Which Types of Annuities Should You Invest In?

When it comes to investing, your stockbroker may encourage you to think about annuities as a part of your investment portfolio. Annuities can be a great investment if you find one suited to your current and future needs.

The Two Types of Annuities

Understanding how different types of annuities work can save you a lot of trouble down the line, so we have provided you with the two types of annuities to invest in along with a description of each.

1. Deferred Annuity: A deferred annuity invests your money for a period of time before allowing you to begin taking withdrawals, generally in retirement.

2. Immediate Annuity: An immediate annuity provides for payments shortly after making your initial investment.

There are benefits to both types, and your broker can help you determine which one is best for you. For example, a deferred annuity, if managed properly, should continue to grow during the investment period and provide larger payments. Immediate annuities might be better suited for those closer to retiring, who need access to cash at an earlier stage.

Within these two types are several subcategories, and understanding the differences can be critical. For example, annuities can either be fixed (setting interest levels for payment at one rate), variable (your payment amount may be tied to the performance of underlying investments) or a combination of both.

Your stockbroker should advise you fully of the risks before any investment, and make sure that the type of annuity is in line with your goals. If you live on a fixed income, for example, investing in a variable annuity may be troublesome if it fails to perform as expected, or if you are given bad advice about the nature of the investment.

Were You Not Fully Informed on the Different Types of Annuities?

If you invested in an annuity and suffered a loss because you were not given the right information about your investment, or if your investment did not fit your risk profile, you may have certain legal rights that require your immediate attention. Contact an experienced Los Angeles investment attorney as soon as possible to discuss your rights.