For low-risk, conservative investors, fixed annuities and CD’s are both excellent investments for savings and budgeting. However, in order to determine which is best for your specific financial situation, you should compare fixed annuity vs. CD to see which benefits are more advantageous to your current environment. Both fixed annuities and CDs can be a great decision, depending on how many years you plan to work in the workforce, when you want to retire and how many other financial investments you current have in other places. Your investment objectives will help you choose between a fixed annuity vs. CD investing.
Both fixed annuities and CDs are a great way to increase your wealth. However, despite being conservative and low-risk, these investment strategies are quite different and should be used in various situations. CDs are great for investors looking to increase their wealth within a specific amount of time. Also, the CD is issued by a bank and therefore guaranteed by the FDIC (Federal Deposit Insurance Corporation) up to $ 100,000 per depositor. On the other hand, the annuity is issued by an insurance company and therefore is not guaranteed by the FDIC. However, if the company is strong and has been around for quite some time, you are still more than safe to invest with this firm. If the issuing company is financially sound, you will have no need for FDIC insurance.
A CD can offer a short-term accumulation of wealth for an individual. An annuity, on the other hand, only offers a long-term prospect. Both the CD and annuity will charge a fee if the individual tries to pull their investment prior to the agreed-upon end date. These fees can be quite detrimental so it’s important to think of your money as untouchable throughout the length of the investment period. CDs offer a guaranteed interest rate over a specific amount of time, which is very similar to the annuity. However, the interest on the annuity will go back into the investment and is tax-deferred which can be a large asset to the overall investment.
For retirees looking for a way to increase their wealth while simultaneously enjoying income each month, the annuity is the certain investment choice over the CD. No part of the CD investment can be utilized during the investing time period, whereas the annuity will issue income checks each month for the retiree, a spouse and even an heir.
Not sure which insurance company you can trust? Take a look at Steven’s Annuity Ratings guide and find a rock-solid annuity provider. Not sure how much to invest to reach your dream retirement? Take a look at Steven’s Annuity Calculator page to help determine premiums.