Annuities are a common investment strategy which can be tailored to fit your financial needs. They can provide a guaranteed income stream which will be paid to the investor over a period of time and can be a great way to help save for big expenses like college or retirement. Annuities can be structured in a number of ways so the guaranteed income will be paid out to help you reach your financial goals.

Traditional Fixed Annuity Products

annuity investment strategyA Traditional Fixed Annuity is one of the most popular types of annuities due to the way the annuity is generally funded and paid out. The payments are generally fixed over the annuitants’ lifetime (when annuitized) or you may choose a variation of the time of payout or to whom is receiving the payment. A Traditional Fixed Annuity generally has an interest rate floor which is guaranteed for one year or more during the accumulation phase and also has a variable portion of the interest rate which will likely change on each anniversary of the signing up for the annuity.

Many annuity products will also include an interest rate bonus on longer term contracts. Traditional Fixed Annuities generally have flexible funding options and the potential to keep pace with or beat inflation as interest rates change. The money in the annuity will also grow tax deferred until you decide to withdraw the money. A Traditional Fixed Annuity has been historically used to save for retirement and to help supplement monthly income in the form a steady monthly check for life!

Benefits of Traditional Fixed Annuities

Traditional Fixed Annuities are a flexible investment strategy with a dollar-for-dollar guarantee that will help you save for the future. You will be able to withdraw a portion of the balance every year without a fee and a guaranteed minimum interest rate ensures your investment will continue to grow.

Other benefits of Traditional Fixed Annuities include:

  • Money grows tax deferred
  • Usually has a generous bonus interest rate during the first year
  • Supplements maxed out 401k/IRAs for extra tax deferred growth

The guaranteed rate also means there are some downsides to Traditional Fixed Annuities which can result in a lower earning potential versus riskier investment strategies. Schedule a consultation with a CFP professional at LTR Financial Services to learn more about investing in annuities to reach your financial goals.