When it comes to wealth management or general financial
planning, there are often so many industry-specific terms and jargon that
determining the best course of action can be difficult. For example, when
presented with a choice of a fixed annuity or variable annuity, we find that
many individuals aren’t exactly sure of the distinction.

Fixed Annuities vs.
Variable Annuities

In general, a fixed annuity determines a fixed interest rate
from the beginning of an arrangement that will remain constant forever, despite
any changes or fluctuations in the market. It also means that payments and
income resulting from these annuities will also be constant.

Meanwhile, the interest rates of variable annuities can
change over time following the performance of the market— or specific financial
factors to which they’re connected.

Benefits of Fixed

One of the clear benefits of a fixed annuity is that market
fluctuations don’t impact interest rates or payouts. This makes them
particularly appealing at moments when interest rates are low and expected to
rise—a fixed annuity will insulate you from the effects of an uptick in rates.

Benefits of Variable

Variable annuities, on the other hand, provide their own
benefits. Variable annuities can offer earnings that are tax-deferred and don’t
place limitations on contributions. Meanwhile, they also often provide a
guaranteed source of income as well as a death benefit. With no caps on how
much mutual fund share prices can rise, variable annuities also offer the
opportunity for greater returns and unlimited potential for growth if the
market performs well. That said, it’s coupled with the risk of lower returns or
losses if the market performs poorly.

Choosing between a fixed rate or variable annuity involves
the assessment of a wide range of financial factors, as well as your own
personal situation. We advise seeking the guidance of an experienced wealth
management specialist who can give you the direction you need.


Annuities are
long-term products and may be subject to contract limitations, fees and charges
including M&E expense, sales and surrender charges, administrative fees,
charges for optional benefits, underlying investment expenses, and early
withdrawal penalties and taxes.  Variable
annuities are sold by prospectus only.

Amuni Financial, Inc. is a Broker-Dealer and Registered Investment Advisor. Member FINRA/SIPC. Please see our website for the states in which we’re registered to do business.

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