A Quick Guide to Annuities

If you’re 70 years old and want guaranteed income, you could spend $200,000 on annuities and receive more than $1,300 a month for the rest of your life.

That works out to about $300,000 in payouts if you live into your 90s. Not a bad ROI!

These returns are possible because you do not buy an annuity such as stock or bonds; this financial product is actually a form of insurance. Insurance companies are just as likely to sell an annuity, as are big brokerages like Goldman Sachs.

However, there are many kinds and variations of annuities, so finding the right one to suit your financial goals is tricky.

In the following article, we’ll provide a quick guide for your annuity investment.

Immediate or Deferred

If you desire to create a vehicle that generates income right away, an immediate annuity should interest you. With this insurance product, you invest a large sum of cash, and you get a return within a month or so. There’s no waiting for maturation. But, of course, with such a quick turnaround, you may have to pay extra fees.

Furthermore, an immediate annuity may have less of a return because there’s a minuscule maturation process for the investment.

On the other hand, you can also buy a deferred annuity. This product is a good bet for people who are years away from retirement or need the guaranteed income and can wait on the ROI.

The money you place in the annuity grows according to the type of product you’ve selected.

Also, the growth is tax-deferred while the annuity maturates.

Fixed Annuities

So, how does the annuity grow in a dollar amount? That depends on which product you invest in. A fixed annuity is the most reliable return on your investment.

Your annuity grows at a fixed interest rate and then is paid out as a guaranteed amount for the agreed-upon term of the payments. However, the lack of risk makes this one of the lower returns you can receive from an annuity.

Variable Annuities

Instead of one steady interest rate affecting your investment, a variable annuity comprises separate accounts containing stocks, bonds, and other financial products.

The upside to this account is that there is a guaranteed floor that the annuity will pay. If your subaccounts do well, then that profit is added to your monthly payment.

You can learn more about these types of annuities and how to protect yourself through small law firm marketing themselves as guarantors.


The last general type of annuity is one that is linked to the growth of a major financial index. With these types of annuities, the money you pay for the product is invested in a find that closely follows an exchange like the S&P 500 or the Dow Jones Industrial Average.

These types of annuities are a good bet over the long haul because, like the variable annuity, they pay out a minimum amount and any profit generated from the index’s growth.

The Cost of Annuities

There’s no debate that annuities will cost you more than investing in a money market or depositing the cash into a 401K. However, you need to keep in mind that annuities are insurance products.

Hence, they will have a guaranteed return that won’t fluctuate with the overall economy. Of course, the annuity may grow at a better rate, but you can still count on a dependable amount of income when your annuity matures.

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