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What are investing in annuities scam – What is investing in annuities scam? 1-800-566-1002 http://www.RetireSharp.com . What are the best types of investing in annuities and learn how you can avoid the most common mistakes that individuals have made when looking to invest in annuities retirement.
Basics of Investing in Annuities

Annuities refer to plans which pay a fixed amount of income over an extended period of time. Annuity plans can be a good choice for supplementing retirement income. However, they can be a poor choice for some people because of high expenses.

In a nutshell, annuities are an insurance product which produces income. Money is invested into the annuity and income is generated. Depending on the type of annuity purchased, funds are either deferred or paid immediately. One primary benefit of annuity investing is the opportunity to grow tax-deferred earnings.

Establishing annuity plans can be complex and confusing. It is best to work with a qualified financial or retirement planner. Although there are two basic types of annuities, several options exist. Each has advantages and disadvantages, including potential tax consequences and steep early withdrawal penalties.

The first type is known as deferred annuities because payments are deferred until a later date. Investors contribute funds during the saving phase and receive annuity payments during the income phase.

The second type is known as immediate payment annuities because payment plans begin immediately. The annuity is purchased with lump sum cash and installments paid for a predetermined timeframe.

Each type of annuity can either be fixed or variable. Fixed guarantees a specific rate of interest, while variable is paid based on investment performance. Annuity payments can be established for a certain amount of time, such as 10 or 20 years, or for life.

The return on investment of variable annuities will fluctuate depending on the performance of selected investments. Variables are regulated by the U.S. Securities and Stock Exchange Commission (SEC), while fixed annuities are exempt from SEC regulations.

Beneficiaries can be assigned to receive generated income derived from annuity plans. Many variables exist regarding beneficiary designations. The main selections include: spousal beneficiary, non-spousal beneficiaries, and unusual owner-annuitant designations such as married couples jointly owning an annuity.

Several payment options are available when establishing annuity payouts. The most common include:

The most prevalent disadvantages of annuity investing is the potential for hidden fees. In most cases, annuities are purchased through an insurance broker who earns a commission for the sale. On average, brokers earn 10-percent.

Then, there are annual fees such as investment management fees, insurance riders, and insurance charges which can add another 2- to 3-percent. And, if you need to withdraw money early, you'll incur a 10-percent penalty. Overall, that could equate to a loss of 13- to 23-percent.

Before investing in annuities talk to the professionals and weigh the risks. Many investors swear by annuity investing, while others won't even consider it. Only you can decide which is best for you.
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