关键区别 - 年金与复杂兴趣
Investors use a number of investment opportunities in order to generate returns. Annuity and compound interest are two such options that can be considered by an investor depending on the investment requirements. The key difference between annuity and compound interest is thatwhile annuity is an investment that offers a guaranteed income for a certain period of time as a result of a substantial sum paid up front; compound interest investment earns interest on a growing basis since each interest will be added to the original amount invested when subsequent interests are calculated.
Investors receive payments soon after making the initial investment
Multi-Year Guarantee Annuities (MYGAS)
It pays a fixed interest rate each year for a certain period of time.
The amount of income varies in this type of annuities since they give the opportunity for investors to generate higher rates of return by investing inequity或者纽带sub-accounts.Incomewill vary based on the performance of the sub account values. This is ideal for investors who wish to benefit from higher returns, but at the same time, they should be prepared to endure the probable risks. Variable annuities have higher fees due to the associated risk.
What is Compound interest
E.g. Assuming that a $1,000 deposit is made on the 1st of January at a rate of 10% per month, the deposit receives an interest of $100 per month continuing for the year. However, for the deposit made on 1st of February at the same rate, the interest will be calculated not on $1,000, but on $1,100 (including the interest earned in January). The interest for February will be calculated for 11 months assuming that this is a one-year investment.
FV= PV (1+r)n
FV= Future Value of the fund (at its maturity)
PV= Present Value (the amount that should be invested today)
n = Number of time periods
Continuing from the above example,
E.g. FV= $1,000 (1+0.1)12
= $3,450 (rounded to the nearest whole number)
This means that if a deposit of $1,000 is made on 1stof January, it will grow to $3,450 by the end of the year.
|Annuity is an investment from which periodic withdrawals are made.||Compound Interest earns interest on a growing basis since interest is earned on interest in addition to the original amount.|
|年金需要一大笔的密苏里州ney as the initial investment.||Investing can be done even from a small fund.|
|Growth in Interest|
|Annuity investment can be increased by investing in equity and bond sub-accounts.||Compound Interest investment value grows even in the absence of additional investment since interest earned increases automatically.|
概括– Annuity vs Compound Interest
The difference between annuity and compound interest is that unlike in annuity, compound interest does not require a lump sum of money at the beginning of the investment; thus, it is an attractive investment option for many investors. Investing in an annuity is usually done by a person closer to retirement in order to receive a guaranteed income during retirement. However, if the stock market conditions are not favourable, investments in variable annuities will generate more volatile returns.
1. “What is an annuity?” Investopedia. N.p., n.d. Web. 24 Feb. 2017.
2. “Compound Interest vs. Annuity.” Budgeting Money. The Nest, 28 Apr. 2012. Web. 24 Feb. 2017.
1. “Compound Interest with Varying Frequencies” By Jelson25 – Own work (CC BY-SA 3.0) viaCommons Wikimedia