Response: Thanks so much for asking your question Hussaim... and a great question it is. The toughest part of our job as financial coaches is managing the expectations of our clients. Wouldn't the world be wonderful if you could buy a product that offered you principal protection, 100% liquidity, no fees and a 12% guaranteed return. In the real world that product doesn't exist, but having had conversations with investors who have sat through some indexed annuity sales pitches, you would think it did.
Having said that, Is it possible to experience double digit returns in an indexed annuity?... yes you can. However, it really comes down to whether you own a capped annuity or an uncapped annuity and it obviously depends on the underlying index and it's performance as well. Let's face it, if you own a contract that has a 4% earnings cap, then you should never expect to earn a dime more than that. Just like any other investment vehicle where investment performance is unknown and unpredictable... indexed annuities are no different. There is no way to know or predict what your contract will do, but if you own a capped annuity... you will certainly know what it will not do and that's a pretty important bit of information you should have in your pocket BEFORE you purchase one of these things. So how do you give yourself the best shot at success? Without mentioning specific products.. try looking for:
Thanks so much for the question Hussaim and best of luck in your search.
Carl Barnowski has 25 yrs. of experience as a retirement income expert specializing in principal protected annuities.