Investing in Fixed Indexed Funds Can Restrict Your Capital Growth

Annuity investing is grabbing the headlines a lot these days as it seems to be an uncomplicated, systematic and lucrative investment opportunity, but only until the facts disguised are made public. So, here's a detailed guide for those who want to know what are the negatives of investing in a fixed indexed annuity before they buy into the words of their investment advisors and salespersons and gear-up to invest their money in a proposition beset with pitfalls and downsides. At the time of signing the final application for a fixed indexed annuity investment, often investors do not pay heed to the terms and conditions column, and pencil in their unique signatures, in turn, finalizing the contract. However, there are several negatives which are intentionally or unintentionally kept secret during the entire process. Let us take glimpse at the most important ones.

Unfolding Untold Story of Capped Returns

A fixed indexed annuity locks your principal amount for a long term, say 15 to 20 years. To top that, the returns earned are capped by the insurance companies; holding you back from having complete access to your own money. Certainly, the investment plan has been designed to fetch returns the way indexed markets do, however, some limitations have been imposed, cutting down the investors' profits. Moreover, a fixed indexed annuity is designed with emphasis on fund management, no matter how far capital growth is neglected.

Don't Ignore Taxation Trouble

Returns from a fixed indexed annuity are subject to income tax, unlike other indexed instruments that enjoy the benefit of paying much lower capital gains tax. This doesn't just confirm a higher rate of taxpaying; it also makes the nominee/survivor of the applicant liable to pay a part of the return from this scheme as income tax. However, this instrument enjoys deferred tax treatment; still the taxation policy takes it far away from being an ideal annuity instrument. Procedural Fees may Rob your Returns The procedural fee, operational cost and the fees of the fund manager collectively come out to be 1-3%, depending on the internal and some external factors. This further drops down the return for the investor and most of the time, the return underperforms indices.

Ouch! Does That Withdrawal Fee Hurt?

With a fixed index annuity, the investor is liable to bear a 5-10% early withdrawal fee for the amount beyond the set threshold or the maximum penalty-free annual amount. Once you know your withdrawal limit, and know how to stay within the brackets, things go smooth, but if the annual withdrawal amount crosses the limit, things might turn topsy-turvy. You might not be looking for a fixed indexed annuity, but chances are that it's been sold to you! If this is the case, someone who understands your present and future financial needs and can well plan out a scheme for you and your heirs can probably act as a shoe-horn in this situation, guiding you to mold your annuity and get at least something beneficial out of it.

The Veterans Aid and Attendance Pension

The inevitable realities of aging require advance planning, and to gain true peace of mind you need to cover all of your bases and prepare for any eventuality. Senior citizens during the current era are faced with some unprecedented circumstances because people are living longer, and medical science can now do some amazing things. People over the age of 85 are the fastest growing portion of American society, so when you are planning your estate you have to take the implications of this ever-increasing longevity into consideration.

As you are planning for the inevitabilities of aging you do need to take stock of the assets that you have accrued, but at the same time, it is important to do your research and gain an understanding of any government benefits that may be available to you. Many of our senior citizens have honorably served their country, and there is a veterans' benefit that is very relevant to those who are engaged in advance planning called the Veterans Aid and Assistance Pension. This benefit provides a monthly payment to qualified veterans who need daily assistance addressing their basic needs, like dressing, eating, cooking, bathing, etc.

The Veterans A & A Pension is not to be confused with the military retirement pension that veterans receive after 20 years or more of continuous service. This benefit is available to veterans who served on active duty for a minimum of one day during wartime, along with a total of at least 90 days of active duty overall. These figures are subject to change by the VA, but as of this writing single qualified veterans can receive as much as $1,632 per month and couples may be eligible for up to $1,949 per month. To apply for the Veterans Aid and Attendance Pension, contact the United States Veterans Benefits Administration.

Investing in Real Estate for Retirement

Why would one want to invest in real estate? All realtors will tell you: appreciation, cash flow and depreciation. Undoubtedly, over time, real properties will again rise in value. Even with the pounding that prices have taken, over the past 10 years (as August 2010), residential properties, on average (Case Shiller/SP 10 City data), outperformed the S&P 500 +47.3% for real estate, -30.9% for stocks! If you are saving for retirement, doesn't it make sense to diversify using investment properties?

If you have though of "downsizing" at or prior to retirement, consider the purchase of your retirement home now. After a professional adviser "crunches" the numbers, you might be amazed to see that buying a second home that can be rented can very well fit into your budget. In addition to rental income that you could receive, rental real estate also benefits from depreciation. This is a phantom expense that can turn a situation that is profitable from a cash flow perspective into a loss for tax purposes.

If you file jointly and your Adjusted Gross Income (AGI) is $100,000 or less, you may be able to write off up to $25,000 of your real estate losses against your income. That's a $6,250 reduction in taxes for those in the 25% tax bracket.

When you are ready to downsize, there could be great news for you. Unless current tax laws change, you may be able to sell your current residence and receive a tax exemption on up to $500,000 on the capital gains you realize. With that money, you can probably have enough to pay off the existing mortgage on the rental and move in to it. You might even have enough extra to provide you with extra income for the rest of your life.

One of the keys to success in the real estate market is understanding how the tax laws work in your favor. With proper planning, your cash flows can be managed and taxes reduced, making your purchases affordable.

Always be sure to check with your professional tax adviser before entering into complex investment transactions and tax laws are continually changing.

Gary Lewis' ideas incorporate more than 30 years working with investments including 20 years experience in the derivatives industry and 10 years as a fee-only comprehensive financial planner. He specializes in designing portfolios that meet the client's required rate of return with a minimum level of volatility. You can read his writings on financial markets at Asset Design Center.

Financing Your Investment Properties

An investment property is a property (land, house, flat, apartment, building etc.) that you buy with the purpose of producing monetary returns. Financing your investment property can be a great way to earn some steady income. Many people buy homes with the aim of renting them and thereby bringing in a considerable amount of monthly income. Similarly, several real estate investors are there who pay for multiple properties, get them renovated and then sell them for a higher profit.

To start on the road to successful journey, there are three best ways to finance your investment on property. While you use them correctly, they can help you get a substantial amount of money from your property investments:

1. Self Financing:

It is much viable to make use of your own resources to buy the property. You will have to meet all the expenses yourself. Similarly, you will be liable for all profits and losses. Self finance is the easiest and reliable source of investing because this way you lower your accountability. This prevents you from going through lots of paperwork, adhering to the strict rules of financing companies and having to discuss your every move with your partner. You can do things liberally but it will be risky if you do not stay careful. However, by seeking advice from qualified experts, it is possible to use your resources properly and maximize the benefits.

2. Loan and Mortgages:

Normally banks, building societies and credit unions offer bank loans or mortgages as a way to finance your investment on property. Such institutions offer loan for a percentage of the purchase-price whereby keeping the property secured as guarantee for the loan. Depending on the interest rates fixed by the finance ministry or central bank, the loans or mortgages are held with either fixed interest rates or variable interest rates.

This way to finance a property investment really is the most established, safe and well-known. Not only you can make down payments but also meet other capital requirements. In addition, you can repay the bank from the amount you earn from rent or sales of properties.

3. Partnership:

Partnership with other investor is a great way to finance your investment on property.It is a win-win relationship for both parties whereby you divide the cost and share with other partners. Utilizing the assets of your helping hand will make your credit rating sky-rocket. Although you get restricted in decision-making process but there is less risk factor if you have the good business chemistry with your partner. Being able to master the art of partnership gives you the ability to finance as many property investments as you want.

Remember, a safe and reliable financing strategy affects your investment venture in the long run. Carefully consider all your options before you decide how to finance your property investments. Choose the right option that keeps your risks low, ensures a high rate of profit and works best for your interest.

Vacation Property Management - Web Tools Are Best

Every rental manager knows how difficult vacation property management is. It can become even more of a horror without modern tools. Imagine taking and organizing reservations and bookings over the phone and logging everything by hand. The good news is that you don't have to think of ever experiencing this nightmare.

These days, you can get your hands on rental software. These are outstanding pieces of modern technology that let you breeze through reservations, payments, information dissemination, fees and more in just a few minutes. You can install one in your website and click on or drag and drop items and color schemes to update information on your properties. With just one glance you and your customer will get vital information about the status of various properties.

Software for vacation property management can come in download or web-based form. There are excellent options for both types but you will be in an advantageous position if you pick a web-based tool.

One clear reason why web tools are best is because they are highly accessible any time anywhere. All you need is a stable internet connection and you can manage your properties from any place in the world. Even if you're off on a business conference or on a holiday trip, you can slot reservations, change minimum stay policies and serve up the freshest promos to your customers.

Accessibility is not the only thing you will enjoy. Web tools also take away the headache of managing the software package itself. Vacation property management tools that are based entirely on the internet don't drain your bandwidth because the software providers host the tools themselves. Hence, you don't need to pay for a bandwidth upgrade.

Also, developers of online tools take care of the costs and complexities of technical maintenance. What you will essentially be getting from a web tool is software as a service or (SAAS). You don't need to pay someone else to monitor and take care of software. You also don't need to worry about very expensive upgrades.

One last advantage to internet based tools is the ease of use. You don't have to go through hoops and loops to integrate or install a system. Many online tools are so simple to use that if you can follow basic instructions and click on a mouse, you'll have no trouble using them at all.

In general, it's easy to see why online software is better than its stand-alone counterpart. Of course, much depends on choosing vacation property management software that's top of the line. Go for a name that has stood the test of time and that enjoys a good reputation among its users. Take a look at some of the sites maintained by other managers and find out what they use. A good reputation product will most likely be used by many.

Condominium Property Management

A condominium is where a specified part of a piece of real estate is individually owned while use of and access to common facilities such as hallways, heating system, elevators, exterior areas is executed under legal rights associated with the individual ownership and controlled by the association of owners that jointly represent ownership of the whole piece.

Looking after a Condo suite is a full time job. From the moment you receive the keys to the day you sell the Condo, a good management company can make the difference between a profitable investment and a poor one.

Property Managers in Toronto will step in and perform, on the owner behalf, all the day-to-day tasks with regards to the condominium. These tasks include rent collection and bill payments. During the normal operation of a tenanted unit rent checks might return NSF, tenants might want to pay cash or use another banks to pay the rent dues. A local point of contact is needed. Bills need to be paid and constant contact must be kept with the billing agencies like the city, the condominium building management and the utility companies.

The local property manager is your tenant's point of contact for questions, requests and assistance. The professional property manager will be able to inspect the tenanted suites, supervise the tenants and buildings and keep an eye on the owner's interests.

When you get possession a tenant needs to be found. In Toronto, tenant screening needs to be done very carefully to avoid renting the property to an incompetent tenant.

Credit Check, Letter of Employment, references are one part of the screening and the experience of meeting hundreds of tenants is the other. Finding you a tenant quickly is important but doing it in a professional way is even more important to the success of your investment.

Three Qualities of Excellent Property Management

Whether you own a single executive office building or a string of apartment buildings, you want to make sure you are getting the best possible return on your investment at all times. Smart real estate investors use a property management service to handle the upkeep on their properties as well as keep them filled with quality tenants. Like anything else, not all property management companies are created equal. So here are three qualities to look for to make sure you're getting the most for your money.

• Focus on Occupancy: The bottom line is you need to make payments to the bank and simply cannot afford to have offices or rentals lie vacant for prolonged periods of time. An excellent team will employ various strategies and market your property on the right venues to ensure high occupancy rates. A service understands that quality is as important as quantity and will do everything possible to draw in desirable tenants.
• Impeccable Building and Grounds Maintenance: If you want tenants to become long-term tenants, the buildings and grounds on your property must be well-kept and made to look as attractive as possible year-round. The best property management teams contract only with quality and dependable services and repair providers so you can be sure that everything will be ship-shape at all times.
• Excellent Customer Service: You shouldn't have to worry about the daily ins and outs of operating your properties; after all, that's what you hire a management team for! Monthly financial statements, timely rent collections, annual reports and other customer service essentials are a must.

If your current management team is simply not cutting in with one or more of the above, it may be time to look for a new one. After all, your real estate investment is too important to leave to chance.