No other savings vehicle is as misunderstood and maligned as estimated by fixed-income securities. Most people who have been benefiting from pensions bombarded by misinformation, biased opinions and lies. The truth: fixed annuities are safe because they keep from insurance companies, a great place to retirement money because they pay tax-competitive returns are guaranteed, and all of your money to work 100% of the time. Like all investments, fixed annuities are sometimes not suitable, nor should they have all their retirement money in fixed annuities.
Sometimes the provision of information on fixed pensions have hidden agendas, biased opinions and / or little knowledge. Many personal financial columnists covered in newspapers and magazines in this category: Your opinion is impacted by their teaching background, is the agenda you get your money into investments made market, with competition> Pensions and their limited knowledge of the brokerage industry delivered. Why is the teaching of industrial distorted? Because they offer facilities that compete with fixed annuities! Acquired in their eyes a "pension" is lost "brokerage commissions." Unfortunately, the prejudices of many columnists and brokers can even unknown to them.
Despite all the misunderstandings about fixed annuities, it is important that you understand your investments and alwaysconfirm that it is suitable for you. The best way to get fixed annuities, "is right", with a financial advisor will be pleased to advise, trust and their interest is your best interest to work. Below are the ten biggest misconceptions of fixed annuities and a short rebuttal, why do not you are.
With great devotion penalties Come: Like all contracts, penalties for the violation of the rules evaluated, otherwise there are no penalties.
All charge high fees: such as bank CDs,Pension costs are built and not taken from the principal amount you earn into a pension or your interest.
Are extremely difficult to understand: no more than any investment or savings options, in fact, bonds are much lighter than most of the investment to understand.
The money is tied up for a long time: You have access to your money at any time and without penalties if you think of the annuity contract.
Nothing is left for my family when I die: Not only is this is not trueBypassing probate their money immediately if you have named a recipient.
Different types of pensions are confusing: there are only four types of pensions in relation to thousands of mutual funds.
Not good for older people: They are especially good for seniors because they are secure, tax-and convertible bonds at a guaranteed income.
You are not sure: rock-solid safe with never lost a penny of capital through the guarantee of the same insuranceProtection of our other assets.
Agents are paid huge commissions to sell: Commissions are established by the insurance company could not be paid by the principal or reward.
The pensions are a substitute for life insurance: pensions for retirement savings, but not good for large transfer of assets such as life insurance.
The next time you consider listening to a scary story about fixed annuities, the source to determine if it is unilateral, or simply wrong. If you setYour money in an annuity, make sure you understand how it works and is suitable for you. Like all savings and investment forms locations fixed annuities work great when used for its intended purpose: Pensions are risk adverse, safety conscious, retirement-minded savers want to be satisfied with a competitive rate of return.
Shelby J. Smith, Ph.D.
December 2009
