Thursday, October 30, 2008

Is an Annuity Index Right for You?

By Terry Collins

Investing in an annuity index may be right for many investors. An annuity index can be a safer investment than investing in stocks or even bonds and usually even more than mutual funds. However, some people think that the stock market is too risky and bonds do not grow fast enough so they start investing in an annuity index instead.

Most people don't even know what an annuity index is. To many, an annuity index is just a type of investment that they don't know about or understand. But, if you study what an annuity index is, you may find that it is a good investment that can be quite safe.

Before you decide if to invest in an annuity index, you need to be familiar with what a regular annuity is. An annuity is not just another type of investment. In fact, an annuity is classified as an insurance company's product, not an investment. But an annuity index can be a better investment for people than a regular investment is.

An annuity index is a type of annuity. An annuity index is not the most common type of annuity but many companies do have them and people do like investing in an annuity index. An annuity index's performance is based on a specified index, rather than a general account or a separate account like other annuities.

An equity annuity index is the most popular type of annuity index because people want to invest in the stock market but do not want to take on the risks associated with stock investing. That's why investing in an annuity index is popular and attractive for these investors.

Investing in an annuity index is more expensive than investing in stocks because you have to pay some fees to the insurance company that issues the annuity index. The benefit you get is the peace of mind that your investment is guaranteed to certain extent but with that guarantee comes the fee that is larger than investing in straight stocks.

High fees are not the only drawback when it comes to investing in an annuity index. There are many rules that you have to comply when investing in an annuity, not just an annuity index. For example, you cannot withdraw money from your annuity index easily. There could be monetary consequences and penalties if you withdraw from your annuity index prematurely.

In general, people like to invest in an annuity index because of its safety and guarantee against the downside. However, some people who know how to invest in the stock market wouldn't invest in an annuity index because they don't want to pay the added fees or be confined by the terms associated with the annuity index. - 15485

About the Author: