The best investment should not be a gamble. It should assure you of some security as well as some minimum returns. When you are investing for your retirement, this situation is even more serious. It would be heart breaking to learn that your lifetime savings are lost in a scheme which makes a 100% loss. Unfortunately, very few schemes will have such features. Luckily, there are annuities which might be able to offer you this surety. The deferred option of fixed annuity is one that you might favor.
The first thing that you need to know about these schemes is how to deposit your principal. Insurance firms give you two options for depositing the amount that you want to invest in the scheme. First, you can deposit the money at once if you have the entire amount. Second, you can pay the principal in bits over a long period so long as your contract allows. The second option is may be appealing to most people especially the ones that realize the importance of investing early enough. Therefore, they are able to invest enough before they get to their retirement age.
When getting into a deferred fixed annuity investment scheme, you need to know that there is an accumulation period. During this time, you are not supposed to withdraw any part of your principal or its earned interest. However, there are some exceptions which you can take advantage. One, you can withdraw some amount for paying college fees for your dependent. Two, you can also get some money for purchasing your first house. Three, there are provisions for withdrawing annual amounts ranging between 5% and 20% of your principal. Any other withdrawals out of these exceptions will attract some tax penalties. Therefore, if it is not necessary, you should wait for your distribution period for you to start receiving payments.
In spite of these limitations, you get very many advantages from this investment. Maybe the greatest benefit is the fact that your earned interests are not taxed during the accumulation period. Therefore, the money that was supposed to be tax adds to your principal and earns more money for you. However, it is advisable to make long-term investments for you to enjoy full benefits of the deferred fixed annuity.
When the time for payment distribution is right as described in your contract, there are many options for you to receive the payments. You could choose to have a single lump sum payment or a periodic type of payments. With the latter, you can choose monthly, quarterly, half yearly or yearly. Moreover, you can choose to have these regular incomes for a specific length of time or a lifetime. The lifetime option may be the best option for people who are investing for their retirement.
You might not get that advantage from any other investment scheme. In addition, these schemes allow you to name a beneficiary. The person you name gets all your regular payments if you die before receiving all your due payments. The least amount of incomes that can be distributed to the beneficiary is the balance from your invested money. However, most insurance firms will even pay this person the earned interest.
Considering all these advantages, it is obvious that the deferred fixed option of annuities is good invest options for your retirement. However, you should research on the firm that you want to invest in, to have the assurance that this firm will stay in operation for all your investment time. Otherwise, if such a firm collapses then your investment would also be lost.
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