CD versus Fixed Annuity Comparison
CD versus Deferred Annuity Comparison Safety, Return, and Investment Time
Retirees with cash often seek an investment with a lot of safety. Holding a certificate of deposit (CD) gives you that safety but sacrifices investment return. Let’s compare a CD to a deferred fixed annuity for safety, return and investment time. Then you can choose what’s best for you.
The Safety Issue
Banks offer CDs. The Federal Deposit Insurance Company (FDIC) guarantees any investment in a bank up to $250,000 (through 2009) against the bank’s failure. If you plan to invest more than that, spread it between different banks – not different accounts in the same bank – so all your holdings are FDIC guaranteed. Bank failures are not all that uncommon.
A deferred fixed annuity hasn’t any FDIC protection. But it’s still considered a conservative investment. First it’s backed by the financial strength of the company that issues the annuity. So, before buying a deferred fixed annuity, check the insurance company’s financial rating. Independent rating companies such as Moody’s, A.M. Best, Standard & Poor’s and Fitch provide this information to you.
As a safety backup in case of failure, many insurance companies are affiliated with a guaranty association in their state. One example is the Georgia Life and Health Insurance Guaranty Association in Georgia. It provides total annuity cash surrender protection per owner per insurance company of $100,000 (read these guaranty association terms carefully—some state that the guarantee is conditional on the association having funds).
The Return Issue
Your return for CDs and deferred fixed annuities depend on their interest rate earnings and taxation. CDs offer guaranteed interest rate for a fixed term – generally, the shorter the term, the lower the rate. All CD earnings are taxed annually – whether you withdraw money or not. This yearly taxation loss reduces the annual compounding of a CD’s return.
A deferred fixed annuity can guarantee an interest rate for an initial period or for multiple years. But earnings of annuities are tax-deferred. So at equal interest rates, your savings will compound annually faster than for a CD. Annuity earnings are taxed only when you withdraw them.
The Investment Time Issue
Withdrawing money before term for a CD will bring a penalty. And an early surrender from a deferred annuity will do so too. So if you’re planning on using most of that money within a year or two, then a CD is probably the better choice. But if you plan on holding for the long term a deferred fixed annuity may be more advantageous.
Refer to the table for a quick summary of comparison issues. You just need the current interest rates and early withdrawal penalty features of CDs and deferred annuities to make an informed decision.
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Comparing issues for CDs and Deferred Fixed Annuities |
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Issue |
CD |
Deferred Fixed Annuity |
|
Held by |
Bank |
Insurance Company |
|
Safety |
If Bank Failure then FDIC up to $250,000 per bank |
Backed by financial strength of Company (see ratings at A.M. Best or Std & Poor’s, Fitch) |
|
Interest earned |
Offers guaranteed rate for fixed period Shorter period - lower rates |
Guaranteed rate locked ion for initial period |
|
Taxation |
Earnings taxed yearly so reduced annual compounding of return |
Tax on earnings deferred until you withdraw money so earnings compound faster |
|
Time to invest |
CD is best if need money within 1 year |
Deferred Annuity if several years and longer |
Note on Annuities: With tax deferred investments, income taxes may be due upon withdrawal of funds, withdrawals prior to age 59½ are subject to a 10% penalty. Annuities have surrender charges or expenses associated with them while CDs have early withdrawal penalties. The purchase of annuities may incur commission and annuities may not be as liquid as CDs. CDs are FDIC insured to $250,000 per owner while annuities are not and are guaranteed by the claims paying ability of the insurance company.
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January 16th, 2009 at 12:57 am
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February 11th, 2009 at 11:10 am
Very interesting comparisons on the different vehicle investments that a lot of older retired individuals have to choose from.
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March 7th, 2009 at 2:40 pm
Great post. I like to see how a charitable annuty would compare to the 2 options you listed. Seems like you get tax right off and income. Cds are great but i think you could set up a good annutiy and maybe make more
High yeild savingss last blog post..Best high yield certificate of deposit rates.
March 11th, 2009 at 4:21 pm
“If you plan to invest more than that, spread it between different banks – not different accounts in the same bank – so all your holdings are FDIC guaranteed.” - is an incorrect statement. There are ways to structure your accounts through the titling of these accounts within one bank to multiply your level of coverage. For instance, A joint account may have two owners. This account would be covered under the interim rule for 2009 by the FDIC up to $500,000. With this same account these joint owners could add a beneficiary adding another $100,000. As well, the FDIC has lifted that beneficiaries have to be “qualified”, meaning they need to be either a Mother, Father, Son, Daughter, Grandmother or Father so as to be able to provide a higher level of protection for your deposited bank funds. In essence you could insure an a single owner account up to $500,000 with the sole owner naming up to 4 different beneficiaries of their choice. If you consider a joint account, the account could very well be protected up to $1million dollars. Also not listed is the FDIC considers IRAs on a sole ownership basis and thus can add another $250,000 to be covered by the FDIC in one single bank. Say the joint owners from the example above have funds covered in the amount of $1million through their joint account and naming 4 different beneficiaries each on that account. They both could also have a bank IRA that will allow for them to be covered up to an additional $250,000 each; thus raising their limit from $250,000 to $1.5million dollars within one single financial institution that is backed by the FDIC.
April 14th, 2009 at 2:44 pm
There are other investment options that ought to be considered too. For example, credit unions offer money market and mutual fund accounts for their members. Likewise, a lot of people tend to diversify their portfolios depending on the investment plan they plan to pursue.
June 6th, 2009 at 11:40 pm
Great post. Very informative. A very good comparison between CDs and Deferred Fixed Annuities. Specially the safety, return and investment time issues are very well described. Thanks for sharing this useful information.
June 15th, 2009 at 8:35 pm
It amazes how people will put their money in a CD for long term hold and pay taxes on it year after year. If they just stop to calculate what they have earned against what they pay in taxes and consider the rate of inflation they would run to the bank to get their savings.
AnnuityBuyerSecretss last blog post..Annuities – Get The Honest Truth
June 22nd, 2009 at 9:09 am
I thought CD’s were better than fixed annuity. But this article shows that it depends on the situation. A good annuity can be more effective at times. The post was very informative. Thanks for sharing the information.
July 2nd, 2009 at 6:00 am
The good article about the investment vehicle. For the young man like me always thinks the retirement fund in future. The factors of inflation rate and uncertainty economic in recent year always make the people make more funding in any investment that give a good return. Thanks for share the information and i will use it as my investment references.
July 7th, 2009 at 8:25 pm
A 5 year CD LADDER would allow you to renew, every year, the shortest period CD for a new longer (5 year) period CD. At the end of 5 years you have a long period CD maturing every year, available to purchase another long period CD. Bankrate dot com has a good article on how a CD ladder works.
July 10th, 2009 at 4:27 am
Excellent comparison info on credit deposit and annual fixed. It is always difficult to identify a good product that will deliver profit to the clients. Most of the financial products comes with hidden clause. Only those who are in this field could identify and show the true information.
July 14th, 2009 at 8:30 pm
nice comparison, please note that many states guarantee goes up to 300k so it is equal or greater than the FDIC amount. Also, you can split fund annuities with two or more carriers to provide additional protection.
July 15th, 2009 at 9:20 pm
Great comparison. I have ever seen such an awesome article about annuity comparisons anywhere. Great ob. Chers
July 18th, 2009 at 2:39 pm
Great post. Very informative. A very good comparison between CDs and Deferred Fixed Annuities. Specially the safety, return and investment time
issues are very well described. Thanks for sharing this useful information.
July 19th, 2009 at 11:38 am
Fixed annuities have the two important aspects. The first one is over due payment and the second is immediate payout. Over due payment means that you can pay later, while immediate payout means you have to make payment instantly.
July 23rd, 2009 at 11:47 am
I think annuities have a bad rap because they used to mostly benefit sales people – who would get large commissions for them. It looks like the Vanguard annuity is a relatively safe way to add this type of safe income to your portfolio. I would just add, as an investor, to make sure you read the prospectus and understand how the company managing the annuity is making their money before you proceed.
July 26th, 2009 at 9:13 am
All banking system is unfair, it’s system give advantage for bank, not for customers.
July 27th, 2009 at 2:17 am
I think for retirees looking for a way to increase their wealth while simultaneously enjoying income each month, the annuity is the certain investment choice over the CD. No part of the CD investment can be utilized during the investing time period, whereas the annuity will issue income checks each month for the retiree, a spouse and even an heir.
July 29th, 2009 at 11:57 am
For low-risk, conservative investors, fixed annuities and CD’s are both excellent investments for savings and budgeting. However, in order to determine which is best for your specific financial situation, you should compare fixed annuity vs. CD to see which benefits are more advantageous to your current environment. Both fixed annuities and CDs can be a great decision, depending on how many years you plan to work in the workforce, when you want to retire and how many other financial investments you current have in other places.
July 29th, 2009 at 2:55 pm
The entire concept surrounding CD’s can be hard to grasp. Thanks for sharing valuable information! Sec.gov har a great article about Certificates of Deposit aswell: sec.gov/investor/pubs/certific.htm
July 31st, 2009 at 1:41 pm
I think a CD can offer a short-term accumulation of wealth for an individual. An annuity, on the other hand, only offers a long-term prospect. Both the CD and annuity will charge a fee if the individual tries to pull their investment prior to the agreed-upon end date.
August 4th, 2009 at 10:33 pm
Informative and useful post. That’s clear comparison between CDs and Deferred Fixed Annuities. It provides me some useful information.
Thanks.
August 8th, 2009 at 11:29 am
Well for retirees looking for a way to increase their wealth while simultaneously enjoying income each month, the annuity is the certain investment choice over the CD. No part of the CD investment can be utilized during the investing time period, whereas the annuity will issue income checks each month for the retiree, a spouse and even an heir!
August 13th, 2009 at 9:21 am
If taxes are a concern, a deferred fixed annuity may be a better option for several reasons.
Earnings on CDs are taxable in the year the interest is earned, even if you don’t take the money out. With deferred fixed annuities, earnings accumulate tax–deferred and are not treated as taxable income until they are withdrawn, which gives you a measure of control over when you pay taxes.
August 14th, 2009 at 12:07 am
These are known as structured settlement annuities and help to distribute income from large payments evenly over time. The rates on most fixed annuities tend to be higher than a standard bank CD.
August 21st, 2009 at 10:20 am
I think now, many people are familiar with traditional certificates of deposit and may purchase them because CDs are what they’ve always used. But tax-deferred fixed annuities can be an alternative to CDs for the right person. As with any financial product, issues such as age, income and suitability should be considered when making financial decisions..
August 29th, 2009 at 8:27 am
The main advantage that CDs have over annuities is the fact that they offer a lower risk than annuities. This is because, legally speaking, CDs are treated as savings whereas annuities are considered to be investments. Consequently, CDs (being savings) benefit from federal deposit insurance which annuities (being investments) don’t benefit from.
September 3rd, 2009 at 1:58 pm
Excellent analysis between a CD and a fixed annuity. The rates today on a CD are next to nothing. For someone with a longer turn horizon I would think that the Annuity would be a much better option. Although in my opinion I would opt for something all together different unless being ultra conservative is a necessity.
September 9th, 2009 at 3:40 am
Yikes! Looks like I have a lot to learn about anuity. A lot of this went right over my head on first read. Good info though.
September 28th, 2009 at 8:50 am
That is true, but i think the main advantage that CDs have over annuities is the fact that they offer a lower risk than annuities. This is because, legally speaking, CDs are treated as savings whereas annuities are considered to be investments. Consequently, CDs (being savings) benefit from federal deposit insurance which annuities (being investments) don’t benefit from. On the downside though, the returns on CDs tend to be lower than returns on annuities. Moreover, if one opts to cash a CD before its maturity,
September 29th, 2009 at 1:23 pm
Really Liked this post. I really am not very familiar with CD’s or annuities. It sounds to me as though the Cd’s are they way to go. They seem a bit safer, and possibly more lucrative. Am I wrong? Furthermore thanks for this blog seems flooded with fantastic info. medical assistant training, and LPN Training.
October 2nd, 2009 at 11:49 am
Variating your investments is very important. I would personally advise someone to go with Deferred Fixed Annuities. On the hand the comparison of issues for CDs and Deferred Fixed Annuities makes things seem a bit more interested. Perhaps a balanced approach between both CD and fixed annuities might be the best option.
October 16th, 2009 at 3:26 am
The trouble with a deferred fixed annuity is that the ratings agency have got their ratings so wrong against so many companies in the past couple of years. The result is that a finacnial tool that would have been previously considered as conservative in its risk aspect, sdenly became a whole lot more risky. This has applied to both large and smaller companies that have issued the annuity. Having said that, the majority of financial instruments have had to be re-assessed in terms of their relative risks in the last two years!
October 30th, 2009 at 1:54 pm
I think if CDs (being savings) will benefit from federal deposit insurance which annuities (being investments) don’t benefit from. On the downside though, the returns on CDs tend to be lower than returns on annuities. Moreover, if one opts to cash a CD before its maturity,
October 31st, 2009 at 9:34 pm
These are known as structured settlement annuities and help to distribute income from large payments evenly over time. The rates on most fixed annuities tend to be higher than a standard bank CD.
November 11th, 2009 at 8:29 pm
Great article with good comparison between CDs - Deferred Fixed Annuities at the all about safety. Now we have clearly thought that CD’s were not better than fixed annuity and all depends on the situation. Very informative post , Thanks for share.
November 15th, 2009 at 8:59 pm
Both fixed annuities and CDs can be a great decision, depending on how many years you plan to work in the workforce, when you want to retire and how many other financial investments you current have in other places.
December 7th, 2009 at 8:04 pm
I think for retires looking for a way to increase their wealth while simultaneously enjoying income each month, the annuity is the certain investment choice over the CD. No part of the CD investment can be utilized during the investing time period, whereas the annuity will issue income checks each month for the retire, a spouse and even an heir.
December 14th, 2009 at 2:36 am
No part of the CD investment can be utilized during the investing time period, whereas the annuity will issue income checks each month for the retiree, a spouse and even an heir!
December 14th, 2009 at 2:22 pm
That was a great article on the cd vs fixed annunity. I was a finance major in college and they completely hacked how to explain it properly. I just bookmarked your blog and will come back often.
December 28th, 2009 at 3:26 pm
Fixed annuities have the two important aspects.
December 29th, 2009 at 11:02 pm
No part of the CD investment can be utilized during the investing time period, whereas the annuity will issue income checks each month for the retiree, a spouse and even an heir!
January 5th, 2010 at 9:29 pm
I think a CD can offer a short-term accumulation of wealth for an individual. An annuity, on the other hand, only offers a long-term prospect.
January 7th, 2010 at 10:01 pm
t looks like the Vanguard annuity is a relatively safe way to add this type of safe income to your portfolio.
January 13th, 2010 at 10:56 am
deferred fixed annuities are issued by insurance companies and are not insured by the U.S. government. They are backed by the financial strength of the issuing insurance company, regardless of the amount. Therefore, before purchasing an annuity, you should make sure the issuing insurance company is financially sound. You can determine financial strength by requesting the findings of independent rating companies such as Moody’s, A.M. Best, Standard & Poor’s and Fitch. These companies evaluate the financial strength of insurance companies and publish ratings that give their assessments of each company.
January 24th, 2010 at 6:11 am
As an investor, to make sure you read the prospectus and understand how the company managing the annuity is making their money before you proceed.
January 25th, 2010 at 8:05 pm
These are known as structured settlement annuities and help to distribute income from large payments evenly over time. fashion The rates on most fixed annuities tend to be higher than a standard bank CD.
January 26th, 2010 at 11:12 pm
I have ever seen such an awesome article about annuity comparisons anywhere.
January 31st, 2010 at 6:16 am
I think the Fixed annuities are similar to a bank CD. You receive a specific interest rate for a warranty period, then the interest rate, as the rate CD, complies with the latest rate lock in the next period. However, unlike CDs, the debt also has a guaranteed minimum in which never have to pay less than the rate of interest.
January 31st, 2010 at 7:12 pm
I’d really like someone to do the math for a 20 yr period for cd’s and annuity comparison. I wonder if the tax deferrment causes erosion of the value because of the 20yr taxable buildup throwing you into the top tax bracket, plus taxing 85% of the so. security upon surrender of the annuity.
February 1st, 2010 at 9:25 am
When a CD reaches its maturity, you can take the CD’s lump sum value in cash, renew the CD for the same or different maturity period or examine other investment alternatives (such as a deferred fixed annuity).
February 7th, 2010 at 12:42 am
I would just add, as an investor, to make sure you read the prospectus and understand how the company managing the annuity is making their money before you proceed.
February 7th, 2010 at 9:27 am
Unlike CDs, the debt also has a guaranteed minimum in which never have to pay less than the rate of interest.I think the Fixed annuities are similar to a bank CD. You receive a specific interest rate for a warranty period, then the interest rate, as the rate CD, complies with the latest rate lock in the next period
February 7th, 2010 at 11:09 am
Very thorough comparison CD vs. Annuity. There are many pro’s to an annuity, the main one being the deferred tax on interest. One should consult an accountant before moving forward with either. Tax strategies can very greatly based on age, income, and future/current needs. Thanks again!
February 11th, 2010 at 4:04 am
Interesting indeed. Just the ideal article I have to show my dad. Just contributing to the topic, I think no part of the CD investment can be utilized during the investing time period, whereas the annuity will issue income checks each month for the retiree, a spouse and even an heir.
February 12th, 2010 at 4:06 am
great article about the comparison bout CD vs fixed annuity. but i’m a little bit confused bout the term used. may be i’m not really expert in this field
February 17th, 2010 at 1:54 pm
Seems deferred fixed annuity is the way to go in my opinion, but opinions rarely matter when it comes to money. Either way, great post!
February 25th, 2010 at 6:45 am
They are backed by the financial strength of the issuing insurance company, regardless of the amount. Therefore, before purchasing an annuity, you should make sure the issuing insurance company is financially sound.
February 26th, 2010 at 11:51 am
Both CDs and deferred fixed annuities are savings vehicles used to accumulate wealth. However, these two products are quite different; each has its own unique strengths and uses. For the sake of comparison, let’s look at two similar versions of these products — an individually owned, Non–Qualified bank CD and an individually owned, Non–Qualified single premium deferred fixed annuity earning an annually renewable fixed rate of return
February 27th, 2010 at 4:11 pm
Wow, very well-planned out post. I’ve been thinking about using a deferred fixed annuity and have been trying to find some information written in “plain English”. This helps a lot!
March 3rd, 2010 at 10:26 am
In general, the gains in an annuity are taxed as ordinary income, just like a CD. There is some math you’ll need to do to calculate how much of your annuity is excluded based on interest rates and such (explained in IRS Publication 939, General Rule for Pensions and Annuities) but your gains are taxed as ordinary income.
March 15th, 2010 at 12:21 pm
The comparison really gives me lessons on how to invest in the certificate of deposit and fixed annuity. But I need to study further on my options to effectively invest my hard-earned money.
March 16th, 2010 at 9:08 am
As an IRA CD is a poor choice as the interest rates are not pace with inflation and therefore purchasing power is not winning. An annuity may make sense for an older person to stabilize the pension funds to ensure an annuity for himself and his spouse. You can also make sense for non-IRA money later in life to help their retirement income. Example, I am 62 about a 1 1 / 2 years I had a considerable amount of money in the stock of liabilities was not necessary, except as a cushion for retirement. I bought an annuity that guarantees an annual return of 5% more if the market is better and going to secure a living income for my wife and I, and if money is left to be given to a designated heir. Annuities have changed due to competition from other investment options.
March 20th, 2010 at 6:16 am
Typical features offered by the first online sites annuity rate today include lists of comparable annuity rates, free online quotes and explanations of the types of annuity and comparisons between different types of annuity. Information will also be offered on topics such as how best to deal with your pension after having bought and how to sell your pension. Annuity sites are also discussed related issues such as tax, tax on death benefits, options income, open market options, IRAs and 401k plans and retirement planning in general.
March 28th, 2010 at 9:23 pm
Nice post. A very good comparison between CDs and Deferred Fixed Annuities. Things should really be considered in having commercial property investment.
March 29th, 2010 at 6:52 pm
I think the Fixed annuities are similar to a bank CD. You receive a specific interest rate for a warranty period, then the interest rate, as the rate CD, complies with the latest rate lock in the next period.
April 1st, 2010 at 8:52 am
Nothing was written about the liquidity of both CD and fixed annuity. That’s what I have found:
“If you need access to the funds in a CD prior to the maturity date, you may pay an interest penalty ranging from 30 days’ to six months’ interest. Of course, you can limit your exposure to surrender penalties by investing in several CDs with staggered maturity dates. A deferred fixed annuity also provides you with access to your money should the need arise. With a deferred fixed annuity, withdrawals during the first several years are generally subject to surrender charges. Most companies will give you the flexibility, however, to withdraw a portion of your deferred annuity’s account value, usually 10% each year, without a company–imposed surrender charge. Once the surrender charge period has expired, you can generally access your money at any time without surrender penalties. Withdrawals may be taxable and, if they are made prior to age 59½, may be subject to a 10% penalty tax.”
April 3rd, 2010 at 11:07 am
Very thorough comparison CD vs. Annuity. There are many pro’s to an annuity, the main one being the deferred tax on interest. One should consult an accountant before moving forward with either. Tax strategies can very greatly based on age, income, and future/current needs. Thanks again!
April 19th, 2010 at 11:27 pm
Typical features offered by the first online sites annuity rate today include lists of comparable annuity rates, free online quotes and explanations of the types of annuity and comparisons between different types of annuity. Information will also be offered on topics such as how best to deal with your pension after having bought and how to sell your pension. Annuity sites are also discussed related issues such as tax, tax on death benefits, options income, open market options, IRAs and 401k plans and retirement planning in general.
April 27th, 2010 at 2:02 am
Good post Seems deferred fixed annuity is the way to go if you were to ask me, but thats my opinion and that rarelys matter when it comes to money.
May 13th, 2010 at 11:32 pm
I will go with CD if I have a scope to invest because I am not interested to invest for long time but who are long time lover may to with Deferred Annuity.
Have long journey with investment.
May 21st, 2010 at 5:53 am
nice post i think it seems fixed annuity is the way i go in my observation. and this post is great.
May 22nd, 2010 at 9:37 am
I think the Fixed annuities are similar to a bank CD. You receive a specific interest rate for a warranty period, then the interest rate, as the rate CD, complies with the latest rate lock in the next period.
May 30th, 2010 at 2:47 pm
Very interesting comparison of CD and fixed annuities - on balance I think the annuity would be the way to go but as always there are pro’s and cons depending on personal situation.
May 30th, 2010 at 2:51 pm
Very interesting comparison of CD and fixed annuities - on balance I think the annuity would be the way to go but as always there are pros and cons depending on personal situation.
June 1st, 2010 at 10:44 pm
I am really happy to find these site..I am really need article about annuity. Sorry if I comment too much.
Ok. In my opinion CDs offer a guaranteed rate of return for a specified period of time. Interest rates will vary depending on current market conditions and the length of time to maturity. Generally, the shorter the period of time to maturity, the lower the rate. There is no guaranteed minimum for renewal rates.
With a deferred fixed annuity, a guaranteed interest rate is locked in for an initial period. After that, interest rates may be adjusted periodically, generally each year.
June 6th, 2010 at 2:01 am
This post a good comparison between CDs and Deferred Fixed Annuities. Very Good Article
June 11th, 2010 at 8:10 am
Looks like deferred fixed annuity is the way forward in my opinion, but opinions rarely matter when it comes to money. Great post!
June 21st, 2010 at 3:50 am
Great post. Very informative. A very good comparison between CDs and Deferred Fixed Annuities.
June 29th, 2010 at 7:41 pm
The entire concept surrounding CD’s can be hard to grasp. Thanks for sharing valuable information! Sec.gov has a great article about Certificates of Deposit too.
July 5th, 2010 at 3:51 am
I have been considering annuities and CD’s but after long contemplation I decided to stop my installments and go for precious metals. With the bailout and out national debt spiralling, precious metals is the best safe haven
July 7th, 2010 at 11:13 am
Thanks for the information. My wife and I have bought quite a few CD’s at our bank for a “CD Ladder”. While we are all taught ladders, we have never been taught to ladder between different banks, in case of failure.
Your information is great, although it leaves me about half sick. : ) I’ll talk with my wife, and we will look into splitting our money between different CD’s in different banks now.
Thank you!!
July 26th, 2010 at 1:16 am
Both fixed annuities and CDs are a great way to increase your wealth. But even if conservative, low risk investment strategies that are very different and should be used in different situations. The CDs are suitable for investors seeking to increase their activities within a certain period of time. In addition, the CDissued by a bank, and then guaranteed by the FDIC (Federal Deposit Insurance Corporation) up to $ 100,000 per depositor. On the other hand, the pension will be issued by insurance companies and is not guaranteed by the FDIC. However, if the company is strong and has been around for a while ‘time, you’re more than safe to invest with this company. If the issuing company is financially healthy, you do not need FDIC.
July 27th, 2010 at 7:22 am
thnx 4 sharing valuable information. but Comparison between CDs and Deferred Fixed Annuities doesn’t enough to show the advantage of CD as my choice
July 29th, 2010 at 10:44 am
CD fixed annuity comparison
August 3rd, 2010 at 11:16 am
Fixed annuity definitely. It is much better than a cd
August 6th, 2010 at 9:17 am
A deferred fixed annuity also provides you with access to your money should the need arise. With a deferred fixed annuity, withdrawals during the first several years are generally subject to surrender charges.
August 6th, 2010 at 10:24 am
A deferred fixed annuity is generally the product of choice for the long haul. Deferred fixed annuities are designed to help accumulate money for retirement or to protect funds already saved once you’ve reached retirement. In later years, a deferred fixed annuity is usually more flexible for accessing your money. They can even be used to provide a legacy for your heirs.
August 6th, 2010 at 9:48 pm
Very interesting comparison of CD and fixed annuities - on balance I think the annuity would be the way to go but as always there are pro’s and cons depending on personal situation.
August 11th, 2010 at 9:05 am
Certificates of Deposit vs. Fixed Annuities 1 Liquidated earnings are subject to income tax and may be subject to a surrender charge. If taken prior to age 591/2, a 10% federal income tax penalty may apply. Fixed annuity guarantees are based on the claims paying ability of the issuing companies or company. However annuities do not provide any additional tax advantage when used to fund a qualified plan.
August 13th, 2010 at 8:06 am
Either way you look at it though, investment makes sense. Whether you are investing for retirement, safety and security or your families future the way to do it is through annuities or mutual funds. These funds have guaranteed benefits, with very minimal loss. If your bank currently consists of your two mattresses, it may be time for you to switch today!