These days it’s hard to decide how to invest your money and have confidence that it will stay safe, but a stock index annuity is worth serious consideration. This product is linked to a market index and you receive the majority of profits when the index rises. However, if it goes down, you are protected with set referral rates. These are somewhat of a hybrid between variable and fixed annuities with some of the benefits of both. Growth potential is generally strong in these, averaging 1-3% in a down year and as much as 10-15% in better years.

Although features vary, you’ll usually find an up-front lump-sum premium for this contract. To add investments at a later date, you would be adding additional contracts. This can be considered a strong and safe way to invest in the market as it is tied to a major index like the S&P 500. This product often outperforms other debt-based products such as bonds or CDs over the long term. One of the standout features is the Minimum Guaranteed Rate which ensures that even in a bad year, you will still see minimal growth and potentially much higher growth depending on how the market performs.

One of the biggest attractions of this annuity is its low risk. The fact that you cannot lose your principal, and are guaranteed to see at least modest growth, is a factor that cannot be ignored in today’s economy. These investments are fairly hassle free. Pay your premium, sign your contact and watch your money grow. The length of the terms varies on these annuities, generally they will last from one to ten years. There is a vesting schedule that allows you to withdraw earnings early without penalty up to certain amounts and taxes are deferred on the investment until you cancel the contract.

It is a challenge to decide how to invest money with the uncertainty of today’s markets. A stock index annuity combines the security of principal with the opportunity for potential growth, making it a valuable option for investments in today’s economy.