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Do Annuity Rates Fluctuate Greatly?

Are you considering getting an annuity quote to find out more about annuity rates and whether annuity is for you? If so, there are many things that you need to know about in order to make an informed decision.

When looking at getting an annuity quote and considering whether annuity is right for them, many people have questions about whether annuity rates fluctuate greatly.

The answer to this is yes … and no! It all depends on which product you have chosen.

Fixed Annuity

A fixed annuity offers a fixed return on the investment of your money. This return is guaranteed and so does not fluctuate a lot – sometimes it will go up and down depending on interest rates and other movements in the market, but this will only be a small movement.

Fixed annuity is good for people who are not very risk tolerant. If you want to put your money somewhere safe and see a modest return on it then a fixed annuity is a very good option to have just this happen.

If you are happy to live a quiet life in retirement and don’t feel like you need too many fancy things, if you would rather be safe and just have enough to get by, then a fixed rate annuity is probably the way you should consider going.

Variable Annuity

A variable annuity takes your money and invests it in a less safe way. Your money will often be invested in a mutual fund where many people’s money is pooled and the head of the fund will pick stocks and bonds to invest in.

This is a much more risky investment because it depends on the stability (or lack thereof) of the stock market. The risk goes both ways however – you stand to make a lot more money from a variable annuity than you ever could from a fixed annuity. If you want to own a boat in retirement and go sailing around the world, you’ll probably need to think more about a variable annuity than a fixed annuity.

The rates on a variable annuity do tend to fluctuate greatly. Especially recently when the markets have been in such a state of flux themselves.

Annuity Rates

So, annuity rates do fluctuate greatly if you have your money invested in a variable annuity, but they do not fluctuate much if you have your money invested in a fixed annuity. The choice of which product is best for you will depend largely on your personal tastes.

Get an annuity quote for both fixed annuity and variable annuity so that you can see what the input and output is for each. This will give you a better idea of which way it is wiser for you to invest your money. If you want to minimize your risk, it is better to choose a fixed annuity. These rates do not fluctuate wildly. They are fairly stable returns. If you are more of a risk taker – a gambler who likes to throw the dice and hopes for a big win, then variable annuity may be more up your alley.

As always, consult your accountant and / or tax advisor and / or financial planner before making a decision on whether to invest in annuity and whether you should be looking at fixed annuity or variable annuity. Personally tailored information is very important before you put your money anywere.

Whichever you choose, annuities are a great investment that – like all investments – will go up and down. Choose the right product for you and then do not be too concerned by the fluctuations in the market. These things happened in cycles and not long after a stock has dropped, it can go right back up again.