News // Fixed Indexed Annuities Versus Mutual Funds and CDs

Fixed-indexed annuities have no fees or other charges. They fit within a niche bordered roughly by certificates of deposit (CDs) and mutual funds. While CDs are considered safe instruments, their rates of return are currently very low and the returns are taxed currently. Mutual funds are investments and, as such, involve risk. Returns can be positive - or negative. Income on these investments is taxed annually. As an individual approaches retirement, they need to focus more on the risk element. Fixed-indexed annuities have no fees or other charges. They provide safety, with guarantees of principal and interest. Fixed-indexed annuities offer participation in the upward movement of the S&P 500. Annual market gains are locked-in but never market losses. The owner of a fixed-indexed annuity accepts a cap on positive earnings in return for safety.