What Are Good Investments Now?

Annuities can play a vital role in retirement for some people and they deserve to be fully understood.  Look at some of the options here, and do some further general research which will give you the right questions to ask your financial adviser and tax planner.  Below are some pointers to start you off and help you decide if annuities make a good investment vehicle for you.

In my days with an insurance subsidiary of a major investment bank, annuities formed the backbone of many of the client’s portfolios.

For many the choice is a fixed annuity of some sort. The first broad definition is probably an immediate or deferred annuity.   The first is purchased and a set monthly or annual amount is paid immediately.  The second type is purchased over a period of time and begins paying at a point in the future. This can be a very efficient investment tool for a small business where the amount saved each month can be variable.

The second consideration may be the duration. Mostly I dealt with lifetime annuities that paid until death; confusingly it can mean lifetime of a guaranteed contract.  This could be five years, ten years or whatever is in the contract.

Another consideration is inflation.  You can have the annuity rise with inflation or rise at a set amount each year.  This can give added peace of mind although of course it does mean less to begin with.  As with all insurance based products, actuarial rates are applied.  Also available are joint life annuities.

Annuity loans discussed elsewhere in more depth on the site, can be a very attractive proposition and are worth exploring if you need capital for a period of time. It is important to understand the penalties that can be involved if loans are not repaid on time.

As with virtually all investments your country tax laws can affect the outcome of any investment, but mostly the tax laws are favorable towards annuities. Governments worldwide want to encourage people to be self sufficient and annuities take the strain off of social services.

Do you due diligence and look at the past performance of annuities and the companies selling them.  Talk to specialists and compare management fees and any other fees and costs associated with the contracts. Make sure annuities are explained carefully and don’t be afraid to query anything you are not sure about and hopefully you will have a good investment for your future years.