Common Annuity Myths

A common criticism of annuities is that they don’t offer the same high returns as traditional market investments. However, this perspective overlooks the fact that investments serve different purposes based on individual goals. Here’s how annuities can complement or even enhance your financial strategy:

1. Fixed Annuities: Stability Over Volatility

• Fixed annuities are designed to hedge against market risk.
• Your principal is not exposed to the fluctuations of the stock market, providing a guaranteed rate of return.
• This makes fixed annuities a reliable option during market downturns, offering protection and steady growth even in volatile conditions.

2. Variable Annuities: Growth with Market Exposure

• For those who want to participate in market growth, variable annuities offer the opportunity to invest in equity markets.
• Like mutual funds, variable annuities allow for potential gains, but they also come with the risk of principal loss.
• This option may suit investors seeking long-term growth who can tolerate market ups and downs.

3. Structured Annuities: Balance Between Growth and Protection

• Structured annuities combine growth potential with downside protection.
• These products provide limited market exposure while incorporating features that cushion against significant losses, offering a middle ground between fixed and variable annuities.

Annuities aren’t inherently better or worse than market investments — they’re simply different. The right choice depends on your risk tolerance, income requirements, and overall financial goals. Annuities can provide a unique combination of stability, growth potential, and protection that complements other investment strategies, ensuring a diversified approach to achieving financial security.