There are a number of reasons why people are interested in investing in high interest annuities. An annuity is a financial product that offers its owners the option of investing money on a tax-deferred basis. An annuity investment also gives you the option to receive the growth of the investment through a variety of different payout methods.
Investing in Annuities
The level of risk on annuities does vary greatly depending on your financial needs. Some people may choose to invest in annuities that offer a steady return that they can rely on faithfully, whereas other people may be more interested in annuities that provide a greater range of return and produces either very high profits or little to no profits at all.
High interest annuities are usually recommended for those that are interested in a financial product that is capable of producing great rates, and for those who are willing to take a little more risk.
Choosing High Interest Annuities
The ability to obtain lifetime income is one of the main draws to high interest annuities. This type of financial product offers individuals the chance to obtain steady income at a level greater than the amount that was originally invested. People who are interested in obtaining the greatest yield for their invested money are usually drawn to higher interest annuities. The interest rates can be as high as 14 percent, which is a fairly strong rate of return.
Another reason people prefer higher interest annuities is that they can obtain withdrawal allowances. This allows you to have a certain amount of money released to you from your annuity.
Other benefits that can be obtained from choosing a higher interest annuity includes the ability to defer taxes. Under the law, you do not have to pay taxes on the money you are earning until you decide to cash out your annuity; until that time, the money can grow in the account tax-free.
Selecting an Interest Annuity
There are two types of interest annuities available:
- Fixed annuities allow your money to be placed in accounts that promise a set interest level. If you choose a fixed annuity you are guaranteed a certain rate of return that will not change.
- With a variable annuity, your funds are placed into an equities portfolio that, in many circumstances, is far more risky than the fixed annuity. If the investments do well, you can earn much more than you could earn in a fixed rate annuity. If they don't perform well, then you can lose your money or earn less than a fixed rate annuity. Variable annuities are great for those who are seeking to obtain much higher returns and who can also afford to take this risk.
Choosing between the fixed and variable annuities depends on your financial goals. In general, however, variable annuities are good for people who can afford the risk of losing money, such as younger people who have time to gain any lost funds back. Fixed annuities are often used by individuals who desire the security of knowing that their funds will provide a specific amount of return on monthly, quarterly or annual basis. Many older individuals seek out fixed annuities because they are generally considered to be a safe, secure investment.
Benefits of Choosing a Higher Interest Annuity
Higher interest annuities are sought after because they provide a person with income that can be used at his or her discretion. Many people invest in these annuities because they are interested in having a source of income for retirement. Often, people who are interested in having a fixed annuity start the annuity with the intention of letting the investment accrue a significant value before they cash it out. This allows individuals to take advantage of the compound interest that has accrued at a high interest level.
Even the riskier variable annuities offer investors guaranteed payouts in some cases, and these payouts can offer substantial amounts of money. Speaking with a financial advisor about annuities will allow you to make the best decisions when selecting an annuity for financial growth.