The formula for annuity calculator is a vital tool that can be used to effectively calculate every time-periodic payment to be made on an annuity basis.  An annuity, as you know, is just a series of certain specific periodic installments that are received back at a future prescribed date.

The formula for annuity calculator

Present value portion (PV) or the current value of the formula can be explained as the initial amount payout, having an example being original payout amount on to your amortized loan.

In the formula, P indicates the payment, PV shows the present value, r gives you the rate per period and n the number of periods. The formula for annuity payment calculator that has been briefly described here is generally used to perform immediate calculations of ordinary annuities. This general formula basically assumes about a constant rate that the rate doesn’t change, while the payments remains as same and the initial payment is just a single period away.

A kind of usual annuity that gradually grows in a proportionate rate would be using a formula which is meant for a growing annuity payment. Moreover, an annuity that alters the payment amount along with or without in relation to this rate need to be changed for each alterations.  A certain annuity that has its initial payment due while at the start would use the annuity due payment formula; however, one would use the formula for a deferred annuity amount payment if there is a payment due while at a later period of time. This really helps by assisting as great formulas for an annuity calculator.

You can just use the formula for annuity payment for those kinds of income annuities, amortized loans, structured settlements, lottery payouts (it is highly recommended to make yourself familiar with the format for annuity due payment, in the case of initial payment starts immediately from the current date), and also in case it any other kinds of constant periodic payments.

As per the period, the rate of interest per period and also the total number of periods must reflect how often your payments are made. For instance, assume that your payment is monthly, then your monthly rate has to be used in the annuity calculator. In the same way, the total number of periods must be the number of months of your installment. This specific concept is really important to be kept in mind along with all financial formulas and while using the annuity calculator.

Lifetime annuity calculator

A lifetime annuity is a specific type of insurance service that pays its customer out a certain part of an underlying portfolio of their assets over the life of the one who invested. Lifetime payout annuity can be helpful in providing variable or fixed payments. Considering the case of a fixed payout service scheme, the investor will receive a fixed amount for every payment that he or she makes along with COLAs cost-of-living adjustments. Payouts which are made under a variable payout scheme must be one with fluctuations as the payments are purely based on how much value the investments currently being held in the investor’s annuity’s portfolio have.

Lifetime Payout Annuity essentially eliminates the possible risk of outliving the specific amount of money that one has kept for meeting all and any retirement expenses.  However, the payments which are guaranteed for life can be helpful in reducing an individual’s risk of longevity. Even then, this scheme of payout may result in issues for those investors who wish to leave their estates to their descendants. This is because of the fact that the lifetime payout annuity payouts stop with the death of the policyholder. However, at the same time, the policyholder could make some alterations which ensure continued payments to an estate or which guarantee a specific number of payments; however, the payouts could change in the latter case.

What you must know about the annuity payment factor

With the help of annuity payment factor, you can effectively simplify those lengthy and complex calculations which are required for an annuity amount payment. The formula for this is specifically made for making annuity payment calculations an effortless task if you are aware of the current value of that specific annuity you own.

Just as with any financial kind of formula that deals with a certain rate and term, it’s really vital for you to match those payment periods with that of a rate per period which is given in the formula for annuity payment factor. For instance, suppose if the installments are made or the payments have received on a monthly basis, the rate has to be an effective monthly rate.

With this, you can effectively use an annuity calculator.