A variable annuity is a type of investment that allows you to add riskier assets, such as stocks and mutual funds, to your portfolio. It can be a good choice if you want to diversify your portfolio or if you’re looking for ways to grow your retirement savings.
What Is A Variable Annuity
An investor and insurance firm enter into a contract known as a variable annuity. According to AG Morgan Financial Advisors, the investor contributes to a mutual fund, and the insurance company promises the investor an advantage once the investor reaches retirement age.
The amount of money you can invest in a variable annuity is limited by what’s known as IRS regulations. Depending on how much you’ve already saved for retirement–and whether it’s invested in other accounts such as 401ks or IRAs–you may or may not qualify for this type of account.
Why Consider A Variable Annuity
A variable annuity could be the best option for you if you want to invest your money and reap some of the advantages of an annuity. According to AG Morgan Financial Advisors, variable annuities are a great way to spend because they allow for tax deferral, tax-free growth, and income guarantees.
Who Should Consider A Variable Annuity
If you’re looking for a way to diversify your portfolio, or if you have some extra money that could benefit from being invested, then a variable annuity may be right for you. Variable annuities offer investors the potential for higher returns than they would get from a CD or savings account. They also protect against market fluctuations and allow funds to be transferred between investment vehicles without having taxes deducted at each transfer point.
While these types of policies aren’t right for everyone–and there are some downsides as well–they can be helpful in certain situations:
- Those who want their assets protected in case of declining health
- Those who want an inheritance left behind with no tax consequences
A Variable Annuity Can Be A Good Choice If You Want To Diversify Your Portfolio
A variable annuity is a type of investment that allows you to invest your money in a variety of ways, including mutual funds and stocks. The benefit of a variable annuity is that it allows you to diversify your portfolio by investing in other assets, such as real estate and commodities. This can help protect against market risk, which means that if the stock market declines significantly while you’re invested in only stocks then your overall portfolio won’t be affected as much as if all of your money were invested solely through stocks.
Multiple financial options, such as mutual funds, are available to investors through a variable annuity. There are three main types of guaranteed returns in the financial industry: the conventional fixed annuity, the indexed fixed contract, and the equity-indexed contract. Guaranteed minimal withdrawals and death benefits are two examples of the perks that some of these contracts may offer, but it’s important to weigh the cost of these features against their value before committing to one over another. Those who want more economic freedom but lack the expertise to successfully navigate the financial markets or make sound financial decisions may benefit from purchasing a variable annuity.