All Posts in Category: Fixed annuities

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Advantages and Disadvantages of Annuities

Like everything in life, there are advantages and disadvantages of annuities. These are explained in complete detail in our “2018 Annuity Guide,” but the following is a brief list of some of the advantages of annuities, as well as some drawbacks:

Advantages of Annuities

  • Tax-Deferred Accumulation (this is a huge advantage over bank CD and money market investing, because it means greater profits to investors due to the accumulation of interest. Every investment becomes taxable upon withdrawal, with the exception of Roth IRA’s, but unfortunately there are contribution limits to Roth IRA’s. Tax-deferral is a very important element to consider when choosing an investment vehicle, because if you are accumulating interest tax-deferred (as with an annuity), your premium(s) earn interest, your interest earns interest, and the money you would have paid in taxes earns interest. 
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What is a Fixed Annuity

A fixed annuity is a type of investment offered by insurance companies, one in which both principal and interest are guaranteed and backed by the insurance company. There are types of fixed annuities, however, that do not offer guaranteed interest rates, but instead offer higher interest rate potential with the same guaranteed safety of investment funds.

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