Fixed indexed annuities: The cure for sluggish REITs

The most obvious reason for this across-the-board depreciation might simply be the high unemployment rate, which peaked at 10 percent in October 2009. As long as people remain jobless, they are naturally far less likely to buy new homes or refinance their current mortgages. 

Although recent news suggests that the unemployment rate is steadily improving, why take the chance of investing in a mutual fund that doesn’t guarantee a minimum rate of return when the real estate market is still spinning its wheels? Your clients deserve to reap the benefits of a secure, no-risk investment product. 

Fixed index annuities offer advantages that make them much more attractive than REITs, not the least of which is their safety. Contract owners of FIAs can expect to receive a steady retirement income and need not worry about losing their principal, even when the market is performing miserably. To combat inflation, riders are also available that can raise the annuity’s payout by 3 percent to 5 percent annually, though such riders come with a hefty price. 

During the growth phase, FIAs provide other desirable features that set them apart from REITs. Since accumulated value is tax-deferred, the interest is able to compound more quickly in a shorter period of time. And despite what the naysayers claim, contract owners enjoy plenty of liquidity: up to 10 percent can be withdrawn annually without incurring a penalty. 

In short, fixed index annuities afford participants the benefit of being linked to the market but without any of the risk. For clients who have lately been dissatisfied with their REIT’s lousy rates, FIAs just might be the cure.

This article first appeared in ProducersWeb.com, a sister Summit Business Media publication. Read the original post here.