pay you the lump sum, but they pay you certain amount every year for say 60 years. That is a 60 year annuity.
You buy a bond for $1000 for 10 years. That bond will pay you, for example, $100 every year, for 10 years. That is a 10 year annuity. At the end of the 10th year, you will also get your initial $1000 back.
Hope that helps!
2006-10-18 13:15:40 · answer #1 · answered by gcl915 2 · 0⤊ 0⤋
You put money in and they pay you money out. It is guaranteed typically by an insurance company, not the FDIC. It is fairly safe if you believe in insurance companies. They do not pay a very high rate of interest but it is low risk. Don't be fooled though they are making money on your money just like a bank. Ever notice how many banks and insurance companies there are in your own hometown. They are paying you x% interest on your money and they are making x + Y% on your money. Legal racket. You can do better elsewhere with your money.
2006-10-18 21:18:44 · answer #2 · answered by EAA Duro 3 · 1⤊ 0⤋
Usually it's for retirees to guaratee them a fixed income for a period of time (for example, 20 years, life, etc.) There are many good ones out there.
2006-10-18 20:50:15 · answer #3 · answered by Business Owner 1 · 0⤊ 1⤋