[vc_row][vc_column width=”2/3″ el_class=”section section1″][vc_column_text]Annuities and mutual funds will be among the vast options you have when choosing investments for your retirement. These are two very different assets with characteristics that differ, even so, both can play significant roles in your retirement income plan. Before choosing either of them, it is important to understand their pros and cons plus their key characteristics.
Annuities
A contract between an insurance company and you, whereby the insurer agrees to pay you back a particular amount of money for a set period is what is called an annuity. The guaranteed income that is regular, usually up until death is one of the major advantages of annuities. If after retirement, you decide to stop working entirely, this could give you a certain amount of money to look forward to every month.
Fund expenses and administrative fees can get annuities quite costly. Because of the high cost of fees make this the downside of annuities. This might lead you to seek options with better returns and less expensive.
Mutual funds
This is a bucket of securities such as bonds and stocks, which can be bought into by individual investors. Since you are purchasing a portion of stock with other investors, this makes in way less risky investing in mutual funds as opposed to buying bonds and stocks individually. When looking into which mutual funds to buy, ensure that you review your account balance, fees based on transactions as well as what you pay your account manager.
If you want to start investing without devoting so much time into researching different stocks, bonds, and securities, then mutual funds are an excellent option for you. As well the lower fees mean higher returns rate on your investment. Compared to annuities, the downside of mutual funds is the lack of guaranteed earnings. Also, depending on market conditions, you might end up losing money.
With annuities you are offered a guaranteed payout. But due to the higher fees, you may end up not getting as much as you would have with mutual funds. There’s a high likelihood that you won’t see your money grow as much as if you had directly invested with a mutual fund in the market.[/vc_column_text][/vc_column][vc_column width=”1/3″][vc_single_image image=”36440″ img_size=”292×285″ style=”vc_box_shadow”][/vc_column][/vc_row]
