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Experienced Covington Finance Advisors Explain Annuities January 10, 2017

Covington, Kenton
Experienced Covington Finance Advisors Explain Annuities , Covington, Kentucky

Of all the common investment vehicles, few cause as much confusion as annuities. However, many expert finance advisors believe that annuities can be an extremely valuable option for investors. 

Unlike other investment vehicles, certain types of annuities provide economic security in the form of regular, guaranteed income. This revenue offers clients a continuous and assured option that can off-set other, riskier investments, introducing true diversity in your portfolio. In fact, they're much like CDs, with a few modifications that provide additional benefits. Below are the different types of annuities.

Fixed Annuity

Financial-AdvisorA fixed annuity involves making a single initial deposit, which then collects interest like any other savings vehicle. While the rate of return on fixed annuities rarely matches those seen in stocks and mutual funds, the power of compound interest over time can make this an important bedrock of your retirement plan.

Fixed-Indexed Annuities

On the other hand, fixed-indexed annuities are tied to the performance of the stock market, but guarantee that you can't lose your initial investment. However, many of these annuities have caps that limit how much your account can grow, so you may not reap the benefits of sudden market peaks. Not all fixed-indexed annuities have this limitation, however, so ask your finance advisor for an in-depth explanation of the terms before signing.

Deferred-Income Annuities

As the title suggests, deferred-income annuities offer guaranteed income, which begins at a later date. Usually, you'll start to see the money come in within a year. You’ll then continue receiving payments for as long as you live. The structure of the payments can vary from one plan to the next, with options suited to a wide variety of circumstances. To find the plan that works best for you, talk to a financial planner.

Even though annuities provide guaranteed income once the lump sum has been paid, there are some risks associated with opening the account. First, you should consider the effects of inflation; with a fixed-rate annuity, future payments may lose spending power. As the cost of living rises, your payments will stay the same—unless you purchase inflation protection, which costs extra money up-front.

If you’re married, you should also consider a joint-life annuity. With a standard fixed annuity, your investment could expire once you pass away, but with a joint-life annuity, your partner will still be able to receive payments. Before making a decision, you should have a detailed discussion with a finance advisor about all the potential risks and benefits of making a new investment.


Variable annuities are long-term investments designed for retirement. The value of the investment option will fluctuate and, when redeemed, may be worth more or less than the original cost. If you’re interested in learning more about or purchasing annuities, contact the finance advisors at Evergreen Advisors in Covington, KY, today. They know that no two financial situations are ever alike, so they never rely on one-size-fits-all solutions. Call (513) 784-9150 to make your first appointment, or visit the website to learn more about their wide range of financial services.

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