Indexed Annuities and the Modern Portfolio

April 2, 2013 - PRLog -- Josh Anderson Associate Advisor of Aaron Matthews Financial Resources recently discussed Indexed Annuities and their place in a Modern Portfolio. Anderson goes on:    In the past few years, and even more recently, the topic of annuities and specifically Fixed Index Annuities or F.I.As have been tossed around. Some of the talk has been around whether or not they have a place in a portfolio.  I think there are many good things that these F.I.As can bring to your portfolio.     Josh lists three reasons he believes an Indexed Annuity could fit in a modern balanced portfolio.    1.Tax friendly  Fixed Index Annuities can be set up to be qualified or non-qualified, which allows you to place them inside your IRA and sometimes in a 401K, depending on your Plan Administrator. Most importantly all these annuities are tax deferred, that means you will postpone a 1099 until you withdraw funds. Whether its for retirement or to save the way you would in a C.D., the money in these accounts can grow and any interest credits that are made for the year are treated like principal the next year. What that means is that if the index the annuity is following loses value your purchase payments and all previous years earnings are retained. Be careful though. If you pull money out through the year the rules change.    2. Building a pay check  F.I.As can provide income for life through income riders. These riders allow your income value to grow at anywhere from 5 to 8 percent annually. The income value should not be confused with the initial principal or cash value. The income value can only be accessed if you decided not to take the cash and decided to take a monthly pay check for life. This provides a safe pay check  when you get to retirement age, allowing you to have a income stream and possibly for you and your spouse.    3. Guaranteed Protection  These types of annuities come with great guarantees that can be a replacement for the conservative side of a portfolio. The Issuers of Indexed Annuities provide the protection of principle: the initial money put into the F.I.A can never be subject to the losses in the index it follows. Even thought fixed index annuities reflect an index of the stock market, the principal is not directly invested in the index. This guarantee makes F.I.As attractive to conservative portfolios. These annuities allow you to have stability in your portfolio by protecting you from the the uncertainty that market indexes can bring.     Mr. Anderson does offer this warning; "F.I.As are not suitable for everyone, but everyone should at least seek an educated advisor as to whether an Indexed Annuity might be suitable for their portfolio and their future goals. This type of annuity allows a lot of protection along with a lot a guarantees that cannot be overlooked when balancing or creating a portfolio."    Josh Anderson is an Associate Advisor with Aaron Matthews Financial Resources. Josh and the team at Aaron Matthews Financial Resources are continually sought out for education on all things regarding retirement and financial planning. The team at Aaron Matthews are frequently featured in ABC, CBS Money Watch, The Wall Street Journal, NBC, International Business Times, CNBC, and many many more.    Contact information for Josh can be found at http://www.aaronmatthewsfinancial.com