Investing in Annuities – Should You or Should You Not?


Investing in annuities is a good habit. If you have money that is sitting idle in your bank account, it is better to invest in annuity schemes that provide a good return on your investment. But the bigger question is if investing in annuities proves right for your investment portfolio. Numerous mixed reviews tend to confuse investors, but if you want to uncover the truth, this short guide should help.

Planning is everything

A good investment turns out to be fruitful if you have concrete plans behind it. So, your investment in annuities will be profitable if you buy them for the right reasons. If you are looking for long-term growth, income, safety, and diversity in your portfolio, then buying annuities should be on top of your list. But you must plan your investments according to your needs. For example, you can purchase an immediate annuity as a source of income, a variable annuity to meet the deferred tax growth, and a fixed annuity as an alternative to CD. Your investment plans should meet your investment goals, so you don’t end up falling short of your expectations.

The best time to invest in annuities

Investors often don’t understand the ideal time to invest in annuities. That’s the reason there are mixed reviews from many investors saying they got amazing returns while others share that they did not get their expected returns.

Just like checking the BTC Profit System before trading in digital currencies, you will have to research on annuity schemes before shelling out money. The rule of thumb is to consider it as an insurance product aimed at reducing future financial risks. You need to find a balance between the amount you plan to invest and the return that the scheme is expected to provide in the future.

Some variable annuity schemes have a selection of bond and stock portfolios up as investment choices. It is a good dilemma to have in this regard because both stock and bonds provide a good return on investment and they are better than true insurance policies that don’t have any investment components. If you are willing to reduce your financial risks for the future, annuities prove to be an excellent investment vehicle.

Millions of investors plan their retirement according to their annuity schemes. If you are aware of your retirement goals, you can look for annuity investment schemes that help you inch closer to these goals. However, you need to keep an eye on the restrictions and fees for the annuity product you buy. Calculate and compare the taxed amount you get as returns and invest wisely. Different annuity schemes have different tax deductions. It will be best to consult with a financial advisor and read the terms and conditions of the product before investing.

When to avoid annuity investments?

The trick about annuities is that there are pros and cons in every scheme. It is essential to understand the different categories of annuities to decide which investment scheme will be most profitable for you. There are investment brokers around offering various schemes, but they may not have a clear understanding of the tax implications. You will not want to invest in a plan that has high taxes and fees but lower returns. Annuities are always good to invest in, but you need to make sure if your investment is for income purposes or long-term finance.

You cannot expect huge returns like variable annuities from immediate annuity products. That is why researching is essential. Calculating the net tax and fees payable for different schemes and then investing in a product that fits your annuity plan is the way to go.

You will often face a choice between no-load annuities and broker-sold annuities. The former has lower fees while the latter has securities and insurance license. It is not hard to compare the trade-off fees when you have a fixed term-plan in mind. For example, if the broker-sold annuity has a 5+2% fees rate including taxes but guarantees a 15% ROI, you should compare it with the no-load annuity offering a 12% ROI but 4% fees. Since the amount invested and term-plan is fixed, your decision to invest in the better annuity plan will be easier.


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