By: Mike Anderson
Submitted: 2011-03-28 01:19:18 | Word Count: 533
If you are one of those persons who are spendthrift and are unable to save for the future, then you should immediately start thinking about investing in some kind of a financial product such as the fixed annuity. An annuity is a financial plan that is offered by an insurance company. It has the features of a life insurance along with other investment plans. A good plan of fixed annuity should guarantee great returns along with a safe and secure investment. There are a variety of annuities available. Here we are about to discuss about the fixed annuity and the annuity rate.
Variable annuities are for those investors who are averse to taking up risky investments. Fixed annuity is a much safer investment plan for a person who makes his living with his job. The fixed annuity is more popular with the commoners because they are safe investments. It is so planned as to help the retiree in reaching a financial goal. Some examples of a fixed annuity plan are the retirement savings or the college education funds etc. Most of the people want to get back a guaranteed return on their investments after a certain period of investment. But he can always choose from different payout timings too. The returns in a fixed annuity are received in various kinds of ways. But it is necessary to get the set rate of interest or you can also have the return put back into a larger market index. For example, the S&P 500 is a kind of annuity where the returns will rise as and when the stocks go upwards.
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The major USP of the fixed annuity plan is that it guarantees the safety of money. The amount will not get lost over the years. You might have a guaranteed return of 2% or more, depending upon the amount that you have invested. It is of course much better than the negative rate of returns. While considering a fixed annuity, make sure to check and understand the annuity rate of the plan.
If you invest in mutual funds or stocks, you are actually risking your money. In case of a fixed annuity, you might not earn a great rate according to the market trends, but it is also true that the money is going to give you guaranteed returns over the next few years. This is important especially since you are making a fixed annuity plan keeping in mind the impending retirement. Also another benefit is the tax treatment from the IRS. The fund that grows at an annuity rate is deferred from the tax. Depending on the IRS status of the funded amount, you might also get a better tax treatment in case of the fixed annuity plan rather than that you receive on other types of investments.
Remember to consider a few factors like whether you will be able to keep that amount aside for a long time, how many payments would you like to receive, how much income you must have etc.
