Monday, August 06, 2007

Buy a fixed term annuity

Dear Mr Tan,

I wish to transfer a sum of money to each of my children (who are now adults). I wish to do it now, instead of many years later on my death. But, I do not want them to squander away the money. What is your advice?

REPLY

You can buy a fixed term annuity to make an annual payment to the beneficiary over a certain number of years, say 10, 15 or 20 years. You should be able to get a yield of about 3% to 4% on this annuity.

More importantly, it meets your goal about giving the money to your children, without the risk that they will spend it away within a short time.

1 comment:

  1. Income used to have a product called I-Gift which was actually an Annuity Certain.The purpose of this product was for people who want a stream of income or for gifting a stream of money to loved ones who lack financial discipline. However, I heard the product was misused by agents who manipulated and sold it for different purpose other than it was intended for; eg they were sold as an investment or for reinvestment resulting in client being short changed.

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