The most important reason for any investor when he is putting his money in some enterprise is to make more money. Such an action requires sufficient research before getting started. The same case would apply for a fixed annuity investment. Its advantages will motivate you to go ahead with your plans while its disadvantages would help you know how best you can prepare for such situations. Let us first have a look at the advantages of this investment scheme.
The first benefit of these schemes is that they will most likely earn money for you without payment of taxes. This is an illegal tax evasion. Therefore, the authorities will not come looking for you claiming that you have broken any tax payment law. Luckily enough, being on this scheme helps in maintaining your good reputation. On the same note, the money that would have gone into tax payment will remain in your account. Consequently, it will also earn more interest for you. Actually, calculations show that the unpaid taxes contribute to 45% of all the earned interests, which sums to quite a lot of money.
The second benefit, which you get from a fixed annuity investment, is a low risk of losing your money. No one would get into a business if you knew that you are bound to make losses. However, there are people who usually get into these high risk ventures because success would mean equally high amount of profits. However, what would high losses imply? For a person who is putting all his income into such a scheme would be left with less money than his initial amount. This is why investing in fixed annuities is often considered good thing. You may be guaranteed of getting your invested cash back and may have the privilege of making some minimum amount of money without sweating for it. This happens despite the stock market’s volatility.
Thirdly, the range of capital that can be invested in these schemes is very wide. It accommodates both the people with only a little amount of money as well as those with some high amounts. This is unlike most other ventures that will require some minimum amounts and place an upper limit. Moreover, irrespective of the money that you invest in fixed annuity, in most cases you are guaranteed of receiving periodic payments for all your days after retirement. Moreover, in the event whereby you pass on before receiving all your dues, there will be the person whom you name as your next of kin. He or she will receive all the remaining payments.
However, there will also be disadvantages that you should look out for before getting into this annuity investment. To begin with, the fixed interest rates could change after some time. Therefore, when they decrease it will be a disadvantage for you since that was not in your plans. Moreover, it would be impossible to withdraw the invested money since you would attract high levels of surrender charges.
The second disadvantage is the fact that fixed lifetime payments could decrease in their value. This will happen due to increase in cost of living and inflation rates. Therefore, the payments that were enough at time X might not be enough for the same bills at time X+Y where Y is a positive number of years. This means that you should contact your financial advisor before making this investment.
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