Best of both worlds
A fixed-indexed or equity-indexed annuity is a type of fixed annuity where money is invested in a fixed account and has the potential to earn additional interest based on the performance of the stock index (such as S&P 500 or Dow Jones). The advantage of a fixed-indexed or equity-indexed annuity is that there is minimal risk, with additional potential for an increased return compared to a fixed interest rate return. The disadvantage of fixed-indexed or equity-indexed annuities compared to fixed annuities is that if the index you choose does not perform well, you may not earn as much money. When these annuities are annuitized, the payments are fixed.
Two phases to an annuity:
- accumulation phase: money is invested over period of time or lump sum and it earns rate of return
- annuitization phase: funds are withdrawn regularly (such as monthly or annually) from the contract until you die
It is recommended that annuities be purchased as part of your overall financial plan. There are complexities to annuities and financial planning that involves many options and considerations.
Contact us today to find out what annuity fits your needs.
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