finance
4 common annuity mistakes to avoid
An annuity is a valuable financial tool. It can help diversify a person’s portfolio and secure funds for retirement. Over time, it can also prove to be a steady income source, which can be used for meeting daily expenses. However, individuals are prone to making mistakes while investing in an annuity and getting into unnecessary financial trouble. One must learn about these common mistakes and try to avoid them as far as possible. Overlooking the fees Various fees and expenses are associated with an annuity. These include investment management fees, administrative fees, and surrender charges. Individuals should account for these and read the guidelines carefully before signing up to avoid confusion. Failing to consider tax implications Tax implications for an annuity withdrawal can vary based on various factors. The withdrawal tax is generally calculated based on the investor’s age, the type of annuity, and the distribution method used. Individuals who do not consider these factors can face an expected tax liability. So, when considering investing in an annuity, one should consult a tax advisor to understand the consequences of withdrawal. Tax advisors can suggest a well-thought-out, tax-efficient strategy to increase profits. Not considering competitors Before making any investment choices, individuals must ask around and check market values.