While the market advice for most of the past two decades has been heavy on the push toward stocks and other volatile but high-return options, the original logic behind advising people to take advantage of technology IPOs and new industries was to fuel innovation after building a secure base. That means investing in the infrastructure pieces for your portfolio that hedge risk and protect your principal, allowing you to be assured that your higher risk investments can only help you in the long run. Without this secure hedge against the occasional misstep in the market, it’s hard to be sure you will get the outcomes you want. Among the various options for investing in stable and predictable returns, fixed deferred annuities deserve more attention than they’ve been getting.
Why an Annuity Provides Peace of Mind
A fixed deferred annuity is basically a savings account with benefits you can’t get unless you combine it with a life insurance policy. It provides some relief from taxes, too. Basically, you need to make an initial investment and then pay premiums, and in return you can withdraw up to 10 percent of the money in any given year without penalties. Some age restrictions on penalty-free withdrawal may apply due to laws around retirement investing. There is an option to convert this annuity to an income stream for either a fixed number of years or until death, and it can be exercised whenever you are ready, after the surrender period passes.
What Do You Need?
Annuities of this type typically require an initial investment of principal between $2,000 and $100,000, and after that your premiums help them gain value as you enjoy the security that comes with a guarantee on your principal and your minimum interest rate. Talk to a broker today to learn more about what this option can do for your retirement savings.