Annuities Enjoy Demand in Shaky Stock Market
Considering the shakiness of the stock market these days, many people who had relied on stock options for their retirement are realizing the secure advantages that are offered through annuities.
People who have invested their savings for years in stock options have seen much of it wash away with the latest economic tide. Annuities enjoy a continual security that is less subjected to market changes. As contracts offered through insurance companies that usually provide a guaranteed flow of income, annuities present safer options for investors worried about the downturn of the stock market.
There are two types of annuities, including an immediate annuity that pays similar to a pension, and a deferred annuity, which allows users to invest money on a tax deferred basis. Although deferred annuities are dependent on the stock market for their performance, there is usually insurance available to hedge against the investment taking a loss. Buy annuity, and you are taking a considerable lower risk than just investing money in the market.
Until recent changes, the one catch when you used to buy annuity was the fact that you might be stuck with it. You’d face high taxes and stiff penalties if you choose to sell the annuity. Luckily, over the last several years, selling annuity has enjoyed a growing market.
Sometimes people consider selling annuity because they don’t need the consistent payments anymore and would prefer to take the money in a lump sum and invest it. Being able to sell the annuity makes it as good as cash, which can be an appealing asset. This fact continues to push the demand for annuities in the marketplace.
Any annuity can be put up for sale, providing its not held in a 401K or IRA account. You can even sell only part of the annuity if you just need a portion but not the entire package. The resulting cash can be invested towards health insurance or other investments.
Check how the gains will be calculated with the annuity. Also, watch for any hidden penalties for early withdrawals. Older people should also watch out for any rules that might prevent the money from being accessed for several years.
Annuity is a sound investment in the wake of the economic melt down. They enjoy strong demand, yet can easily be sold as a valuable commodity if you need the money in a lump sum for other investments.
Johnathan Marx :: May.02.2009 :: Finance :: No Comments »