Do you want to have an investment that pays you dividends gained from the stock market yet protects your initial principal when the market is not doing well? It's certainly not everyday that you get the chance to do this - achieve growth while staying safe. But this can be done through an equity index annuity.
Majority of investors have to make a choice between taking risks in order to grow or accept small growth in exchange for safety. Thanks to the insurance industry - growing safely can be achieved. You can get high returns from the stock market and a security guarantee from this investment product.
An equity index annuity is a great alternative if you are looking for security with a low interest rate and/or volatile market environment. This particular product guarantees benefit when stock market prices rise and safety when it falls because you don't lose any money. It also assures a minimum return of 3% and this is what makes it very attractive for those approaching retirement. This is much like fixed annuities, in that the principle is guaranteed. It is also considered as a long term investment with the terms set about by the issuing insurance company just like fixed annuities.
But there is a catch with this particular investment. You have to keep your money invested for a prescribed time to assure the benefit of an equity index annuity. If not, then you will have to give up some of your investments in the product. Thus, if you plan to keep your investments for a longer period of time then index annuities is a great investment to have.
Yet all things have a limit, that's why the issuing company of the annuity will put a limit of the returns that will be given to you during a market rise. This will serve as their protection when market downs are experienced. The limit is decided upon the indexing method the company uses. Usually, a method called participation rate is used for this calculation.
Another method used to calculate index interest is a method called the annual reset. This method makes you gain permanently during market ups. When the market becomes erratic and the index declines, it simply locks you at the lower index level. There are even some index annuity renewals that are reset at appealing levels. With a lower reset, more opportunities can be seen for the future.
With the present market, it can be hard to topple an annuity that goes up. This is the reason why a lot of seniors rushed to the stock market to lock in gains and bought equity index annuities. They are awaiting market upturn which will produce more gains for them. Certainly, this kind of investment has given seniors comfort during the time when the market declines.
To get the best possible advice for equity index annuities, be sure to consult an investment advisor. It pays to invest the time and effort to know the complexities of this investment vehicle so that you know what you are getting. It will also help you when deciding if it will fit into the financial plan you have for yourself.
สมัครสมาชิก:
ส่งความคิดเห็น (Atom)
ไม่มีความคิดเห็น:
แสดงความคิดเห็น