annuities / indexed annuity

Are Indexed Annuities Really as Good as They Are Made to Sound?

“Some of the hottest selling financial products currently being sold are called indexed annuities.  They are often promoted as a way to potentially earn double digit returns with no downside risk and no risk of outliving your money.  The insurance reps and supposed advisors that sell them often prey on people’s fears of stock market crashes, unstable economies and rising taxes.  Anytime someone tries to scare you into making a decision or evoke strong emotion to compel you to do something you should BEWARE.  Additionally, if something sounds too good to be true it usually is.  Our experience with talking to those who have purchased indexed annuities as well as some of our own research has led us to conclude that in most cases the returns are usually lower single digit returns comparable to a bond return.  Additionally, the lack of liquidity and flexibility in accessing funds in the annuity often proves inconsistent with many retiree’s income needs.
For more information on this subject we have provided links to two articles that go into greater detail about indexed annuities.  The first is a FINRA Investor Alert.  FINRA is a not-for-profit organization authorized by congress to protect America’s investors and to make sure the industry operates fairly and honestly.  The second is from Fidelity Investments, which operates a brokerage firm managing a large family of mutual funds and provides fund distribution and investment advice along with retirement services, life insurance and wealth management.”
FINRA Investor Alert – Equity-Indexed Annuities: A Complex Choice
Fidelity – Indexed Annuities:  Look before you leap
Thanks to Networth Advisory Group for this post. Check out their website and blog: http://networthadvice.com/net-worth-blog/
Source: Financial Planning for Women