As parents we often have to weigh the benefits of what is best for our children in the future. One of the best things we can do for our children is to plan financially for their future.
You can actual get some to buy annuity payments. That’s always a good deal. Or you may choose to hold on to the payments.
Have you ever compared the cons and pros of an annuity or bank account to one another?
As a parent these days it becomes vital to set up accounts to prepare for our children financially. We have to search out what is going to give us the most bang for our buck.
We also have to be aware that when we are making an investment it becomes important to guarantee the future use of the money.
Buy annuity payments? Who will buy an annuity payment? There are reputable companies online and in the market that will be happy to assist you. Please make sure that you check out the companies track record before you make that decision.
Did you know that an annuity gets you back on interest alone is much higher than a bank account? An annuity will get you an interest rate of 4.5% that will neither decrease or increase for the life of the annuity. It is a fixed rate. So that means that you will always draw the same amount of interest.
A bank account will draw you an interest of less than 1%. The biggest difference would be that the rate on the bank account can go up and down and may even surpass the rate of the annuity. Can anyone really afford that gamble?
In today’s economy, everyone is majorly concerned about taxation. And annuity is never taxable. Neither the original payment amount nor the interest accrued by the annuity is taxable. Wow that has to be a winner with taxation concerns!
Now how does this compare to a bank account.
The interest on a bank account is taxable. However, the original payment amount is not taxable. Some good news there, but does not sound as good as the annuity does it?
The next question is quite a huge matter for everyone to consider. What happens if something happens to you the parent? Is that child going to be able to access that account?
With that annuity, a parent is able to set up how the child will receive the money. You can say that the child will receive a thousand a month until he reaches the age of 18. With a bank account the child will be locked out until he reaches age 18.
Are there any risks? With everything there is a risk. Back in the Great Depression, only six tenths of one percent was lost on annuities. A bank account is fully insured should something happen to our banking system. It would benefit one greatly to weigh out your options in this matter.
Being a parent is a difficult thing to approach these days. So make things a little easier for yourself by weighing your options carefully of which you should choose: an annuity or a bank account.