How Are Annuities Different From Mutual Funds?

  1. 12689 POINTS
    Ted Ratliff
    Owner, SFS Associates,
    Mutual Funds are securities tied to the stock market.  They are subject to the gains and losses of the market more directly than an annuity.  An Indexed annuity is tied to stock indexes but they are much safer than a mutual fund in that you are protected from the losses of the market.  Since you have that protection, you will generally not have the gains of the stock market.  Annuities are safe money and a good way to provide for an retirement without the risk.  Mutual Funds and stocks have more risk but greater gain potential.  Which is better for you depends on your personal situation, goals, and risk tolerance.
    Answered on May 23, 2013
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    David RacichPRO
    Fountain Hills, Arizona
    Yes. Mutual funds are a security product under the jurisdiction of the SEC. Variable annuities are also a security as well. Both products could use equities as well as bond instruments. Fixed interest rate, indexed and immediate annuities are insurance regulated generally by the department of insurance of each state.
      
    Answered on May 23, 2013
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