Basics of Investing

Posts Tagged ‘pros and cons’

 

Pros of Annuities 

This is an interesting way to turn a sum of money into even more money as a guaranteed income. It’s absolutely guaranteed to rise in value, at least 5%, and many people find that it is a great way to enjoy a comfortable retirement, as it provides monthly income checks for years. 

Cons of Annuities 

• You’ve got 10 years or more to wait after buying an annuity before it pays you a dime.
• You can’t withdraw anything at all at your own pace, only the pace you agreed to at least a decade earlier.
• Annuities can’t be bought to pay out over a short period of time. (10 years is the minimum payout stretch.)
• Incredibly large fees for early withdraw. (If you can at all!)
• You’re only guaranteed 5%. Most wouldn’t bother to settle for that little! (Inflation alone eats the majority of that!)
• Insurance companies are not as skilled at fund management, nor are they based on wall-street like a world class investment bank is. Hence, the chances of making more than 5% are small.