Comparison of a Fixed Indexed Annuity and a Fixed Annuity
The main feature that a Fixed Indexed Annuity has over a Fixed Annuity is that a fixed indexed annuity takes the risk out of investing in the stock market. The reason for this is that, with a fixed indexed annuity, you are guaranteed by the insurance companies a minimum rate during poor market conditions. While a fixed annuity offers the same guarantee of a constant return rate, the fixed indexed annuity gives investors the opportunity to cash-in equity-based growth. While the investor may not know how much money their account will accumulate over the years, debt based instruments are always out-performed by equities.
Comparison of a Fixed Indexed Annuity and a Variable Annuity.
What makes a fixed indexed annuity superior to a variable annuity is that a fixed indexed annuity is recession proof and can protect your investment from other economic mishaps. Seeing as an important aspect of gaining wealth is the ability to manage losses effectively, a fixed indexed annuity allows you to maintain a constant return rate despite the gloomy economic state. So while variable annuities and loosing their investors money, the safety net provided by a fixed indexed annuity gives you comfort in knowing that you are still earning money.
Why People Choose a Fixed Indexed Annuity
What makes a fixed indexed annuity so attractive to investors is the simple fact that a fixed indexed annuity is guaranteed to make the investor break even, thereby giving the investor piece-of-mind. Unlike the variable annuity, which depends upon the state of the economy, fixed index annuities cannot be negatively affected by economic downturns as they are guaranteed a constant rate of return.
Also, that people can cash in equity-based growth makes fixed indexed annuities more attractive that fixed annuities. Overall, with the benefits offered by fixed indexed annuities over fixed and variable annuities, fixed indexed annuities should give investors piece of mind when investing and/or planning for retirement.
