How to Use Fixed Annuities?

Answer 1

In a market of volatile forces, fixed annuities have been a stalwart fixture for average people. Because of the interest rate minimum and the fixed payouts that guarantee the safety of investors, fixed annuities have been an investment that many people move toward in times of crisis.

There are many ways that fixed annuities can be used in order to solidify the personal financial portfolios of the average investor. Below are just a few ways in which fixed annuities may be used in a reasonable manner for many different purposes.

You can use fixed annuities as a backstop for losses.

Fixed annuities, by definition, must have a minimum interest rate payment. This interest rate minimum can provide a very real backstop against losses that may be incurred in more speculative parts of a financial portfolio.

Certain types of fixed investments may also be used as asset protection for large assets such as houses or cars in certain cases.

Fixed annuities may also be used in order to bolster a retirement account.

Retirement accounts can be propped up by fixed annuities. Although they should not take up the entire portfolio unless the principal is high enough, they can be a significant part of the overall portfolio.

Many financial experts recommend that the closer that an individual is to retirement, the more fixed investments they should have.

Fixed annuities can be used as a tax shield.

If you do not need to take distributions of income as you get it, a great place to park it is inside of a fixed annuity. Certain types of annuities can serve as tax shields, allowing your money to build inside of the investment tax free. When you do finally take the distribution, you will be taking from a much larger principal.