Financial products, like everything else, evolve over time. Financial institutions strive to be the best. With this in mind, they are always coming up with new products to stay competitive with the other companies. This has caused the market to overflow with too many new products that virtually go untested. Fixed annuities are not new and flashy, and consequently are often underrated or not considered. But if you are looking at investment vehicles, then you should not overlook a fixed annuity.
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Investments and investing, ebbs and flows like the tides, and there are some common sense practices that need to be implemented and understood before you start investing your money. A lot of companies, like insurance companies that sell investment products, will put together really good looking prospectus’ that promise great returns and they show you a lot of pages that will make you believe them. Contracts that are too good to be true usually have fine print that accounts for any excess risk exposure.
I am reminded of a great quote from Warren Buffett: “Beware geeks bearing formulas.”
You can see better returns for your investment if you stay with tried and true investment strategies that are easy to understand and implement. When push comes to shove, fixed annuities can perform as well or better for a solid retirement plan that any of those flashy indexed and variable products. With a fixed annuity, you know what to expect and that’s exactly what you get. There are no surprises or unhappy outcomes.
As far as annuity products go, fixed annuities and immediate annuities have been around for a very long time. And the reason for their longevity is that they have a proven history of working. It is possible that some of the new products will work, but as of yet, there is no way to tell. And you don’t want to give your hard earned dollars to an investment vehicle that may or may not be there tomorrow, a year from now or ten years from now. Doing this is would be like letting someone else pack your parachute.
What makes Fixed Annuities so great? There are several things.
Competitive Interest Rates - Bank CD rates or treasury yields will benefit you as much as the interest rates from fixed annuities. Plus, fixed annuities have a guaranteed minimum interest rate, allowing you to know that no matter what happens, your account will always grow.
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Income Options- Free withdrawal provisions allow a contract owner to access a portion of the account on an annual basis without penalty. Fixed annuities can also be transformed into an account that will give you a guaranteed income for a certain amount of time or you can choose a lifetime withdrawal annuity option. According to a study by New York Life and Wharton Business School, immediate annuities were proven to guarantee the larges amount of retirement income.
Safety- 2008 marked a disastrous year for the global financial markets. But most insurance giants were able to weather the financial storm because they follow very strict and conservative investment strategies. These institutions are required to hold higher levels of reserves than others in the financial industry. Because of this, many insurance companies are still very stable and profitable. As an added guarantee, each state has an insurance fund that will cover losses of up to one hundred thousand dollars, just like the FDIC does for banking institutions.
Is there a downside to fixed annuities? As with most things in this world, yes, there is. But we shouldn’t talk about if a fixed annuity has a good a or bad side. What we should discuss is if this is the right investment vehicle for you. Fixed annuities will make sense for some people and for others they are not the right solution to their retirement needs. Timing is very important as well. At some point in your retirement plan, you may consider a fixed or immediate annuity and it may be the right choice for you at that time, but if you pick an annuity at the wrong point in your retirement plan, you may not like the purchase down the road.
Most of the challenges for the annuity market come from salesmen who do not understand this viable investment vehicle. There are a lot of investment products that are great for the insurance company that is marketing them, but they are not the right choice for the investor. It is important to take the time to learn how to determine if a contract is good or not so good.
If a fixed annuity appeals to you, it is imperative that you find a qualified advisor. The people at AnnuityStraightTalk.com completely understand fixed annuities and can explain how to use them in a way that you will benefit the most. That might take a little extra work, but your nest egg deserves no less.
Make an informed decision about annuities. Get the Free Annuity Report at www.AnnuityStraightTalk.com. - fixed annuities