Annuities are a fantastic investment tool utilized to experience tax deferred growth. Unlike certain retirement plan options such as IRA’s and 401(k)’s, annuities have no set maximum investment amounts that can invested on a yearly basis.
There are three main types of annuities:
- Fixed Annuities
- Variable Annuities
- Indexed Annuities
Fixed annuities are invested in sub accounts that pay interest on a monthly basis. The income paid out is fixed and the annuity can not lose value.
Variable annuities invest in sub accounts similar to mutual funds. The sub accounts can be invested in fixed income securities (bonds) or equity securities (stocks) or a blend of both. Most variable annuities have several investment options to choose from.
Indexed annuities are fairly new and are more of a blend between a variable and a fixed annuity. These invest in indexes like the NASDAQ, DOW or S&P 500. These annuities are very special as they offer a guarantee of the investor’s principal. Therefore you have the ability to realize significant returns on your investment without exposing yourself to the risk associated with investing in normal index funds.
Annuities are also used to provide income for life, hence the term annuity.
For more information on annuities, please contact us at 800-833-1704.