Federal Reserve recently lowered key interest rates in order to battle the current credit crisis. This is not good news for bank investors who have relied on certificates of deposit and money market savings accounts to save and/or generate income. When inflation is factored in, most bank instrument’s returns are at historical lows. Additionally, the volatility in the stock and bond markets is not a suitable alternative for most conservative investors.
That leaves many savers asking where they can find guaranteed, safe and insured high returns. The answer may be surprising. It is the best kept secret that most bank employees and stock brokers hope remains undiscovered.
Fixed rate, high yielding annuity accounts are by far one of the best savings vehicles available to investors today. These insured accounts can generate guaranteed monthly income that far surpasses bank c.d.’s while avoiding the risk of the overall markets.
As of late October, our most popular five year annuity yields 5.65% and our most popular six year annuity yields 6.00%. These rates are guaranteed for the life of the contract. Of course, there are other term options that usually range from 3 to 10 years. Generally, the longer the term – the higher the yield.
At the end of the term, the investor can withdrawal their funds in entirety or choose to reinvest at the current rate. And contrary to popular belief, the deposit does not belong to the insurance company at passing. If the insured (also known as the annuitant) was to prematurely pass away, then the account balance will transfer to a named beneficiary.
Annuities also provide tax benefits that many other investments do not. If the insured does not desire income, then the account grows tax deferred. This is in stark contrast to all bank instruments. Annuity owners own a true, compounding savings instrument. An account that can also provide a lifetime stream of income at a later date. Learn more about annuities here.
In summary, when considering the current state of interest rates and unprecedented market volatility, a fixed annuity account can be an extremely safe and desirable option for investors who wish to reduce risk and guarantee returns.