If you are a conservative investor, you know it. Your stomach drops at the thought of losing money in the stock market, and you don’t think you could sleep at night knowing that your hard-earned money is at risk. You feel most secure when your money is in a safe, stable place. Conservative investors tend to avoid downside market turns by funneling their money into risk-adverse savings vehicles like CDs and money market accounts, which typically earn nominal returns. All that aside, even the most conservative investor should attempt to earn enough to beat taxes and inflation. There are many low-risk ways to grow your money, such as fixed deferred annuities or short-maturity bonds. One investing method that conservative investors should limit their exposure to is variable annuities, due to the risk of losing principal and their high fees.

Because of their tax deferred status and high commissions for the representatives that sell them, the sale of variable annuities has exploded in the last ten years. Simply put, when you purchase an annuity, you buy a contract with an insurance company. With fixed annuities, the funds used to purchase the annuity are protected by the insurance company. A variable annuity however, invests your money directly in the stock market, in a series of sub accounts which you are responsible for monitoring.

Some say that pushy salespeople have also been behind this variable annuity sales boom. Allegations of questionable sales tactics and inappropriate sales being made to senior citizens have lately cooled the public’s ardor for these higher risk annuities.

The conservative saver should not discredit all annuities. The original deposit is always 100% guaranteed and protected when purchasing a fixed-indexed or fixed deferred annuity. Often, these annuities offer a guaranteed interest rate which outperforms savings accounts, bank CD’s and the like.

If you are ready to save and are looking for safe, higher yielding methods of building your nest egg, think twice about variable annuities. But keep an open mind about other annuity products. Our Annuity Specialists can help you decode the difference among annuity products – call AnnuityLibrary.com today at 1-800-998-4056.