When Fixed Annuities Outperform Market-Based Investments
We often hear the phrase “no risk, no reward” in investing—but for retirees and conservative savers, that mindset can be dangerous. When your priority shifts from accumulation to preservation and income, volatility becomes a liability. Fixed annuities offer a safer, more predictable alternative, and in certain market environments, they can legitimately outperform traditional market-based strategies on a risk-adjusted basis.
Fixed Annuity vs. Market Returns
Consider a straightforward example. If you invest $500,000 into a 5-year fixed annuity paying 5.40%, your outcome is contractually defined on day one. With annual compounding, that premium grows to approximately $651,968 by the end of the term—meaning over $150,000 in guaranteed interest, regardless of what the stock or bond markets do.
There is no market exposure, no management fees, no sequence-of-returns risk, and no guesswork. You know exactly how much your money will be worth at maturity, which allows you to plan confidently for future income, purchases, or retirement transitions.
By contrast, a traditional 60/40 portfolio depends heavily on market timing and sustained performance. In years where equities stall or bonds underperform—something retirees have experienced repeatedly over the last two decades—returns can lag expectations. More importantly, volatility becomes especially painful if you’re close to retirement or already taking withdrawals, because losses may be locked in when assets are sold to generate income.
Why Predictability Wins
Predictability doesn’t mean giving up growth—it means choosing growth you can rely on. Fixed annuities are designed for investors who value certainty and stability over speculation. They allow you to lock in multi-year growth without daily market fluctuations and protect principal during periods of economic uncertainty.
In addition, interest inside a fixed annuity grows on a tax-deferred basis, allowing compounding to work more efficiently over time. Many retirees also use fixed annuities as a strategic “bridge”—a safe place to grow funds while delaying Social Security, waiting for pension income to begin, or preparing to activate guaranteed lifetime income later.
At Diversified Insurance Brokers, we help clients compare today’s top fixed annuity rates, term lengths, and contract features so their money is positioned for maximum value and long-term protection—without unnecessary risk.
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Fixed Annuity vs. Market Returns
Let’s say you invested $500,000 into a 5-year fixed annuity paying 5.40%. You’re guaranteed to earn over $150,000 in compounded interest by the end of the term—with no market exposure, no fees, and no guesswork.
Meanwhile, a typical 60/40 portfolio might struggle to keep up, especially in years where stocks underperform or bonds lag. And while equities can deliver long-term growth, they also carry short-term volatility that can be painful if you’re close to—or already in—retirement.
Why Predictability Wins
Fixed annuities are ideal for:
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Locking in multi-year growth
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Protecting principal during market downturns
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Earning tax-deferred interest
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Creating a safe bridge to retirement income
At Diversified Insurance Brokers, we help clients compare the top fixed annuity rates and terms to ensure they get the most value and protection for their money.
Ensure you are receiving the absolute top rates
Current Fixed Annuity Rates
Compare today’s best fixed annuity rates from top carriers.
Current Bonus Annuity Rates
See which annuities offer the highest upfront bonus today.
Request an Annuity Quote
Submit our annuity request form to get personalized rate options.
Lifetime Income Calculator
Use our calculator to see how much guaranteed income your annuity can provide.
Contact Us Today:
Ready to explore insurance and annuity options that offer guaranteed income, principal protection, disability, life insurance, Social Security and Medicare reviews, and long-term financial growth? Let the expert advisors at Diversified Insurance Brokers help you find the right strategy for your retirement goals.
📞 Call us at 800-533-5969
🔗 Visit our annuity rate page here
📍 Contact Us Page
About the Author:
Jason Stolz, CLTC, CRPC, is a senior insurance and retirement professional with more than two decades of real-world experience helping individuals, families, and business owners protect their income, assets, and long-term financial stability. As a long-time partner of the nationally licensed independent agency Diversified Insurance Brokers, Jason provides trusted guidance across multiple specialties—including fixed and indexed annuities, long-term care planning, personal and business disability insurance, life insurance solutions, and short-term health coverage. Diversified Insurance Brokers maintains active contracts with over 100 highly rated insurance carriers, ensuring clients have access to a broad and competitive marketplace.
His practical, education-first approach has earned recognition in publications such as VoyageATL, highlighting his commitment to financial clarity and client-focused planning. Drawing on deep product knowledge and years of hands-on field experience, Jason helps clients evaluate carriers, compare strategies, and build retirement and protection plans that are both secure and cost-efficient.
