Financial Planner Explains Fixed & Indexed Annuities
Annuities can pay tremendous benefits when incorporated into your long-term financial plan. However, an important part of the annuities planning process is to determine which annuity is right for you. Part of this decision involves considering your tolerance for risk. For those who would prefer minimal risk while realizing considerable returns, fixed and indexed annuities can provide the benefits you are looking for. Alpha Crypto Consulting founder Kris Montgomery can walk you through these products and help you choose which one is right for you.
What is a Fixed Annuity?
Fixed annuities are a type of annuity that pays income at a fixed rate of interest on any contributions you make to the fund, unlike a variable annuity, where the interest rate varies according to the performance of the underlying portfolio. Annuities can be purchased with a lump-sum payment or by way of paying premiums over time. This phase is often referred to as the “accumulation phase,” and any interest accrued is tax-deferred.
Advantages of a Fixed Annuity
Some pros and advantages of fixed annuities include:
- Guaranteed rate of interest. Typically, fixed annuities include a guaranteed minimum interest rate, which can guard against the possibility of declining interest rates.
- Protection of your principal. Fixed annuities are attractive for retirement purposes because your principal investment is never at risk, unlike stocks or other assets.
- Guaranteed income. Fixed annuities will pay income in the future at whatever period you choose – monthly, quarterly, or annually. In addition, fixed annuities can generally also be converted to immediate annuities, meaning that you can begin receiving income when you need it.
All of that said, fixed annuities are not the best choice for everyone. Kris can help you find the right annuities product as part of your overall financial plan.
What are Indexed Annuities?
Indexed annuities are a type of variable annuity, meaning that it pays a varying rate of interest on the principal investment. However, they are somewhat unique in that their interest rate tracks a particular index such as the S&P 500, rather than the performance of an underlying portfolio. Indexed annuities allow investors to take advantage of growth in the stock market and see greater returns than they would with a fixed annuity. And without depending upon being actually invested in a specific portfolio, indexed annuities offer an opportunity to see greater gains with less risk.
However, indexed annuities also typically limit the amount of gains that you may see. In other words, gains in the particular index may not be fully realized by the investor. These caps can vary by contract, but Kris can explain the various products to you so that you can make an informed decision.
Contact Alpha Crypto to Discuss Fixed and Indexed Annuities
Fixed and indexed annuities can pay income to fill the gaps left by other sources of retirement income, but it’s important to choose the right product for you. With more than 10 years of experience in annuities planning, Kris can help you find the right annuity that will meet your goals. Call or email us today to discuss your goals and which annuities may be right for you.