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What Are Annuities In
Contrast To Other Investments?
There are so many investment choices that we wonder what are annuities
and how do they fit in?
Once you understand the annuity
definition
and the basic
types of annuities available, the next step is to compare
them.
While trying to do the best for our future
retirement, we are presented
with a variety of investment options to choose from such as 401k,
IRA,
CD’s, savings accounts, mutual funds, etc. So what are annuities
in comparison to other methods?
There are similarities and differences to the 401k, IRA, CD’s and other
types of investment possibilities. Each one has its strengths and is
beneficial under certain settings.
The benefit
of an annuity is that it allows you to choose when you want
to receive routine income. There is no need to wait for your
retirement. If that is what you want…
You are more in control
of the interest rates and when to start the
payments back to you.
So, what are annuities against the others? Here is a simple comparative
analysis.
You Have a
Guarantee of Funds
Your annuity funds are placed
with an insurance company. This company
guarantees
your funds and is responsible
to see that you get paid
according to the agreement...
Unlike the 401k, IRA & CD there is no limit to the amount that
you can place into an annuity. (And, the mutual funds and
stock market have no guarantees at all...)
Insurance comapnies have annuity
ratings and maintain state regulated levels of reserves and
capital.
You Determine
The Interest
You can determine if the
interest is to be fixed.
Or you can set it to be variable
according to the options you
choose (similar to mutual funds)...
This method provides you with better
control, unlike the 401k, IRA, CD,
mutual funds and stocks. As your interest method and amounts are set,
you do not have to be a finance investment wizard. You do not have to
micro-manage your account unlike the 401k, mutual funds and stocks...
You Determine Time Period
You can choose to receive monthly/quarterly/annual income after one
month of your initial deposit (immediate
annuity). Or your money can grow until a set future date (deferred
annuity).
Unlike the 401k or IRA, you don’t have to wait until your retirement to
receive regular income without penalty.
Mutual funds and stocks have their own rules. There could be penalties
as well as taxes on gains, which your tax advisor can fully advise you
on.
A CD has its similarities. However, one usually picks from specific
choices that are available at the time of investment. On the other
hand, an annuity can have a fixed interest for a much longer period
of
time...
Less
Financial Restrictions
The 401k and IRA have specific financial restrictions on how much can
be put in. The CD has rules of its own, and their offers change from
time to time.
An annuity has a set
agreement, from the beginning, which does not
change unless specified in the contract...
Financial Advisor Updates
Again, the 401k, IRA, CD, mutual funds and stocks, all have their
unique advantages.
There are times when those are the best choices
based upon the issues at hand. However…
Rules and regulations can and do change. Thus it is always best to
speak with a specialist to see what the choices
are for your specific scenario...
Get a free
annuity
quote
- let us help guide you
through
the options to make the best choices for you!
Or, get a free consultation from a Certified
Financial Planner to go
over your plans to help you make the best decision for
your needs.
"You'll be glad
you did!"
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