Although Annuities are considered an investment, they’re really a contract between you and an insurance company that may, or may not, behave like an investment.
The simplest type of annuity is an immediate, single life only annuity (even the simplest can be complicated!). According to immediateannuity.com, a 65 year old male will begin to receive about $560/month for the rest of his life after a $100,000 “investment” in this type of annuity. This can be a good choice if it brings you peace of mind, or if you expect to live longer than average. But it may not be the best way to earn a high return on investment.
Variable annuities are an even more complex animal. Since they are a contract between you and an insurance company, they vary widely. The agency that regulates the variable annuity industry issued an “Investor Alert” titled “Variable Annuities: Beyond the Hard Sell” that does a good job of explaining them. It’s a must read if you’re considering a variable annuity.
Disclaimer: Haas Capital Management LLC does not sell annuities