44+Understand+stocks+and+bonds+as+investing+alternatives.

What are the pros and cons of stocks and bonds as investing alternatives.

A mutual fund is a collection of stocks, bonds, or other securities. Investors purchase shares of the mutual fund that is managed by a professional investment company.

A typical mutual fund holds dozens of different securities. That offers some measure of diversification — a sharp decline in an individual security won’t be nearly as damaging to your portfolio as it would be if you only owned a few securities.

Mutual funds are professionally managed. Some of the finest managers on Wall Street devote their attention to buying and selling securities according to the goals of their funds.

And mutual funds often have a minimum investment of only $1,000 — some will accept even less.

Variable Universal Life Insurance The insurance companies have developed some innovative products that enable you to invest in a wide range of securities — including stocks — through your life insurance policy.

A variable universal life (VUL) insurance policy operates much the same as a "traditional" universal life policy. In exchange for premiums, the insurance company provides a death benefit. And, just like more traditional life insurance policies, the cash value within the policy accumulates tax deferred.

But here is the unique difference: you decide how the premium is divided among the subaccounts. With most policies you can select from several different investment subaccounts.

These investment options allow you to participate in the market and experience the gains and losses realized by the underlying securities.

The cash value of a VUL policy is not guaranteed. The investment return and principal value of the variable subaccounts will fluctuate. Your cash value, and perhaps the death benefit, will be determined by the performance of the chosen subaccounts. Withdrawals may be subject to surrender charges and are taxable if you withdraw more than your basis in the policy. Policy loans or withdrawals will reduce the policy’s cash value and death benefit, and may require additional premium payments to keep the policy in force.

Variable Annuities The insurance companies have developed another interesting product: the variable annuity.

With a variable annuity, you invest a sum with an insurance company, just as you would with a fixed annuity.

But instead of investing your money in its general account, as with a fixed annuity, the insurance company invests it in a separate account. Like a variable universal life insurance policy, this separate account is made up of a number of different investment subaccounts. You specify how much of your annuity will be invested in the various subaccounts.

Your return will be based on the performance of the investments you select.

Withdrawals made from a variable annuity prior to age 59½ may be subject to a 10 percent penalty. Generally, surrender charges apply if withdrawals are made in the early years of an annuity or life insurance policy. Subaccounts fluctuate with changes in market conditions, and when surrendered, your principal may be worth more or less than the original amount invested.

As with most financial decisions, there are associated expenses. Be sure you understand and compare them prior to investing

www.totalreturnannuities.com