A Tax Deferred Annuity Can Increase Your Investment Return

Oct. 28, 2009 - PRLog -- Chicago (InsuranceAgents.com) - There are so many ways to invest your money, it seems impossible to choose the right one. If you are looking into annuities, you know your options are pretty endless, each with beneficial traits. Tax deferred annuities are a popular option for investors and it could be the most beneficial for your financial plans.

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In a recent article posted by InsuranceAgents.com, "Tax Deferred Annuity: Leading the Path to Success," tax deferred annuities begin with the payments to the life insurance agent before they enter the accumulation process in where the money gains interest and while it is gaining interest, it does not get taxed. This allows your money to grow at a faster rate. There are three types of tax deferred annuities to choose from, fixed, variable and indexed. A fixed tax deferred annuity is, "one of the oldest and most popular type of tax deferred annuity, the fixed annuity is known for guaranteeing an investor’s rate of return. While the proceeds are not taxed during accumulation, they are once distribution begins as ordinary income rather than as capital gains," states the article. Unlike a fixed annuity, the variable annuity rate of return can change over the time of the annuity which gives the investor the chance to increase their rate of return in the end of the annuity. An indexed annuity is a combination of both, its interest rates depend on the performance of the market.

If you are interested in opening a tax deferred annuity, its important for investors to understand that while your money will not be taxed during the accumulation process, each annuity does involve some type of taxation. Your life insurance agent will be able to give you all the exact details relating to the annuity of your choosing. The only way to fully benefit from your investment is to understand how it works.

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