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In this day and age annuities are a vital part of not only anyone's retirement plan but any good financial plan regardless of age. They are the best method of turning money in to more money that I know of and this is precisely because of the flexibility of the method.

Annuities are placed into one of two categories. There are both fixed and variable annuities offered. The difference between the two is night and day. You can usually switch between the two with relative ease and the same companies offer both in an attempt to cater to not only as many people as possible but as many parts of ourselves as possible.

Fixed annuities are playing it safe. You get the fixed rate of return which is decent but nothing spectacular. The fact that you do not have to pay taxes on it is what makes this so attractive. Beats a savings account.

Variable annuities are a much higher risk-reward ratio. These annuities are basically the act of using the same financial adviser to invest for you. There are no safeguards but the potential for return is unlimited.

Knowing the difference between the two types of annuities is vital to being able to decide which one is right for you and maximize your investment. This is one of the best ways to invest and is certainly worth your time to look into. Good luck.

Learn more about this author, Royce Radcliffe.
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