When most people are considering the advantages and disadvantages of annuities compared to stocks, often times the historical return stocks have generated are much more appealing. However, there are important questions you need to ask yourself:
- Do you have the patience for stock investing?
- Can you commit the time necessary to be successful investing in stocks?
- Are you aware of the tax implications, fees and expenses associated with stocks?
If you answered "NO" to any of these questions, an annuity may be a good option for you. An annuity will provide a periodic stream of payments over a specified period of time. Most people these days are choosing a tax-deferred annuity because of its advantages. It allows your money to compound faster, as compared to traditional savings, because you can earn interest on the dollars that otherwise would have been paid to the IRS.
Tip. Talk with a trusted advisor when considering your various options. There are numerous products available that can be tailored to meet your specific needs.
An additional benefit provided by annuities is their history of being very safe. Some investors enjoy taking huge risks for the potential of a large return. Others prefer to know exactly what their return will be each year. For the latter, an annuity could be a great option.