Fixed Annuities and Value Stability
Fixed annuities are financial products designed to provide a guaranteed rate of return on the principal invested. They are often used as a retirement planning tool due to their stability and predictability. One of the key characteristics of fixed annuities is their ability to maintain value under normal circumstances.
No Loss in Principal Value Of Fixed Annuities
Under standard terms, as long as there are no product fees, a fixed annuity cannot lose its principal value. This means that the amount you initially invest in the annuity is protected from market fluctuations and economic downturns.
Related Reading: Do You Get Your Principal Back from an Annuity?
Impact of Fees and Charges On A Fixed Annuity
However, it’s important to consider any fees or charges associated with the annuity. While the principal is protected, certain fees or charges, if applicable, could reduce the overall value of the annuity. This is typically not related to market performance but rather to the specific terms and conditions of the annuity contract.
- No Market Risk: If you invest $10,000 in a fixed annuity, the principal amount remains secure regardless of market conditions.
- Fees Scenario: If the annuity contract includes an annual fee of 1%, the value of the annuity could decrease by the fee amount, notwithstanding the interest earned.
In summary, fixed annuities are designed to protect the principal investment from loss, making them a secure choice for those seeking stability in their retirement planning. However, it’s crucial to be aware of any fees or charges that might impact the overall value of the investment. Contact us today for a free quote.
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