Premium payment arrangements: a single premium annuity or flexible premium

Single premium annuity funded by a single payment. Single premium annuity can be deferred or immediate. Most single annuity funded out of retirement savings due to the Pension Fund (Pension Fund). If you joined as a participant Pension Fund, on your retirement age, 80% balance of your pension will buy a single premium annuity. Periodic payments from an annuity is tax free because it is considered as an insurance benefit.

Flexible premium annuity is an annuity funded by a series of premium payments. Deferred annuities are always flexible, which is designed to have a sufficient period of time to accumulate premiums and investment income before the money can be paid regularly.

An annuity can be classified in several categories at once. For example, an annuity purchased from the disbursement of pension annuity maturity date is fixed, single-premium life-soon. That is, the annuity is funded from a single premium, are invested in fixed-income investment instruments and the payment of immediate benefits for the next month until anuitan lifetime.

annuity fixed period, fixed amount, or lifetime

Fixed period annuity pays income for a specified period, for example ten years. The amount of income paid does not depend on the age or the sustainability of the people who buy the annuity (called anuitan). The amount of income paid depends only on the premiums paid into the annuity, the length of time payments, and investment returns accumulated. Annuities provide a fixed amount of income within a certain amount until the balance of premiums and investment returns are paid out.

Lifetime annuity provides income for the remaining life of anuitan. A variation of lifetime annuities continues to provide income for up to two pairs anuitan died (joint-life annuity). The amount paid depends on age anuitan, premiums paid into the annuity, and investment returns are accumulated.

Types of lifetime annuities are used as retirement benefits in Indonesia (as in civil and military) generally provide periodic payments every month until the lifetime of the main participants, then proceed spouse (widow / widower) of 60% of the monthly benefit the main participants, then down to son for 33.33% of pension benefits widow / widower of a maximum of up to three children who have not reached age 25, unmarried and has not worked.

In a lifetime annuity, a source of income comes from three “wallet”: Your investment, investment earnings and money from a pool of people in your group who died first from you. This is a typical setting on the annuity, which allows companies to guarantee the annuity income for life.

The nature of the underlying investments: fixed or variable annuities

Fixed annuities have a certain interest rate, similar to a bank Certificate of Deposit (CDs). In a fixed annuity, the insurance company guarantees the principal and minimum interest rate. In other words, provided a good insurance company financially, the money you invested in fixed annuity will grow and not decline in value. Growth in the value of the annuity and / or income paid may be fixed in dollars or a specific interest rate. Growth in the value of the annuity does not depend directly on the investment performance of insurance companies that support the annuity. Some fixed annuities provide a higher interest rate than the minimum if the actual investment, expense and mortality experience of the company is better than expected.

If you buy a variable annuity, your money can be invested in investment instruments multilevel return is not fixed, especially in mutual funds. The value of your money in variable annuity and the amount of money to be paid to you depends on investment performance after deducting the cost of managing those funds. To provide certainty, the insurance company can provide assurances that your annuity will never fall below a certain value.

Is Debt Costs

If you have a debt, whether it’s debt to the bank, payable to the creditor, then you  pay interest. Suppose you owe to the Bank valued at 100jt to the bank with interest at 18% / yr, then you will be charged a fee of 1.5juta each month. So is the cost of debt, the longer you pay it off, the greater the cost of which you bear. Try to calculate if you owe with a duration of 3 years, which cost you bear is 1.5 x36 = 54, more than 50% of the loan principal. If you have debt, quickly paying off your debt. If you have not had a trial and error do not owe.

People We Love Can Be Cost

If the husband / wife or your child has a birthday, we always want to describe who’s special birthday gift, like new watches, toys, expensive clothes, etc.. Though not necessarily they need it and want it. If you bought your (male) to buy 1 set of expensive equipment which make up your wife, of course, increases the cost in your family, but if your wife bought a gold necklace complete with liontinnya, you actually have to do INVESTMENT. If your family’s future financial crisis necklace can still be sold at high prices, even the price has gone up. So what will you buy for your wife? Jewelry of gold? Or the equipment expensive cosmetics reply?

Earn more money

The most difficult step. How can you earn more money? To get rich is more important to earn money. You can put your senses on a promotion at work or a new job. You can keep a blog about one of your hobbies, start a webshop, starting a consulting or whatever.

Your passions that you have to somehow can convert into a business? Often you can best think of something cool with some help from friends and family. And with the internet at your fingertips you can quickly start a company.

Save while 20% of your income and build reserves. And you can experiment with making investments or investments. Let money work for you, use what you have as leverage to get more.

Doesn’t have to Investment

As a novice investor can very easily use mature funds. With these funds have more risk than savings, but ultimately a higher return often. The greater the risk, the greater the yield can often be.

Try to invest for the long term. Every economic crisis is again an end. Through your ability to properly distribute and simply wait to have you reserve will grow slowly but surely. The greater your assets, the more financially independent you are.

Three pillars of good financial management

For yourself and your family financially healthy to keep you consider the following three pillars of personal finance:

Save – Put at least 10% of monthly income in a savings account and treat it with as much respect as paying your rent or mortgage. Also read “Pay yourself first, then your accounts.
Investment – When you’re ready, start investing. Let every euro works by wisely investing in shares, mutual funds, real estate, bonds or companies. Let your obviously well informed and only starts to invest if you know what your doing.
Insurance – Cover your risks off by insurance against things that can cost you too much money.
Financial independence is reached only when you build your character as a strong fortress. If something is not directly affected the system in situ. You have enough back-up measures to protect your financial future.