Annuities is a financial instrument normally sold by insurance agents with the view of taking a lump sum from you in exchange of returning a fixed sum of money every month.

In Singapore, the most common annuity that we come across is our CPF Life. It is very unpopular and people seem to think it is a way the government refuse to let us take back our money.

But for me it does have its use, just that people find it hard to justify whether they are getting a good payout our return out of it.

The rate of return of annuities

To calculate the rate of return we can use an IRR excel formula to help us. I have come up with a easy rate of return calculator here for you guys to play around. Make a copy of it if you have a Google account. [Calculator here ...