Top Reasons To Look Into Fixed Index Annuities
Investing your money anywhere might seem like a scary process. The stock market has many ups and downs that can be difficult for some people to follow. Deciding to invest in fixed index annuities can give a little peace of mind to many people. Although there is a certain amount of risk that is involved with most investments in the stock market, fixed index annuities can help to provide a relatively safe environment for your money to grow in. This can allow you to save up for retirement by simply leaving your money in one place. There are many reasons to invest in such an annuity. Here are some reasons that you might consider this method for saving for retirement.
1. It is a relatively safe way to invest. Your money is handled very carefully and put into major stock in the stock market. You can leave your money there and let it grow with the stock market over time. Of course, the stock market is subject to both growth and decline. Your money can grow, but it will never fall below what you actually put into it. This means that in the worst case scenario, the same amount of money should be in your account that you first invested into it. With the best case scenario, your money continues to grow at the maximum rate that it can each year. The actual money that is in your account may fluctuate, but the original amount that you invested will stay safe because it is insured.
2. You are guaranteed to get your money back. As stated above, the stock that your money is invested in is subject to both growth and decline. Due to the insured nature of fixed index annuities, you are guaranteed to get your money back. It may take time to get all of your money back while avoiding the incursion of penalties, but you are still guaranteed to get all of that money back. The worst thing that can happen when withdrawing your money is that you have to pay some sort of penalty like a surrender charge. This is merely a penalty fee, however, and not a loss to the stock market. That money is guaranteed!
3. Your money actually builds a certain amount of guaranteed cash value. Even if your money does not necessarily grow with the stock market, your account does acquire a certain percentage of growth over time. This interest stays in your account, and does not get affected by the stock market. Since it is not affected by the stock market, the interest is usually only attached to the original amount that you put into the account. This means that even if your account grows, the interest acquired is only applied to that original amount. It is still a guaranteed growth over time.
4. You can withdraw up to ten percent of your funds without penalty, usually annually. While it is pretty much impossible to withdraw all of your money at once without incurring some sort of surrender charge, there are many companies that allow you to draw up to a certain amount without a penalty. Some penalties may be as much as 20 percent of your funds, or even higher. This shouldn’t be a problem if you plan on simply leaving your money in fixed index annuities. If you leave your money just where it is, it generally does not incur any penalty on you. If you do need access to some of that money, however, be aware that only a certain amount—usually ten percent—is accessible without penalty.
5. Even if the stock market drops, your money will not drop below a certain level. This needs restating just to make sure that people understand. One reason why fixed index annuities are relatively safe is because your investment is guaranteed. Your growth is not guaranteed, since the stock market fluctuates so much and so often. You can rest assured that your original investment amount is safe, even should your stock fall far below any growth you experienced. It is a simple way to get involved in the stock market without risking the loss of your money with a fall in stock.
Investing your money does not have to be very risky. Fixed index annuities offer a certain level of comfort and security for your initial deposit into the stock market. If you are looking for a relatively safe investment for retirement, perhaps fixed index annuities are a great option for you.