Fixed Indexed Annuities are considered a safe money product because they’re backed by the financial strength of the insurance company guaranteeing safety. This is an insurance product, not a stock market investment, and interest earned is locked in each reset period. Money invested will never be lost, never go down in value, and will earn pre-determined gains every year. Making a fixed indexed annuity a safe, or low-risk, tax-deferred long-term savings option.

Beyond an FIA, there are three additional types of annuities.

  • Variable Annuity
  • Immediate Annuity
  • Deferred Annuity

Variable Annuities are high-risk investments typically mutual funds that are comprised of stocks, bonds, money market instruments (CDs, money market funds and accounts, etc.) or a combination of all three. You can lose what you invest because you carry the risk of performance. 

An Immediate Annuity is a lump-sum investment with payments that can begin within a year and guaranteed for a specific time, from 5-years to a lifetime. Payments will end after death unless the annuity included a cash refund, or death benefit. The lump-sum initial payment can be a downside for many.

Deferred Annuities don’t have limits like a Roth IRA or 401k and payout the same way they’re purchased, in a lump sum or monthly payments. Payment dates are set by the investor and taxes are paid when money is taken out. 

Contact Alloy Wealth Management about our Retirement Planning and Investment Management services. We often recommend annuities as part of a balanced portfolio. 800-689-3935