You hear it all the time.
“It’s time to start investing,” they say. But where does one begin? Navigating through these murky waters is difficult, confusing, and often times overwhelming.
There are so many investment options, each with different terms, conditions, qualifications, restrictions, other characteristics that make it difficult to decide which one (or ones) are right for you.
Well, don’t worry. We’re here to help.
In this blog, we’ll break down one of the most common, high return investment options out there for those looking to receive consistent payouts broken up across a set period of time.
Hey, what do you know? We just described an annuity.
It’s possible you’ve heard that term before, but never really knew what it meant. Well, in that case, let’s dive right into our first lesson: Annuities 101.
What Is An Annuity?
In layman’s terms, there are a few different ways to interpret the term “annuity.” Merriam-Webster breaks it down like this:
- “A sum of money payable yearly or at other regular intervals.”
- “The right to receive an annuity.”
- “A contract or agreement providing for the payment of an annuity.”
Does that help clear it up? Somewhat, we suppose. The key takeaway here is that an annuity refers to the payout of a specific sum of money that is divided out in equal proportions at specified intervals. So, when you invest in an annuity, you receive a steady, reliable return every so often, whether it be monthly, quarterly, yearly, or otherwise. That’s simple enough to understand, isn’t it?
But technically speaking, financial annuities are a little more complex. These investment vehicles are designed for those who are either planning for, or already in, the retirement stage of their life. Annuities are meant to be a way for those investors to receive a reliable stream of income to either replace the income they lost after retiring or supplement their other sources of income.
Typically, annuities are sold by financial institutions, brokerage firms, and insurance companies to individuals, and there is a specified maturation date associated with each annuity. Upon that date, the investor starts to receive their payments at the previously agreed upon intervals.
Annuities are also great ways to transform a single lump sum, such as a lottery jackpot, into a compounded stream of reliable cash flow.
While that is a general overview of annuities, understand that not all annuities are built the same. There are different types, each with their own pros and cons.
Here are just a few different types of annuities.
Types Of Annuities
As a basic overview, we’ll only dive into the two most common types of fixed annuities. There are also annuities known as variable annuities, but since we here at Tactical Wealth only deal with solutions for fixed income, we will stay away from those for now. If you want to learn more about variable annuities, you can check here.
Now, the two most common types of fixed annuities are immediate annuities and deferred annuities, each of which have their own special characteristics. When deciding which type might be right for you, it’s important for you to take into account your current financial situation, your overall financial goals, and your stage in life.
- Immediate Annuities: This type of annuity is best for those closer to retirement, if not already retired. That’s because immediate annuities allow you to receive your dividends as soon as you deposit your initial seed, or investment. Another advantage to immediate annuities are the lower fees when compared to other types. Immediate annuities can allow an investor to receive a fixed income for a couple years, several decades, or even until death.
- Deferred Annuities: Much like they sound, deferred annuities don’t generate steady revenue until long after your initial investment, sometimes upwards of a year or even several years. This choice is more common for those who are planning far in advance, perhaps if they still have a ways to go before retirement or until they need additional income. The fees associated with deferred annuities are one of their biggest drawbacks, however.
Annuity Pros and Cons
Like any investment, every type of annuity has its own benefits and disadvantages. As a whole, annuities are generally seen as safe and reliable high return investments. However, due to the often confusing terms and unwieldy fees, they aren’t always as foolproof as they may seem on the surface.
- Annuity Advantages
- No contribution limits
- Stable, reliable income
- Fixed interest rates (fixed annuities only)
- Tax advantages
- Annuity Disadvantages
- High annual investor/commission fees
- Generally low interest rates
- Difficult to understand
OK, so what if you really like what an investment annuity has to offer, but are taken aback by some of the cons they carry with them? Isn’t there a way to get the stable monthly (or yearly) cash income stream provided by annuities without losing out to low interest rates and high fees?
Well, now there is. The Tactical Wealth Fixed Income Fund is better in every way when compared to annuities, and here’s why:
- Rather than being tied to insurance companies and the stock market, the Fixed Income Fund is backed by real estate, and has an established contingency reserve and pooled investments to protect against non-performing loans.
- Because of its involvement with real estate, the Fixed Income Fund is able to offer the highest rates available, sometimes as high as two times or more than the annuity rates offered by other firms.
- The Fixed Income Fund is a high return investment that is easy to understand. All you need to know is how mortgages work, and how long you want your investment lifespan to be, and you’re well on your way to a stable, consistent stream of income that you can count on.
- Our fund protects against risk by concentrating our holdings in areas with historically stable markets, maximum loan-to-value ratios of 70 percent, and an established contingency reserve to cover additional legal expenses and provide our clients with their monthly income even in the event of a foreclosure or non-performing loan.
- Even better, the Fixed Income Fund has NO transaction fees, NO management fees, and NO investor fees. We won’t compromise the returns you deserve by taking a chunk from them. Instead, we only purchase loans with values greater than the returns we pay out to our investors.
- Tactical Wealth is not just another investment firm. We are managed by an expert with over 20 years of market experience, with a conservative approach and an eye for innovation when it comes to investments.
So, now that you know all about annuities, it’s time to contact Tactical Wealth. Our investment vehicle has all of the benefits and none of the negative ramifications of other fixed annuities. Get started today and start heading towards peace of mind with an investment you deserve.