Lump sum versus payments are a debate that continues to rage among financial investors. The reality of the situation is that it’s not very easy to make a decision which will be able to be used correctly to determine both the advantages and disadvantages of each type of investment. With a lump sum payment, the cash received in a relatively short amount of time is invested. This can have both advantages and disadvantages depending on your specific circumstances. It’s important that you know what these are so you can make an informed decision.
If you are looking at buying a piece of real estate with the goal of turning it into a rental property, the best thing would be to use lump sum versus payments. In this case, you will be using your investment funds and paying monthly mortgage or rent payments. If you don’t have the funds right now, you could always wait until you receive them but most people don’t have this luxury. When you buy a piece of real estate with the goal of making a profit, you will also have to pay for property taxes, insurance and perhaps a little extra in interest.
Another situation in which lump sum versus payments are most often applied is when someone is looking to make retirement income. Usually, people who receive pensions also receive annuity payments. If you are going to use your funds to supplement your regular pension payments, you should purchase a retirement account that features a low rate of interest. While you won’t be able to get as high of returns as you would with a pension payment, you will still be able to get something without paying out a ton of money up front.
L Lump Sum versus Payments When it comes down to it, you should always aim to invest your money into an asset that will increase in value over time rather than putting it into a plan that will require you to pay taxes on a daily basis. Unfortunately, many people make the mistake of investing their money into a mutual fund or a stock option that will not increase in value. These investments come with both the tax cost and capital budgeting fees associated with them. Instead of trying to determine if a lump sum would be better than current payments, focus on how much you can afford to pay out of pocket in the future for the sake of your overall capital budget.
Lump Sum versus Payment When you are trying to figure out which is better between lump sum versus payments, it helps to look at both positive and negative aspects of each. When you deal with a debt collection agency, you are subject to penalties and legal action. These will come against you, even if you did nothing wrong, as the debt collection agency can take any steps necessary to recoup what they are owed. However, when you work with a reputable and established debt company, this is not going to be a factor in your overall decision making process.
Lump Sum versus Payment Another factor to consider is whether or not your lump sum should come with a per Diem payout or a stipulated finding. Per Diem payments are given to employees who have been employed by your company for at least a year. Because you paid a lump sum to acquire their services, they should be entitled to this payment per year. A stipulated finding means that the company will get a percentage of the entire amount of the lump sum, regardless of whether or not they actually receive payments from the employee in the future.