When investors think of ‘safe investments,’ they tend to think of bonds or CDs, which calculate from a pre-determined timeline and interest rates. During a low-interest-rate environment, both provide safety, but not necessarily, the returns investors are seeking. Bonds and CDs have differing benefits and risks despite being viewed by investors as ‘safe.’
A third ‘safe’ interest-bearing alternative is fixed-indexed annuities, which capture the upside of the market while protecting the principal from the downside risk. Before investing in bonds, CDs, or fixed-indexed annuities, the benefits and risks of each should be considered:
Fixed-Indexed Annuities have characteristics of both fixed and variable annuities and are a contract between an insurance company and the purchaser. Many indexed annuities have a minimum interest guarantee, and your principal is protected from market volatility, which retirees tend to seek.
In today’s low-interest-rate and volatile market environment, investors seeking safety must consider how any investment fits into their investment strategy. All the above investments offer benefits to the investor. Each has its place in retirement planning, but only if suitable. As well as part of a financial strategy using other types of investments and accounts. Investors should fully understand the risks associated with annuities before purchasing them. If you have any questions about annuities, now is an excellent time for us to visit.
Disclosure: The newsletter and links are being provided as a service to you, they are not endorsed or approved by the Social Security Office or any other Government Agency. Please note that the information and opinions included are provided by third parties and have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.
Disclosure: An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax-qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but taxes and penalties may apply to non-qualified distributions. Consult a tax advisor for specific information.
Disclosure: This article is not intended to provide legal advice and is for informational purposes only. This is not a comprehensive review of all features and benefits. All the material details of these/this product(s) should be reviewed prior to making a purchase decision.
In addition Tampa Bay Advisory specializes in providing strategies for those who are seeking a better lifestyle during a low-interest-rate environment. If you have retirement savings of five million dollars or $50,000, we can ensure it works as hard. As a result, we offer our experience and knowledge to help you design a custom strategy for financial independence. Contact us today to schedule an introductory meeting!