(NECN) Three great questions this week: index shares vs index funds, what to do with an old annuity (can you guess what I said?!), and how to get in on the Fed's new income-based student loan repayment program. If you're drowning in loan payments this program is worth looking into.
Lynn in Rutland, MA
What's the difference between an Index Fund and an Index Share? People seem to use them interchangeably.
Index Funds vs. Index Shares
* Funds: deposit and withdraw dollars
* Funds: Best for smaller balances and regular investing
* Shares: buy and sell like stocks
* Shares: More tax efficient, better for larger balances
Taylor in Cambridge
My
insurance agent called recently because I have an annuity that matures
in September. He is suggesting a new account with a different company.
Do annuities have the same guarantees as CDs?
Annuity Basics
* Annuities are more complex then they seem
* They DON'T mature like CDs or bonds
* As secure as the insurance company
* Read the contract
* Info at: SEC.gov, search:Investor info, publications
Tom in Boston
I hear there's a new government program
that bases student loan repayment plans on income. I'm in grad school
right now. Does this plan apply only to new loans or would my undergrad
loans be eligible? How do I apply?
Income-based repayment plan
* Federal loans or federal consolidation loans
* Extended repayment plan
* Payments capped at 15 percent of your pay above 150 percent of federal poverty limit
* After 25 years, balance is forgiven
* Info at: Studentaid.ed.gov, search: Income-based repayment plan
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