The little-known brother to the Hogwarts sorting hat, worn by each student at the end of the year to determine their grades. Alas, we’re just kidding. This actually involves annuities.
An annuity is an investment that pays a certain amount each year over a period of time. They come in a lot of varieties, each with its own provisions. One form of annuity is the indexed annuity, which ties returns for its principal to a certain stock index...the S&P 500 or the Dow Industrial Average, for example.To protect the investment, the annuity might guarantee a certain minimum growth rate, which comes regardless of what the index does. However, to allow the company to earn some profits somewhere, the annuity might also have a have a maximum growth rate. This is the annual crediting cap.
The benefit of these annuities to the customer is that they are safe...there is at least a minimum guaranteed growth rate. But the customer buys that safety by giving up the chance for big growth in years when the stock market performs extraordinarily well. The downside and upside are both capped.Related or Semi-related Video
Finance: What are lenders?27 Views
finance a la shmoop what are lenders is that a bagel company hmm okay well maybe
it doesn't matter here lenders are the people and institutions
and countries who loan money banks are lenders they loan money for small [woman walks into bank]
business for big business and well everything in between
banks are big lenders they generally focus on large amounts for big
corporations and take their spread then you have savings and loans well they're
smaller more intimate local cousins of the banks and they focus on local loans
like your local flower shop needs 25 grand in credit but lenders also sell a [flowers in a store]
special kind of loan a mortgage for when you want to buy a home and the interest
on mortgages is distinctively tax-deductible your big brother can also
be a lender that hundred bucks he loaned you yeah is not like the hundred that [sister approaches big brother]
grandmama quote loaned you unquote ie Big Brother's long does not just get
naturally forgotten his alone carries interest in newgy penalties when it's [fist appears as sister smiles]
not paid back to lenders it's people who loan money lending loaning got in there
kind of related [sister being nuggied]
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