Income Planning

Introducing the Fixed Indexed Annuity: Upside Potential with Downside Protection

Are you seeking an investment option that combines growth potential and principal protection? Look no further than the fixed indexed annuity (FIA). This tax-deferred, long-term savings vehicle offers a unique balance of benefits, providing you with the opportunity for growth while safeguarding your principal during market downturns. In comparison to a fixed annuity, an FIA offers greater growth potential, and when compared to a variable annuity, it presents lower risk and potential returns.

The returns of a fixed indexed annuity are linked to the performance of an underlying index, such as the widely recognized S&P 500® Composite Stock Price Index. This index comprises 500 stocks, providing diversification and representing a broad segment of the market. While the index tracks the market, your invested funds in an FIA are never directly exposed to stock market volatility, ensuring a level of protection.

With a fixed indexed annuity, you can enjoy the following benefits:

  1. Principal Protection: Your initial investment is shielded from potential market losses, ensuring that even during downturns, your principal remains intact.
  2. Growth Potential: The performance of the underlying index determines your returns, offering the potential for growth when the market performs well.
  3. Tax-Deferred Growth: The earnings on your fixed indexed annuity grow tax-deferred until you make withdrawals, allowing your investment to compound over time.
  4. Diversification: By tracking a broad market index, the FIA provides an opportunity for diversification, reducing the impact of individual stock performance on your investment.

Consult with a financial professional

It is important to note that while a fixed indexed annuity provides the potential for growth, it also comes with certain limitations. Your returns may be subject to factors such as participation rates, caps, and fees, which can restrict your full participation in market gains. Additionally, FIAs are designed as long-term savings vehicles, and early withdrawals may be subject to surrender charges. Therefore, carefully reviewing the terms, features, and risks of an FIA is crucial before making any investment decisions.

When considering a fixed indexed annuity, it is advisable to consult with a financial professional who can assess your specific financial goals and circumstances. They can help determine if an FIA aligns with your investment objectives and provide guidance on the suitability of this product for your financial portfolio.

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