If safety is a big issue and yet you want the best possible return with guarantees, consider a fixed annuity for your next investment, as many others are doing today. People find that there are significant reasons to select a fixed annuity before they choose a CD. Of course, to find the best deal, you have to shop.
Of course, the interest rate is normally the first thing most people check but there's more differences when you compare fixed annuities than just the interest rate. Interest rate or rate of return is a good place to begin, but you need to look further to find the best fixed annuity for your situation.
One example is the length of time the company guarantees the initial rate of return. Sometimes the first year rate contains a bonus rate, after that first year, the annuity rate drops down to a much lower rate, sometimes not competitive with other fixed annuities.
Each product has a minimum guaranteed rate of return also. This is the rate that no matter what the economic conditions, the company promises is the lowest you'll ever receive. When interest rates at the bank drop below a percent, the minimum guaranteed rate becomes important.
Request information on the minimum amount the contract requires and the minimum initial investment. Some companies offer bonus interest rates for larger amounts of money but give a respectable rate for lower investments. Other companies won't even allow you to open an annuity if you don't have enough funds for their minimum.
See if you can add more funds and what the minimum addition must be. Once you find how easy the annuity is to manage for both organization and tax benefits, you'll probably want to add more. Consider this aspect when going into a fixed annuity. You also may find that the older you get, the less complicated it is to have only one or two products.
Surrender charges, like early withdrawal penalties are important when you invest your money. Some companies surrender period is shorter than others are. You might find an annuity that allows you to invest for one year and then remove the funds without penalty. Other products may have charges that last not just your lifetime unless you take annuity payments.
See how your heirs have to take the proceeds. There are a few annuities on the market, which only allow heirs to annuitize or they face a stiff surrender charge. These are not the best annuities unless that fits your wishes. Some parents are delighted to know that their children won't be able to spend the funds all at one time.
For those that worry about the potential for emergency cash, most annuities offer the ability to access a portion of the principal as well as all the interest. Some policies allow you to take out 10 percent of the money in the contract without paying a penalty. In a liberal policy, if you don't use the 10 percent one year, it transfers to the following year and accumulates each year.
Shopping for an annuity is the same as any other major purchase. It requires that you shop carefully and look for features that are important for you. Even though you may talk to an insurance agent and look at the products he offers, check around for other products to see if his are the best for your situation.
Christopher Tyler educates on the topic of fixed annuities and other investment options for retirement. As the economy has fallen into the worst recession in decades more and more investors are looking for safe options to grow their investment for retirement. Come see to learn more about the fixed annuity as a viable investment for retirement.
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