Annuities: What are they?

An annuity is a vehicle for retirement that allows a client to deposit money in one lump-sum or series of payments so that money can grow at a fixed rate for a given number of years or based on the performance of a chosen stock index or indices.

There are four basic types:

Variable Annuities:
These annuities are dependent on the performance of the Market, and thus have greater potential for growth but also greater potential for loss. If you have a longer time to wait before retirement and are un-averse to risk, a variable annuity might be the right choice for you.

Immediate Annuities:
Immediate annuities provide guaranteed income, immediately. The client chooses the length of time to receive income payments and the amount that each payment would be. These payments can even be increased over time to protect for inflation. This is a good option if you are in retirement and want a steady, guaranteed income.

Fixed Deferred Annuities:
Probably one of the safest annuity options, the fixed deferred annuity provides protection from the Market with a fixed interest rate, growing your money until a time later down the road when you feel it necessary to start taking supplemental income payments.

Fixed Indexed Annuities:
The fixed index annuity is a reference to how the interest rate is calculated based on the performance of an index or indexes.

One more distinction is between monies funding annuities: qualified–tax deferred, and non-qualified–after tax.

Previous articleMutual fund basics
Next articleBoost your money confidence to achieve financial success
john is an American TV maker turned inside originator with an arrangement of prominent activities. After years composing, delivering and coordinating, john attempted his own hand at private insides, rapidly acquiring regard in the outline business