The long-planned sequel to the award-winning Broadway sensation Annuity Maybe!
Actually, the term refers to a specific kind of annuity contract. In an annuity, you pay a lump sum now to get regular payments some time down the road. Usually, these payments last until you die. However, in an annuity certain, the payments will continue (not that you'd notice), with the money going to some beneficiary that you name as part of the contract. The length of time these payments continue will also get laid out in the contract.
One of the risks of an annuity is that you won't get full value from the money you put into the investment because your retirement period will be too short (due to your aforementioned death...talking retirement planning can be a bummer). An annuity certain hedges this risk somewhat. You might not get full value personally, but at least your heirs will, since the annuity will at least get paid out for a minimum length of time, whatever might happen to you.
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Finance: What is Perpetuity?44 Views
finance a la shmoop. what is a perpetuity? forever. that's what you should think
when you hear the word perpetuity. well a perpetuity is a cousin to an annuity.
in an annuity you invest a given amount of money and then you get a portion of [100 dollar bill]
that dough paid out to you over a set number of years, or in the vein of a life
insurance policy it gets paid out until you are you know doing backstroke Six
Feet Under. and annuity sunsets well basically when you. do but a perpetuity [skeleton in the ground]
outlives you. it pays forever even when you're dead. so why would anyone want one
of these things? well they work for university scholarship endowments. you
know like think about a great Italian literature philanthropist named well
let's say Bella pepperoni. no offense to our Italian shmoopers out there. she made [woman wears name tag]
her fortune analyzing the works of Dante and Machiavelli and wants to endow a
scholarship for other PhDs in Italian Lit forever. well she'd put in say a
million bucks and it might get invested in half and bonds half in stocks with
yield and the throw from that million bucks might be something like a four or
five percent a year or forty or fifty grand and that would be more than enough [equations on screen]
to cover the basics for a PhD in Italian lit well more or less forever as
dividends get raised in stocks bro and all that stuff. the million bucks just
remains invested 50/50 stocks and bonds and the world continues to spin so yeah
even when she's no longer around to enjoy the fruits of her labor as well [headstone shown]
that fruit doesn't spoil develop mold and start to smell bad even if we can't
say the same for her. sorry. just keeping it real. [woman's picture next to casket.]
that's perpetuity. goes forever. perpetual.
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Technically, an annuity is any kind of regularly scheduled payment, usually made annually, quarterly or monthly...for the life of the recipient. Ev...