Annuities and income streams

When it comes to investing your money, do you know where it is going and who is managing it? Do you have a good investment advisor on your side that is helping you choose the right investments? Are you investing in annuities? It is hard to understand what annuities are along with income streams and how they work.

In short, an income stream is just a regular source of cash that comes from an investment. In the investing world this is called an annuity. Annuities are commonly used when you have a large lawsuit and you are rewarded with a large settlement. You will take the money in the form of annuities as you will receive monthly or yearly payments from the settlement.

Annuities can be purchased from an insurance company to provide you with a fixed payment amount. Of course you need to consider inflation when you invest in future annuities that will be paid to you. Inflation can take away a lot of money from your annuities so it is important to have a financial advisor that will be able to help you evaluate your situation and understand your future investment needs.

When you are rewarded with a settlement, it is better to opt for annuities or income streams? The lump sum payment can be nice as you have a lot of cash right now, but most people will spend all of their money in a hurry so its not even around in 5 years to help pay for their medical needs they have as a result of the accident. A lump sum payment also means you need to include it in your taxes, and you will have to pay taxes on this amount. Hiring a good financial advisor can help you to see which payment method is right for you and to make sure you can afford to pay the taxes when they are due.

If you do accept the lump sum amount, you want to talk to your investment advisor as to what you should do with the money. Should you take it all and stick it in savings where you have access to it often or is it a better idea to look into investing the money directly into your retirement account or CDs and money market accounts? Hiring the right financial advisor in the first place will help you to avoid costly fees on your investments and to also make sure you don't blow through all of the money right away so it's still around for your company in the future to pay for your additional medical needs.

For a large settlement, always look at the present value of annuities and use the calculation for future annuities to see if you will have plenty of money to pay for your needs. You also need to make sure you can access the money in a timely manner to help pay for the medical needs.

Do the calculation on your own before you meet with the investment advisor to see if you have it right and to see if it's one that looks good for your situation. This way you are educated when you talk to them and it will give you a better opportunity to learn more from the investment advisor when it comes down to talking about the distribution of your lump sum payment.

Always look ahead and consider your retirement when you are debating between the lump sum payment and the annuities. Consider the tax benefits of both to see which one will charge you less and which one will offer you more money.