Annuities for Accumulation of Cash
It is important for all of us to accumulate as much cash for retirement as we can. We’re living longer than ever, and we want to have enough cash to ensure that we never outlive what we’ve managed to put away.
How do you accumulate that cash? There are the obvious answers: stocks and mutual funds. But, what most financial planners don’t tell their clients about are fixed indexed annuities.
Fixed Index Annuities
Fixed indexed annuities are vehicles that act similar to CDs at your local bank or credit union. With a CD, you deposit your money for a certain time period. At the end of that period, you get your original principal back, plus the interest. In this prolonged period of low interest rates, the interest you will receive is very small. In a fixed indexed annuity, you “deposit” your money with a major US life insurance company, and commit to a time period of say 5-12 years.
Unlike CDs at a bank, fixed indexed annuities are tied to a major US index, the S&P for example. And, when the markets do well, you capture a portion of the gains. When the markets are down, you do NOT share in the losses. That’s right, you read that correctly: you do NOT lose a penny of your principal.
Fixed indexed annuities are a great vehicle that allows for capturing a portion of the market gains without ANY of the market losses. It is a wonderful tool to help you accumulate cash for retirement!