Financial Strategies Today » annuities explained http://www.financialstrategiestoday.com Hot topics in finance Sat, 15 May 2010 14:56:14 +0000 en hourly 1 http://wordpress.org/?v=3.3 What Is A Variable Rate Annuity? http://www.financialstrategiestoday.com/what-is-a-variable-rate-annuity/ http://www.financialstrategiestoday.com/what-is-a-variable-rate-annuity/#comments Wed, 31 Mar 2010 00:23:12 +0000 GuestPoster http://www.financialstrategiestoday.com/?p=202 Click to read the article titled "What Is A Variable Rate Annuity?"

]]> A variable rate annuity is an interest based fund investment opportunity that provides account holders with a means to build their assets for retirement. Unlike a fixed rate annuity, variable rate annuity returns are based on the fluctuations of the stock market, as your money is invested into stocks and bonds (or perhaps a balanced fund). While these types of investments do carry risk, you can choose to invest on the more conservative side or the riskier side.  See Variable Annuities Explained for a more detailed explanation of how these annuities’ returns are calculated.
Like other types of annuities, you set up your account with either a lump sum investment or you can choose to start with an initial investment and then add to it over time. Money that you earn on the account is tax deferred until you start to receive payments from your investment.

Variable rate annuities are not for everyone. If you are close to or at retirement age, you may not want to invest into them, since they do carry risk. If you do not like to take risks with your money this may also not be a wise investment choice. Variable rate annuities are generally a good option for individuals who are younger and want to plan for their retirement and at the same time are not afraid to assume some risk for a greater gain.

Like other annuities, if you are fully funding your account with a onetime deposit you can start receiving payments almost immediately. You will also have the more popular option for a variable rate and that is to defer payments for a set time period. Most variable rate annuities are deferred annuities, as in order to make a higher return you will want the money to stay in them for some time. It is best to set up these types of annuities well in advance of when you will retire and want to start receiving payments.

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