What is the difference between a fixed annuity and a fixed indexed annuity?
A fixed annuity has a set interest rate on the annuity which may go down to a guaranteed rate of interest but never lower. You can never lose your principal but your interest rate could decline to the guaranteed rate if you are in a declining interest rate environment. The rates are usually locked in for a year at a time. A fixed index annuity is linked to a market index as the Standard and Poors, or the Nasdaq, a fixed index annuity is not actually in the stock market so if the market goes down, you don’t lose money, however, if the market goes up your interest rate is tied to the index so you have the potential of higher rates of return. A fixed index annuity is a vehicle that allows you the potential of higher returns on your investment like a variable annuity but without the risk of losing your money. If the stock market goes down you simply don’t make any money but you never lose money. Many fixed index annuities come with riders which guarantee you a certain rate of return even i
