There are people that are about to retire, many have already retired, people from all over the globe like to have safe future. All that matters is the income that starts coming faster. One small investment can give you life time income. You are getting the fixed index annuities that are having the products that are insured. You will in the safe side of the trading. In this type of trading you will not have any loss side. There are several good features that are found in this type of annuities. The feature like caps provides you the limit of how much of the stock market index return you will receive over a specified crediting period. The average is taken yearly.
Let us have one example to understand this properly. If you purchase a fixed indexed annuity that credits you each year with the return of the S&P 500 Index for the prior year up to a cap of 5%. If you are using the amount of 10000 rupees into the annuity on first of Jan. 2018, and by the next year on Jan. 1, 2019, the S&P 500 Index has returned 10%. The 5% is the credit that you are getting on your principal 500 rupees in interest instead of the full 10% return of the S&P 500. Another good feature that you have in this type of trading is the participation rate. It is said to be the proportion of any index’s gain that is credited to your account.
If you purchase a fixed indexed annuity that credits you each year with 50% participation in the S&P 500 Index’s return from the prior year. If you are having the annuity of 10000 rupees in the starting year then on the same day of next year the S&P 500 Index has returned 10%. You have another feature so called spread. This is also one of unique feature that is a percentage reduction of how much interest is credited to your account over a specific period of time. There are different types of fixed annuities and many of them have both a spread and a participation rate. If you buy a fixed annuity that has a participation rate of 50% and a spread of 3% and you have used 10000 rupees into the annuity then in the next year S&P 500 Index has returned 10%. In the next year the 10% return would be multiplied by the participation rate of 90%, then subtract the 3% spread.