Description
discuss primary benefits of various annuities and recommend one annuity to your 25 year old nephew, provide specific examples on the salient manner in which the annuity that you recommend would provide the greatest benefit to your nephew upon his retirement at age 65.
Explanation & Answer
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An annuity is an investment made in lump sum or periodically for a certain period of time. The annuity generates interest from payments which is compounded after a certain period of time.
benefits of annuities include
-They allow one to save away a larger amount of cash and defer paying taxes
-generation of revenue from interest earnings
the best kind of annuity for my nephew would be deferred fixed annuities. When annuities are deferred and fixed, this means that my nephew would start to receive payments after retirement(at 65) and would be assured of a fixed rate of return.
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