Are Indexed Annuities A Good Investment
![How Fixed Index Annuities Work Infographic Annuity Annuity Retirement Personal Financial Management](https://i.pinimg.com/originals/09/47/0f/09470f3f37b8f0653a00369474f807f2.png)
The Good Indexed annuities have characteristics of both fixed and variable annuities.
Are indexed annuities a good investment. In addition to the advantages and disadvantages above below are some helpful guidelines to help you decide if a fixed index annuity may be a good investment for you. Indexed annuities are not too good to be true but they can be pretty good if you keep your expectations in line with the contractual realities. One other common practice of fixed indexed annuities is to place caps on growth.
The result is a greater potential upside than a. At the same time you have to be aware of the risks involved. Understanding Indexed annuities Indexed annuities feature a guaranteed return plus a market-based return.
First it is important to note that this product FIA is not technically an investment. As for the stock market return question that one is trickier. For example if the investment index goes up in one year by 30 you may be capped at say 4 and therefore miss out on a 26 gain.
With indexed annuities also known as equity-indexed annuities you dont invest. In a nutshell an indexed annuity -- which is sometimes called a fixed-indexed annuity or an equity-index annuity or a variation on one of those -- is an investment. Unlike index funds fixed index annuities are.
Many indexed annuities have a minimum interest guarantee. Instead it is an insurance product that allows you to have potential gains. Indexed annuity investments and payments are tied to stock market indexes such as the SP 500.
These contracts offer a handful of indexes you can have your assets follow without actually investing in the index which means you cant lose money. So the short answer is that Fixed Index Annuities can be a good investment if you fully understand the benefits and limitations of the contract and if its fit properly within a portfolio. That said indexed annuities can be a good investment.