Annuities are a way of investing. An annuity is a contract you enter with insurance company whereby the company pays you income for your investment. Insurance companies know that you cannot outlive your annuity till its maturity and this may be harsh to you but a reality. It works in a way that you make some payments to the insurance company and the insurance company promises that it will pay you back another day.
The first reason why you should go for a fixed annuity is because they are tax deferred. You will not pay tax from the earnings until when you decide to withdraw or you start getting income from the fixed annuities. You will earn competitive returns from fixed annuities which are safe. It is also possible for you to get additional interest compounding because of the tax deference. The second reason why a fixed annuity is a worthwhile investment is the fact that there current interest rates are competitive. They are even much better than the certificate of deposits that is normally offered by the banks. They also have guarantees and the insurance company pays the guaranteed amount even if the conditions in the market are not good at all.
For some of the fixed annuity contracts, you have the permission to withdraw a percentage of your account value on an annual basis free of any tax penalties. It is only until you withdraw in excess if you are planning for your retirement, and then a fixed annuity is the kind of investment that you should go for. It provides you with long term guarantees and stability. Fixed annuities are known for generating significantly large retirement savings and therefore help you meet your goal for saving for your retirement. All you have to do is start early and continue being consistent/persistent.
The fact that they can provide one with a guaranteed life time stream of income has made fixed annuities more popular. They are actually the only kind of investment that gives individuals an opportunity for a guaranteed income, a principle guarantee and a guaranteed return. These days, the middle and the lower classes are turning to the fixed annuities mode of investment and it is not only the wealthy families that are going for them today unlike in the past. Thanks to the insurance companies, they have been able to reach out to all people of all classes. Fixed annuity is the most favored kind of investment to the certificate of deposits. The features of annuities a better compared to that of bank certificate of deposits in that they have generally higher rates, they have death benefits, and they have penalty free withdrawal allowances, have a life time income option and probate avoidance.
When going for a fixed annuity, ensure the company you choose has high ratings. The company should capable of making appropriate payments when the time for payment comes. It is a safe kind of investment because they are normally backed by assets of the insurance company issuing it.