Investing in a fixed index annuity can be a wealth bringing decision, especially if you already have a good financial situation and you are very successful with mutual funds and stocks. There is no doubt that fixed index annuities do not generally perform as well as the mutual funds in an up market, but at least you have the guarantee that you will have no losses in a down market. However, we are not looking to make any comparisons here, but only to realize that you must be looking to create income regardless of the circumstances.
Stocks, as well as mutual funds, are always fluctuating. But since you need income whether the portfolio you own is up or down, and taking money out of your equities while they are down in value can be a financially disastrous decision, fixed indexed annuities can solve this problem. The best thing you can do is to invest exactly enough money into fixed index annuities to meet your income needs. What will then happen is that the fixed index annuity value will grow just until your income need is fulfilled, and from this point forward you can use an income rider, taking out guaranteed profits each and every year. All of this is done while retaining access to your principal, which is not annualized. Moreover, you can choose to invest your funds in whatever you want, as aggressively as you wish, without having to worry about losing the assets that are generating your base income.
Another great advantage is that when you have a nice return on your mutual funds or stocks you can take out part of the profit for things like vacations or new cars. In addition, since you do not have to begin taking any income from your annuities until you think that you are ready, the income will slowly but steadily grow along the way. Whether it is one year, five or ten, as long as you play by the rules, you can be sure that you will have a guaranteed income for life when you need it, without losing access to the lump sum you initially invested.
Retirees love the fixed index annuity investments mostly because it changes the whole idea of investment stress. Unlike investing in stocks or mutual funds, indexed annuity plans will take care of the financial needs of your family no matter where the market is heading to.
