Site Title

Sub-heading text.

With an equity-indexed annuity, you get to participate in the upside when the stock marketplace is climbing, but you also protect yourself against the downside because you'll earn a assured minimum return even if stock prices fall.

In short, an equity-indexed annuity may pay a greater return than a regular fixed annuity would, but have less danger than a variable annuity.

An equity-indexed annuity is really a mixture of a fixed along with a variable annuity. The advertising pitch generally goes some thing like this: Equity-indexed annuities provide you with the very best of each worlds.

Assured return: As having a fixed annuity, you get the low-risk appeal of a assured minimum return (generally 2% to 3%).

With some upside: But, as having a variable annuity, you also possess a shot at greater gains when the stock marketplace rises, because an equity indexed annuity's return can also be tied towards the overall performance of a benchmark index, like the Regular & Poor's 500.

They're complex: Equity-indexed annuities are very complicated investment vehicles, and they come in a wide variety of forms. Their complexity makes them extremely difficult for investors to understand, and advertising pitches can often be deceiving.

They don't always match a indexes' full return: They also don't necessarily provide you with the entire return of the marketplace index they're tied to. Different equity-indexed annuities calculate your gains in different ways. For example, some provide you with only a portion of the index's overall return, or set an annual cap – and most exclude dividends. So when the marketplace returns are a big draw for you, make sure you know exactly what you're getting.

Fees: Then there are surrender charges. In some indexed annuities, surrender charges can run as high as 20% and last for 15 or more years. So you may not have access to all of your money without paying steep penalty charges for a long, long time.

The Financial Industry Regulatory Authority (FINRA) has issued a useful investor alert on how to size-up equity-indexed annuities.

If you want to reap some of the benefits of marketplace returns, but don't want to take on all of the danger and volatility of the stock marketplace, you might want to consider an equity-indexed annuity.

But make sure you read through the terms carefully and consider all of the fees involved before you buy.

Copyright 2021 Finance Informar - All Rights Reserved. Privacy Policy