In this age of information wars, it is really important to choose what you need to know. Just a regular search for a fixed annuity on any of the search engines will provide you with more than what you need. But the real task is to select from the never ending versions of information. If you are looking for the very basics of a fixed annuity, then you've landed at the right page because this article will talk about the essentials of a fixed annuity. Nothing more and certainly nothing less.First of all, I would like to give you a tip. Professionals in this field use a technique of confusing their clients by grouping all the types of annuity together. This will only work if you are a total layman on the topic of annuities. Once you are done reading this article, I hope you will be informed better on fixed annuities and will not get confused by the complex jargon of fixed annuities professionals.
A fixed annuity in its very basic sense is an annuity that is designed to pay a fixed rate of return for a pre-determined period of time. The rate of return is credited to the account after the period of time and a new rate is set for the next period. In other words, say a fixed annuity may pay 8%. After the completion of a year, 8% is credited to the account and a new fixed rate of return is declared for the next year. Another fact that will allow you to strengthen your decision on a fixed annuity is that fixed annuities provide a guarantee that will not only get your money back even at the worst economic stage, but will also, due to this fact, bring you a peace of mind.
Now that you know what fixed annuities are, you need to know some very important pros and cons of fixed annuities.
The very basic advantage of this type annuity is that there is a 100% guarantee that you will definitely get your money back along with the added rate of return. So you know you are getting the money and you surely can calculate how much you will be getting. Hence it is also useful for planning your expenditures.
As and when the interest rates in the economy shoot up, even your fixed rate is bound to rise at the beginning of a new period of time. Now you have a reason to be happy when your country's economy is doing well.
Similar to other certificates of deposit, a fixed annuity will yield higher interest rates through the passage of time. In other words, the longer your period of deposit, the higher the interest rates.
Demerits of this system are also as important as the merits.
You know from the advantages that the rate of return declared is dependant on the economy of the country. Hence as when the interest rates in the economy go down, the interest rate declared on your annuity will also go down.
Another and the last of the significant disadvantage is that you will have to face tax penalties if you use the money before you reach the pre-determined and agreed age.
To know more on fixed annuities and other life settlements or to talk to an expert in this field, visit FairField Funding. Fairfield Funding is a direct buyer of structured settlement annuities, will help you sell my annuity and can get you cash for annuity.
Stefano Grossi
FairField Funding
Sell My Annuity
Article Source: http://EzineArticles.com/?expert=Stefano_Grossi
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