Annuities Explained

In the choice of investment options for retirement, many Americans choose income insurance as part of their portfolio. Annuities can be a safe way to protect your capital and get a decent return on their investment at regular intervals for a period of time or for life . Are tax-deferred until the time of payment. There are many nuances , or options that come with different annuities on the timing of payments and the term of office . However, in general we can segment revenues into three main types : fixed and variable annuity Annuity Annuity Index. Which annuity is right for you (if any) depends on your particular family and financial situation . Each type comes with the differences in risk and return, and we will explore here .

fixed annuity  

A fixed annuity is the safest type of annuity. With it, the investor receives the capital protection and a guaranteed minimum interest . They are similar to bank certificates of deposit , but geared more toward retirement and greater liquidity . Usually, the investor can expect an interest rate of between 3-10% . This annuity is purchased with a single premium up front , and usually ranges from 1-10 years. The longer the annuity , it often means that the higher the interest rate offered. This annuity is often ideal for investors already in retirement.

variable annuity 

A variable annuity is more flexible than a fixed annuity with a potentially higher return but more risk. It provides the same benefits for deferred taxes. Variable annuities can differ in many aspects from supplier to supplier , but the following are generally true .

Variable annuities can be purchased with an initial lump sum , or it can be restored in time , with many payments as investors would like. With this type of annuity you are able to invest in stocks and mutual funds . Obviously , this can affect the monthly payments that you receive . The ' additional amount of risk in this type of annuity is up to you , depends on the types of actions that decide to invest , but they usually come with a fixed option , is that it allows you to change the safest route at all times. This is usually the ideal type of income for investors with a couple of years before retirement , allowing further growth of savings.

Indexed Annuities 

Indexed Annuities are between variable and fixed . With an indexed annuity , the interest rate you receive is related to the execution of an important stock index . Indexed annuities offer minimum guarantees for interest and income borrowers , and therefore safer than a variable annuity , while providing an opportunity for a return higher than a fixed annuity .