Are you considering your retirement? What are some of the best investments to use? It all depends on your age and the type of retirement you would like to build. Some people prefer low risk investments where others have high risk investments. Understanding your risk tolerance and your age will make a difference in selecting the best investments. An annuity is likely an account you have heard about. Is this a smart investment?

The Need For An Annuity

Younger investors are best advised to stay AWAY from annuities. They are great for older investors but you need to be very careful when investing in them. An annuity is an agreement with an investor and an insurance company. You will be paid a specific amount from the insurance company for a set time period based on how much money you choose to invest. Usually you have a decent interest rate, which makes them great if you are retired and looking to still invest. Just be careful about the insurance salesmen as there have been a lot of bad deals out there and people have been taken advantage of.

Fixed Annuity

A fixed annuity is one where you will get a set amount of interest for a certain period of time. They are similar to investing in a CD as they come with extremely little risk. You just have to agree to the set amount of money to invest and then lock in the interest rate. You will be guaranteed the interest and the money that you invested over a specific amount of time.

Variable Annuity

A variable annuity is a little different as you will end up investing money and having an income amount over time. You will end up with payments to you that are based on the performance of the annuity. It’s similar to investing in your employers 401k or IRA plan. You will usually need to make an annual fee payment to have the investment but the returns can be generous.

Indexed Annuity

This is a higher risk annuity and not always the best idea. They have a combination of both the other annuity options but come with the interest rate that matches the S&P 500. It can give you income but it can also give you losses. Usually indexed annuities are sold by insurance salesmen that do not want to help you build your retirement. They would never suggest elderly people put their money into such accounts!

Be smart with your money and invest into accounts that will help you make money. Pick a good financial advisor and really strategize when it comes to your retirement so you aren’t throwing money toward accounts that do not provide you with positive returns!