Today’s interest rates are a hot topic of conversation. With the 10-year treasury rate below 2 percent, many of your clients may be unsure of where or how to invest their hard-earned dollars.
Some may be hesitant to lock into an investment, especially with talk of how rates may follow the lead of some foreign investment rates — like many European countries — which have negative yields on 10-year government bonds. Others may be gun-shy because of the recent financial instability that followed Great Britain’s vote to leave the European Union.
Investments that used to be considered safe havens, such as off-shore accounts or even luxury properties, are no longer considered a sure thing by many advisors and clients. While some brokers may be unsure of what types of investments to propose to clients, those who sell fixed annuities have continued to see strong sales.
The reason for that is even with a low interest rate there are certain aspects of a fixed annuity investment that can’t be beat:
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A fixed annuity helps prevent a client’s investment from being subjected to the yo-yo fluctuations of the stock market. A fixed annuity provides stability for an investment, and also allows for the principal investment to earn interest.
While other investments are taxed, even when they don’t perform well, a fixed annuity isn’t taxed until funds are withdrawn or regular distributions start. This allows clients to ensure they are keeping their investments in the black — even during a down year.