Find The Best Annuity Rates The Simple Way
- Author Susanne Short
- Published January 11, 2011
- Word count 505
Obviously, when investing in annuities one wants the best annuity rates available. Most of us think the highest interest annuities are the best way to invest. For some people they might be, but not for all. When looking to invest in annuities there are other considerations like risk tolerance, and what your financial ambitions are.
It is essential to deal with only a trusted and reliable broker. While achieving the highest interest rate on annuities is important, you may want to study the flexibility of the contract. There are penalties for withdrawing your funds from this type of investment before the contract expires. These penalties can be severe depending on the type of contract you have chosen.
Naturally, it is best to invest when the rate of interest is high. Long term annuities will give you a higher interest rate, but the early withdrawal penalties will be high. On the other hand, a short-term commitment will ease up on early withdrawal fines, but you can expect a lower interest rate.
When mulling over annuities you should know there are fixed rate annuities, and a variable rate type. The variable rate annuity is subject to economic changes and it is possible to lose some of the potential yield. This investment is better suited for the high risk taker. Yet, you could make large gains should interest rates rise. For those who prefer to play it safe fixed rate investments are not influenced by market conditions and the interest rate will remain constant.
You do walk a tightrope when you measure high interest annuities versus having a more flexible contract. Should you or someone in your family be diagnosed with a disease or other sickness you might find a flexible contract a better alternative. While the interest rate is reduced you are able to withdraw money with penalties that are not as severe. Obviously, the goal of investing in annuities is to not withdraw funds before the term is complete, but sometimes it cannot be avoided.
Most insurance businesses are viable companies. The fact is bankruptcies do happen. However, many states now offer a safety net to help offset losses if the holder of your annuities fails. Keep in mind that this safety net may not reimburse you for the total value of your investment. Employing an insurer of high integrity will help you avoid this unpleasant situation.
As mentioned, the interest rate of fixed rate annuities does not fluctuate. This is called the guaranteed period. Should your particular insurance suffer losses this does not affect the yield of your fixed investment.
To summarize, annuities provide a good way to save for your eventual retirement. The higher the initial investment, the higher the yield you can expect. Further, the longer term you commit your investment to the higher interest rate you will receive. Shorter term contracts offer a lower rate of interest, but the penalties for early withdrawal are significantly reduced. It is essential your adviser be aware of your risk tolerance, and your ultimate investment plans.
Best Annuity Rates can be found using the open market option and using an independent financial adviser to search the entire market for the best annuity rates.
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