Investopedia

Continue to Site »

Annuity In Advance

Filed Under » ,
Dictionary Says

Definition of 'Annuity In Advance'

An amount of money that is regularly paid at the beginning of a term. Rent is the classic example of an annuity in advance because it is a sum of money paid at the beginning of the month to cover the 30 days to follow. An annuity in advance is also called an "annuity due."

The opposite of an annuity in advance is an annuity in arrears (also called an "ordinary annuity"). Mortgage payments are an example of an annuity in arrears. Like rent payments, mortgage payments are due on the first of the month; however, the mortgage payment covers the previous month's interest and principal on the mortgage loan.

Investopedia Says

Investopedia explains 'Annuity In Advance'

One instance where the difference between an annuity in advance and an annuity in arrears matters is in the valuation of income properties. If payments are received at the beginning of the rental period rather than at the end of the rental period, their present value increases.

Don't be confused by the name: an "annuity in advance" is not the type of investment product that we usually think of when we hear the word "annuity" in finance.

Articles Of Interest

  1.

    Explaining Types Of Fixed Annuities

    Learn about this popular retirement tool, its pros and cons and how annuities work to create a guaranteed regular stream of retirement income.

  2. An Overview Of Annuities

    These contracts provide a guaranteed income stream. Learn how they work and their benefits.

  3. Taking The Bite Out Of Annuity Losses

    If this investment product has caused you sleepless nights, it's time to consider alternatives.

  4. The Cost Of Variable Annuity Guarantees

    These products tempt investors with some impressive benefits - but they come at a price.

  5. Personal Pensions: Repackaging The Annuity

    Discover an investment that can provide a stable income once you've left the work force.

  6. Why Your Pension Plan Has Sovereign Debt In It

    One type of security pensions tend to invest in is sovereign debt, or debt issued by a government.

  7. How To Buy Annuities (And When Not To)

    Annuities are complicated products that require some basic homework to be done before requesting quotes. Retirees will want to think about how they envisage their lifestyle and even their potential ...

  8. 6 Popular ETF Types For Your Portfolio

    Exchange traded funds are an extremely popular diversification tool that can protect your portfolio during troubled periods.

  9. Top 5 Budgeting Questions Answered

    You don't need a degree to understand your money, begin saving and pay down debt.

  10. 5 Ways To Stretch Your Retirement Budget

    Living comfortably can be easy if you follow a simple plan.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Validation Period

    The amount of time necessary for the premium on an insurance policy to cover the commissions, the cost of investigation, medical exams and other expenses associated with the issuance of the policy.

  2. Winner's Curse

    Because of incomplete information, emotions or any other number of factors regarding the item being auctioned, bidders can have a difficult time determining the item's intrinsic value. As a result, the largest overestimation of an item's value ends up winning the auction.

  3. Glocalization

    A combination of the words "globalization" and "localization" used to describe a product or service that is developed and distributed globally, but is also fashioned to accommodate the user or consumer in a local market.

  4. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  5. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  6. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.
Trading Center