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Fixed and variable annuities are the two basic choices to choose from when it comes to purchasing an annuity. Of the two, the fixed annuity is considered to be the more conservative choice. It offers a steady, guaranteed growth. The fixed annuity earns a guaranteed rate of interest that remains constant throughout the pre-determined time frame. Once the agreed upon time period ends, another is set-up with a new interest rate that better reflects the current state of the market. (Although the interest rate might vary slightly throughout fixed annuity timeframe, it still offers more of a return than a variable) Although fixed annuity plans generally offer fewer features than a variable annuity plan, their fees are also much lower. Most fixed annuity contract expenses are taken into consideration when the company supplying your annuity declares periodic interest rate fluctuations.
Why choose an annuity? Some of the reasons are as follows:
- Untaxed gains allow for faster investment growth.
- Receiving a source of retirement income.
- Freedom to switch between investments within annuity tax free.
All in all, a fixed annuity serves the purpose of bringing stability and safety to your investment portfolio.
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Compare fixed annuities with LIFE ANNUITIES
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