Differences between fixed and variable annuities

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Differences between fixed and variable annuities

Differences between fixed and variable annuities

Fixed annuities are those that provide the beneficiary with a “fixed” income from the investment made, therefore it is a guaranteed fund and an amount that is previously defined.

A variable annuity  is one that invests the funds provided by the beneficiary in securities, such as bonds or stocks. So, you can only know the recipient of the variable annuity which will receive, when you know the performance of the invested money and not before.

It is very important that each person is fully aware of the benefits and risks of each of the investment options in annuities offered because while a sector determined the fixed annuity may be attractive to another segment may be unprofitable and is more seductive to opt for a variable rate … in the end it will depend on the risk you are willing to run.

 

Recommendations for choosing a type of annuity

It is recommended to choose a fixed annuity:

People who are not willing to take risks in their investment, seeking security and stability heritage. It is an appropriate choice for a conservative investor

All who are near retirement age and seek a valid alternative to recoup their funds and not take risks in the stock market either stocks or bonds that are traded there

It is advisable to choose a variable annuity:

Where known fluctuations in the market and are willing to take the risks involved in your investment. It is an option that is characterized as the favorite of the most daring investors, who prefer to opt for a higher return benefits through the acceptance of a higher risk

Belonging to the younger segment of the working population, young people seeking to develop a retirement plan and find the benefits of a plan risky long-term investment that can yield excellent benefits

Investments are always a complicated issue, it is best to seek advice from an expert and look for the executive to assist you perfectly mastered the art see, in this case annuities. While this is an attractive way to monetize certain investment fund, it may create a risk or benefits be moderate by inadequate strategy, so you have to worry about having the best possible information before investing.

 

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