Fixed Annuities

The Advantages of Fixed Annuities

Fixed Annuities

Fixed Annuities

An annuity is termed as any continuing process of payment over a fixed or flat total amount per annum. According to financial theory, it is a terminating flow of a fixed payment over a given period of time.

As a reliable, safe, secure, and defer taxation investment instrument, fixed annuities offer a steady return to investors who are nearing their retirement. There are several reasons that make investors opt for fixed annuities over other annuities. Among them include the following.

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Rate Stability

They have fixed rates that do not deviate (stable rates). Unlike other annuities that are majorly affected by market forces, fixed annuities maintain their annual rate of return. That means you can easily calculate your investment returns year after year without any difficulties. You can also continue to make some improvements on your net worth unless you stop or withdraw your investment.

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Certainty

Fixed annuities provide a great deal of certainty when it comes to earnings and returns. For instance, you can be given the rate in advance so that you can be able to decide whether or not to invest your money. In addition, fixed annuities can eliminate the tentative nature of other type of annuities.

Tax Deferral

There are various annuities that can allow you to postpone your taxes. It means that you don’t have to pay the tax as per your annual earning interest. This leads to a considerable return on your investment compared to a person who pays the tax yearly. As a result, your savings increase at a very quicker pace. Tax deferral can be done continually until you find yourself in a relatively low tax bracket of post retirement.

Low Risk Investment

In today’s unpredictable economic environment, fixed annuities are proven to be among the safest investment tools. That means the low risk investment has been protected against market forces. Hence, there are no rapid changes and fluctuations as is the case with shares and bonds buying. As a result, you can complete your investment period without making any withdrawal and thereby, receiving a reasonable sum of money. Since the interest remains intact, there is little to worry about on risk.

Post-Death Benefits

Note that a fixed annuity can not be included to your estate. That means your creditors have no over it. In case you pass on, the money will be strictly transferred or directed to the beneficiaries you mention while making the agreement.

Retirement fund

If you are nearing your retirement age, you can still continue receiving the interest by annuitizing your investment. The goodness of this retirement fund option is that it is available with almost every type of annuities. However, many people don’t make good use of it. This is because they are not given proper information about it thus lacking knowledge on how to go about it.

These are some of the common benefits of fixed annuities that one can gain over other types of annuities. Generally, fixed annuities are steady and secure investment options that are less risky though compared to others.

Related Links:

Indexed Annuities

Immediate Annuities

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