Equity
Indexed Annuity Article of the Month - 1
Secrets Your Banker Won't Tell You -
Which Loan is Best for You?
By Mike
Makler
Recently I was driving my Car and heard
an Advertisement for a Mortgage lender who claimed they
would help you find the Best Loan out of over 400 Different
Loan Types. 400 Different Loan Types, now that has to
be confusing. How do you find the Best loan for you.
Clearly the Best loan for you is not the Not the
best loan for your bank. Learn the Secrets your
Banker doesn't want you to Know.
Some Questions to ask when Choosing a Loan.
- How Long will you keep the Loan?
- How Long will you keep the House?
- How much profit is the Bank Making on this Loan?
The Average Homeowner will get a New Mortgage
Loan every 7-years. If you are going to move or refinance
in the Next 7-Years is a 30-Year Fixed rate real estate
loan Really Best for You. A 30 Year Fixed rate mortgage
loan is certainly Best for the banks. A Typical in Force
30 Year Fixed rate Loan in force today has an Interest
Rate of between 5 and 6%. The Average cost of Funds
for a Bank is about 1% (How much interest do they pay
you own your checking account,Your Saving account).
This means on a 30 Year Fixed rate Mortgage the bank
Earns about 4% to 5%. If you keep your home-loan less then
7 Years why get a 30-Year Fixed rate Loan.
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Some Mortgage Lenders are offering mortgage home loans with Payments
Fixed for 5-years based on a 1.95% Interest rate. If
you look at a standard 200,000 Loan at 5% the Monthly
Payment would be $1073 the same Loan at 1.95% would
have a Monthly payment of $734. $339 a Month Less. $4,068
a Year Less. If you were to invest this $4,068 at the
end of 5-years with a 5% Return you would have over
$22,700.
Using Equity Indexed Annuities that
Pays a 10% Bonus for all loan payments made in the first
5-years, a 5% Return is very reasonable. Equity Indexed
Annuities have another advantage in that they accumulate
tax free. So now which is the best loan for you?
Equity Indexed
Annuity Article of the Month - 2
Use this Simple Trick, it's to Buy $100
Bills Direct from your Bank for only $97.
By Mike
Makler
Most People just don't understand the
power of using their home as a Wealth Creation Tool.
How many people do you know who have lived in the same
house for 10, 15 or more years and have virtually no
mortgage, You know the Type 'House Rich Cash Poor'.
There are strategies these homeowners can use to put
that House Rich Part to work Building Wealth.
Did you miss the Going out of Business sale at the
Bank Last Week? They were selling $100 bills for only
$97. Darn you missed it. Ok the Bank didn't have a going
out of business sale but if they did how many $100 Bills
would buy? I'd back up the SUV to the bank and see how
many Bills I could get in and then go back for as many
Trips as I could. Your Bank is Selling $100 Bills for
$97 Back up the SUV.
The Equity in your Home is like that Bank. If you Qualify
you can Borrow money at 2% or Less and turn around and
Achieve Returns of 5% or More fairly safely with Equity
Indexed Annuities. In Most cases the money
you borrow is Tax Deductable while the money you place
in the Equity Indexed Annuity is Tax Deferred.
Taking a Closer Look, If you Borrow money at 2% and
turn around and get a return of 5% that means your net
return is 3%. For every $100 you Borrow you are placing
$3 in your pocket. Wow the bank really is selling $100
Bills for only $97.00
Many lenders are offering Mortgages with the payment
fixed at 2% for the first 5 Years. What are you waiting
for back up that SUV and get your $100 Bills Today.
reprint permission from Article Source:
EzineArticles.com
- About This Month's Article-1 and Article-2 Author
is Mike Makler, a Financial Consultant in the St Louis
Missouri Area Specializing in Real Estate Loans and
Annuities. To Learn More Call Mike at 3143985547
or Visit Mike's Web Page: http://ewguru.com/finance
- Get Mike's Newsletter Here http://ewguru.com/fin-news
- Copyright © 2005-2006 Mike Makler
EIA Editor's Note: For more information on the equity
indexed annuity market try contacting an
independent insurance agent, or a professional
Certified Public Accountant, and continue reading
below, including our free online-information from the
United States Securities and Exchange Commission (SEC).
Please pay a visit to a Mortgage
Broker for additional Mortgage Loan information.
All About Equity-Indexed Annuities
from The U.S. Securities & Exchange Commission
Are you considering buying an equity-indexed
annuity? This brochure explains equity-indexed annuities
and provides resources for obtaining additional securities
information.
What is an equity-indexed annuity?
The
equity indexed annuity is a special type of contract
between you and an insurance company. During the accumulation
period – when you make either a lump sum payment or
a series of payments – the insurance company credits
you with a return that is based on changes in an equity
stock index, based on stock market trading like the
NYSE,
and an index such as the S&P 500 Composite Stock
Price Index, or other stock index markets, or perhaps
the high
yield capital markets, or commodities trading for higher-risk
commodity traders.
The insurance firm often guarantees a minimum return. Guaranteed minimum return
rates vary. After the equity accumulation period, the insurance
company will make periodic payments to you under the
terms of your contract, unless you choose to receive
your contract value in a lump sum.
Can you lose money buying an equity-indexed annuity?
You can lose money buying an equity-indexed annuity,
especially if you need to cancel your annuity early.
Even with a guarantee, you can still lose money if your
guarantee is based on an amount that’s less than the
full amount of your purchase payments. In many cases,
it will take several years for an equity-index annuity’s
minimum guarantee to “break even.”
You also may have to pay a significant surrender charge
and Federal Income tax
return tax penalty and likely pay more tax if
you cancel early. In addition, in some cases, insurance
companies may not credit you with index-linked interest
unless you hold your annuity contract to full maturity.
What are some of the contract features of equity-indexed
annuities?
Equity-indexed annuities are complicated products that
may contain several features that can affect your return.
You should fully understand how an equity-indexed annuity
computes its index-linked interest rate before you buy.
An insurance company may credit you with a lower return
than the actual index’s gain. Some common features used
to compute an equity-indexed annuity’s interest rate
include:
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Participation Rates.
The participation rate determines how much of
the index’s increase will be used to compute the
index-linked interest rate. For example, if the
participation rate is 80% and the index increases
9%, the return credited to your annuity would
be 7.2% (9% x 80% = 7.2%). |
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Interest Rate Caps.
Some equity-indexed annuities set a maximum rate
of interest that the equity-indexed annuity can
earn. If a contract has an upper limit, or cap,
of 7% and the index linked to the annuities gained
7.2%, only 7% would be credited to the annuity. |
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Margin/Spread/Administrative
Fee. The index-linked interest for some
annuities is determined by subtracting a percentage
from any gain in the index. This fee is sometimes
called the “margin,” “spread,” or “administrative
fee.” In the case of an annuity with a “spread”
of 3%, if the index gained 9%, the return credited
to the annuity would be 6% (9% - 3% = 6%). |
Another feature that can have a dramatic impact on
an equity-indexed annuities return is its indexing method
(or how the amount of change in the relevant index is
determined). Some common annuities indexing methods
include:
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Annual Reset (or Ratchet).
This method credits index-linked interest based
on any increase in index value from the beginning
to the end of the year. |
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Point-to-Point. This
method credits index-linked interest based on
any increase in index value from the beginning
to the end of the contract’s term. |
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High Water Mark. This
method credits index-linked interest based on
any increase in index value from the index level
at the beginning of the contract’s term to the
highest index value at various points during the
contract’s term, often annual anniversaries of
when you purchased the annuity. |
These and other features may be included in an equity-indexed-annuity
you may be considering. Before you decide to buy an
equity-indexed annuity, you should understand how each
feature works and what impact, together with other features,
it may have on the equity annuity’s index profit potential.
Are equity-indexed annuities registered with the Securities
and Exchange Commission?
Equity-indexed annuities combine features of traditional
insurance products (guaranteed minimum return) and traditional
securities (return linked to equity markets). Depending
on the mix of features, an equity-indexed annuity may
or may not be a security. The typical equity-indexed
annuity is not registered with the SEC.
Who should be contacted if we have an "equity index annuity"
concern or problem?
If you have a problem with an equity-indexed annuity,
you should contact your
state government insurance commissioner or state
department of insurance. In addition, we would also
like to hear from you, although we will likely only
have jurisdiction to resolve your particular issue if
your equity index annuity is a security. You can send
a securities complaint using the online-complaint form
at the SEC.
You can also reach us by regular mail at:
Securities and Exchange Commission
Office of Investor Education and Assistance
100 F St NE
Washington D.C. 20549
Where can I find more information?
Before you purchase an equity-indexed annuity, you
should understand how it works, what factors to consider
in making your decision, and how you can avoid common
problems. An “investor
alert” concerning equity-indexed annuities is available
on the NASD’s website.
For more information about investing wisely and avoiding
fraud, please check out the Investor Information section
at the SEC's site.
Reprinted with Permission of the SEC
website Investor
Information. - We are offering this Equity Indexed
Annuity information as a service to investors. It is
neither a legal interpretation nor a statement of SEC
policy. If you have questions concerning the meaning
or application of a particular law or rule, please consult
an attorney or
financial professionals who specialize in financial
investment markets, or stock market and securities law.
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