How Fixed Index Annuities Protect Your Investment
Protecting your investment is a natural instinct for anyone who puts money anywhere. Whether it is in a bank, at home under a mattress, or in some sort of stock, you want your money to be safe. Fixed index annuities offer the opportunity for people to not only protect their original investment in the annuity, but to also gain interest and offer a certain amount of protection in stock market gains as well.
If you are looking for a way to invest in the stock market without the risk of absolutely losing your investment, then a fixed annuity could be a great option for you to consider.
Fixed index annuities focus on putting money into major stock in the stock market. Major stock is still subject to the same ups and downs of any other stock in the stock market. However, they are relatively safe with so many people investing in them. The exact stock that your annuity is invested in may depend on the company that you go through and your personal preferences. You can rest assured, though, that your investment will go to major stock, and probably one that you have heard of before.
Another thing that fixed index annuities offer to an investor is a guarantee of your original investment back. When you put your money into the annuity, it will stay there until the annuity is up or you withdraw money from it. No matter what the stock market does, your investment is protected. You do not have to worry about losing the money that you put into the account because it will always be there.
In addition to protecting your original amount, many fixed index annuities also offer a certain amount of protection for stock market gains over a certain period of time. This protection usually kicks in yearly, so that the gains you experienced in previous years cannot necessarily be lost in one bad year. This offers you a certain amount of protection not only on your original investment, but on increases that you experience in subsequent years.
Fixed index annuities also usually offer interest increases on the money that you invest. This is generally referred to as a guaranteed cash value growth. Basically, when you invest with these types of annuities, there is also an interest rate tied to the amount that you invest. Your money grows yearly based on this interest, and you keep the interest in your account. So even in the unlikely chance that your account happens to never gain any money from the stock market, you will at least acquire a certain amount of interest on your investment.
Your money with fixed index annuities is also protected by staying in one place for a certain amount of time. The number of years that your money is invested differs depending on the plan that you have selected. Many people will invest the money and simply leave it there for the duration of the annuity. Early withdrawal of funds can be subject to certain surrender charges or fees if it is above a certain amount. Rather than face these fees, some people will leave the money untouched until their annuities are up.
When you really examine it, basically fixed index annuities guarantee a certain amount of growth over time without the risk of losing any of your initial deposit. You may deposit thousands and thousands of dollars that are used in the stock market, and you are guaranteed to at least get that much back. In addition, you acquire interest on the money you invested, and certain yearly gains are protected as time goes by. So no matter what, you have at least put the original invested amount away for retirement or whatever you had planned on saving. It is pretty safe, offering minimal risks, especially if you merely leave your money where it is for the entire annuity duration.
Investing with fixed index annuities might not necessarily be the best option for every person. It is important to get educated on the different options that are available to you, and what might work best for your particular situation. These annuities do offer a certain amount of protection, however, no matter what the amount of your investment. To protect your money, acquire interest, and have the opportunity to increase your savings in the stock market, you might consider a fixed index annuity for your needs.