Annuity Due

  

Categories: Insurance, Tax, Retirement

Annuity due is different from annuity dude, the guy who sold you the annuity in the first place.

An annuity due is an annuity that pays at the beginning of a time period. If you have an annuity due and you get monthly checks from it, you can expect those checks to start showing up at the start of the month (rather than later).

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Finance: What is Perpetuity?44 Views

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finance a la shmoop. what is a perpetuity? forever. that's what you should think

00:08

when you hear the word perpetuity. well a perpetuity is a cousin to an annuity.

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in an annuity you invest a given amount of money and then you get a portion of [100 dollar bill]

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that dough paid out to you over a set number of years, or in the vein of a life

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insurance policy it gets paid out until you are you know doing backstroke Six

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Feet Under. and annuity sunsets well basically when you. do but a perpetuity [skeleton in the ground]

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outlives you. it pays forever even when you're dead. so why would anyone want one

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of these things? well they work for university scholarship endowments. you

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know like think about a great Italian literature philanthropist named well

00:48

let's say Bella pepperoni. no offense to our Italian shmoopers out there. she made [woman wears name tag]

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her fortune analyzing the works of Dante and Machiavelli and wants to endow a

00:58

scholarship for other PhDs in Italian Lit forever. well she'd put in say a

01:03

million bucks and it might get invested in half and bonds half in stocks with

01:07

yield and the throw from that million bucks might be something like a four or

01:11

five percent a year or forty or fifty grand and that would be more than enough [equations on screen]

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to cover the basics for a PhD in Italian lit well more or less forever as

01:19

dividends get raised in stocks bro and all that stuff. the million bucks just

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remains invested 50/50 stocks and bonds and the world continues to spin so yeah

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even when she's no longer around to enjoy the fruits of her labor as well [headstone shown]

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that fruit doesn't spoil develop mold and start to smell bad even if we can't

01:35

say the same for her. sorry. just keeping it real. [woman's picture next to casket.]

01:38

that's perpetuity. goes forever. perpetual.

Up Next

Finance: What is Annuity?
58 Views

Technically, an annuity is any kind of regularly scheduled payment, usually made annually, quarterly or monthly...for the life of the recipient. Ev...

Find other enlightening terms in Shmoop Finance Genius Bar(f)