Fixed Annuities Typically Offer Higher Rates
Three-year fixed-rate annuities often offer higher interest rates compared to Certificates of Deposit (CDs) of the same duration. This is because annuities are designed to provide long-term financial security and include additional features such as tax-deferred growth and potential death benefits. Moreover, annuities typically involve a higher level of risk and commitment than CDs, which can contribute to their higher interest rates.
- Higher Interest Rates: Generally, fixed annuities offer higher interest rates compared to CDs.
- Tax Deferral: Interest earned is tax-deferred until withdrawal.
- Guaranteed Income: Provides a guaranteed income stream for a specified period or for life.
- Minimum Investment: Often requires a higher minimum investment than CDs.
Certificates of Deposit (CDs)
- Fixed Interest Rates: Offers fixed interest rates for the term of the CD.
- Lower Risk: Considered lower risk as they are FDIC insured up to certain limits.
- Penalty for Early Withdrawal: Early withdrawal usually incurs a penalty.
- Accessibility: Generally more accessible with lower minimum investment requirements.
Comparing The Options
|3-Year Fixed Annuity
|Certificate of Deposit (CD)
|Tax on Interest
When choosing between a 3-year fixed annuity and a CD, consider the higher interest rates offered by annuities against the lower risk and accessibility of CDs. Fixed annuities are suitable for long-term, tax-deferred savings, while CDs are better for short-term, low-risk investments. Understanding your financial goals and risk tolerance is key to making the right choice.
Contact us today for a free quote.
Request A Quote
Get help or a quote from a licensed financial professional. This service is free of charge.