Annuity Transfer – What are the Risks
by: Amit Laufer
Many people who know in the back of their minds that they got the possibility to transform a monthly payment or annuity long term payments into a big lump sum and by that to relieve some temporarily financial problems, or need to buy a new car or a house or help their children and so forth are tempted to exercise this process into action. Although it is a very natural feeling and sometimes even a real life need or deep inner quest for power and control, it is not in their best financial interest to say the least.
It is no wonder that the U.S federal laws encourage long term payments in both cases like Structured settlements and lottery winnings. There are many good reasons for that and I’m going to spell them out as clear as I can.
– In some countries around the world it is legal to pay for lottery winning in one lump sum. Experience shows many of these people lose most or all of their money in a few years Time, due to the following reasons:
– Ordinary people who get into their possession a very large sum of money don’t really know how to manage their treasure or how to invest it wisely, they are not prepared for it and they are overwhelmed with a delusion of over abundance of wealth, they become totally careless on how and on what they spend their money.
– Even if they invest their money, they go to high risk speculative investments as they try to get high yields. Instead of going for a much solid and safer, “widows & orphans” type of investment portfolio. Neither do they go for the golden middle way in between of a mixed portfolio. They don’t use investments advisers or financial consultants.
– They become over generous with their family and friends, they buy their children homes, cars or any other mater...