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Sunday, June 3rd 2007

9:35 PM

Mutual Funds or Equity Indexed Annuity?

INSURANCE PHOENIX So you have some savings set aside that you don't need access to, other than putting it somewhere safe where it can earn some interest. Mutual Funds are popular. But you already have your 401k. Do you need more money in stocks and bonds? What about an Equity Indexed Annuity? Here is an explanation in a nutshell. EIA = The money is invested in an index. Examples of two indexes are the S & P 500 and Russell 2000. You earn a participation rate, which means you earn a portion of whatever total return the index earns. Let's say the index earns 10% one year. You would make a portion of that, which could be 70%, 80% or more. The insurance company keeps the difference. Is that a rip off? Absolutely not. The reason you share the profits with the insurance company is because they guarantee NO losing years. The worst you will ever do in an Equity Indexed Annuity is earn zero. Now - would you trade a percentage of the profits for a guarantee you will never see your balance go negative? It is a pretty interesting trade off. In Mutual Funds, you know you will see down years. Likely, you have had a few years you remember all too well. It won't happen with an Equity Indexed Annuity. Live in Arizona and want more information, contact me through my website at Phoenix Mutual Funds or Phoenix Annuity Phoenix Mutual Funds Phoenix Annuity
17 Comment(s).

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