Variable annuities have become a hot investment product in the annuity marketplace over the past couple of decades. Unlike traditional fixed annuities, with a variable annuity your money is invested directly in the stock market, in sub-accounts you choose. However, without constant monitoring, you could stand to lose accumulated gains and even a chunk of your original principal. If you are retired or close to retirement and are becoming more risk-adverse, a variable annuity could end up being a poor investment choice for you.

Variable annuities are purchased by people who want to share in the stock market’s gains, who want to take advantage of annuities’ tax-deferred status, and to make sure that their loved ones can have a death benefit to fall back on. Traditional fixed annuities offer these features, along with safety and security, because your money is never invested directly in the stock market and is guaranteed by the issuing insurance company. Fixed deferred annuities, which function sort of like high-return savings accounts, will never lose value. You will earn a favorable interest rate, year after year, without having to pay taxes on your gains until withdrawn - taxes that can bite into the compounding effect of fully taxed alternatives. Also, with a fixed deferred annuity, you don’t have to practice constant vigilance to monitor your money’s gains and losses, like you do with a variable annuity.

For those who are reluctant to completely give up dabbling in the market, the fixed-indexed annuity offers returns tied to the movement of a particular stock market index, such as S&P 500. Your principal deposit earns interest based on the market index’s growth. This interest is usually calculated by taking snapshots of where the index stands on particular dates and comparing the difference. Owning a fixed-indexed annuity requires no monitoring of sub-account performances, and fixed-indexed annuities even have a guaranteed minimum interest rate, so you can’t lose money even if the market performs poorly.

BuyAnnuitiesOnline.com’s Specialists can help you decide which fixed annuity product is right for your situation. If you believe that a variable annuity may be too risky for you and you would like to learn about other annuity products that are available, call 1-800-994-3023 today.