Concord Investment Counsel

Two risks to consider when deciding if an annuity is right for you.

Thick with intricacy well beyond stocks, bonds, and mutual funds, annuities are some of the more vexing financial instruments around. Their guarantees can attract investors from two extremes – those who avoid Wall Street and choose annuities as a safe alternative to CDs, and those reeling from stock market upheaval who want a certain retreat from risk.

Annuities can meet an important need for some investors; and with so many options available, the right product is within reach. But before signing near the X, investors are wise to look beyond a smiling salesman or glossy brochure and consider that annuities may be more sold than bought – and it’s easy to invest in them for the wrong reasons. We’ll explain a couple of them.

First, some basics: An annuity is an investment contract with an insurance company that produces returns in one of two ways. A fixed annuity earns interest like a CD that’s paid and backed by the insurance company, while a variable annuity captures the performance of underlying mutual funds.

Labels: Annuities, Retirement Planning, Tax Planning

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