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Fixed Annuity As An Investment For Your Future

There are very many investment decisions that you can make at any single moment but you don’t because there are factors that allow or let you make those decisions. The factors are varied and diverse. Some of them include availability of money or lack of it, geographical reasons, risk averseness, returns involved, age, and others that make you or stop you from making certain investment decisions. When you look at some of the lifelong decisions that people make, it would only mean that they are very patient, disciplined or they completely understand what the returns will bring them. When you take for example the fixed annuity as a lifelong commitment that has not a lot of room to manoeuvre other than putting premiums into it you will agree that one needs to be fully prepared before taking this journey.

When looking at fixed annuity as future investment, be it for retirement as many prefer or for your children’s education trust or even taking care of your surviving spouse and children when you passed away, you are assured of getting a sure steady flow of income. Although you won’t be withdrawing unless under special circumstances, the interest earned accumulates and will end up being more than just keeping your money in a bank account. The returns are always higher at the onset of the annuity but as time passes, the insurances company reduces it but never below the minimum rate that has been stipulated in the contract. The rate may go down due to market factors affecting your investment and the market in general.

It serves as a very ideal way of saving for your old age. Quite a number of people can’t resist the urge to always break a fixed deposit account or a general savings account because there are no severe repercussions. In the fixed annuity case, you will have to maintain your cool all throughout because you stand to lose up to 25% of your principal on surrender charges if you withdraw the annuity early in life and another 10% on taxes to the government. If you are under the age of 59.5 years, you are not encouraged to withdraw an annuity because the above charges with be attached to your drawings. However as time goes on you can make some allowable withdrawals.

A fixed annuity plan earns an interest that is compounded. The interest keeps on growing and since you are not withdrawing it the government will not charge any tax on it. This is most ideal because when you are making the premiums you are in a high income bracket and you aren’t charged tax on the premiums but when receiving the payout you are most likely to be in a lower income bracket whereby the tax deferred will be lower.

There is always the comfort and security that comes when you are assured that there is a steady flow of income whether you are young or old.