Interest rates have been around since the dawn of civilization! They can be traced all the way back to 3000BC. It didn’t take long for people to realize the importance of interest rates as a critical part of the borrowing and lending equation.
Interest rates have changed significantly since back in the early days when a 20% rate was a fairly common occurrence. These days, interest rates that high would cause mass panic.
The Federal Reserve sets interest rates in this country and the benchmark rate is called “The Federal Funds Rate!” This is the rate that banks charge other banks to lend Federal Reserve funds to each other for overnight borrowing. This rate must be manipulated for time to time, moved lower to stimulate growth or moved higher to curb inflation.
The reason this matters so much is because of the ripple effects of the Federal Funds Rate. The FFR affects the Annual Percentage Rate (APR) on credit cards, home equity lines of credit, auto loans, mortgages, Certificates of Deposit (CDs) and savings account rates just to name a few.
If you look at the history of the Federal Funds Rate, it was at ZERO from 2008-2015, and again at ZERO from March 2020 to early 2022. Lowering this rate helped stimulate economic growth and triggered the real estate and refinance boom over the last 2-3 years. Real estate is starting to cool now that mortgage rates have doubled this year.
You might be asking yourself, what does this all mean? The Federal Open Market Committee (FOMC) meets every 6 weeks to evaluate rates. They have never been this transparent as they have stated there will be several more increases this year and possibly the first quarter of next year.
This means, for conservative investors, there will soon be a major “Safe Investment Opportunity” to lock into these higher “Fixed Annuity Interest Rates” for multiple years!
Fixed Annuities are issued by insurance companies as an alternative to bank Certificates of Deposits (CDs). Fixed annuity rates were under 1.9% earlier this year, and in New York State the 5-year and 7-year Guaranteed Fixed Interest Annuity Rates are currently returning over 4%.
Annuity rates could reach 5% by the 4th quarter of this year or the first quarter of 2023, which would be a good time to lock them in for years going forward!
See below to read my Lucky 13 Advantages of Fixed Rate Annuities:
- Guaranteed Interest Rates: You know exactly how much money you have at the end of the term.
- Guaranteed Principal: Your principal is protected regardless of market conditions or company performance.
- Interest Rates: Higher than CDs, bonds, or T-Bills.
- Tax Deferred: You do not pay income taxes until you start withdrawing funds which allow for faster accumulation hence providing you with greater income.
- No Fees: You pay no annual management fees while funds accumulate and no fees on death benefits to heirs.
- Protected From Creditors: If you get sued creditors cannot go after/attach fixed annuity funds.
- Bypasses Probate: Fixed annuity death proceeds bypass probate hence they are private, saving on estate fees and going directly to named beneficiaries outside the will.
- Lifetime Income Options Available: At any time your annuity may be converted into an income stream you cannot outlive.
- Annual Withdrawal Options Available: Most fixed annuities allow for 10% annual no fee withdrawals.
- Annuitization: This unique annuity feature allows the policyholder take a guaranteed income for life and/or a period certain, and have a portion of the income excluded (an exclusion ratio) from taxation.
- State Protection: Should the annuity insurance company become insolvent, there are state protections (depending on what state you are in) with limits between $250,000-$500,000 in most states.
- Piece Of Mind: Annuities are secure and offer peace of mind to account holders knowing they are safe from harm’s way.
- Lowers Your FAFSA Score: For those parents with college bound students looking to qualify for merit-based (FREE) endowment money, repositioning parental asset into FAFSA-friendly Fixed Rate Annuities can lower your FAFSA score by almost $6000 for every $100,000 moved out of non-FAFSA friendly financial vehicles.
My firm has over 20 years of experience with Fixed Interest Rate Annuities and we have access to over 100 insurance companies to shop interest rates for clients. For those “Financial Wave” readers interested in learning more about major opportunities coming soon for “Fixed Interest Rate Annuities,” feel free to reach out to me at Rob@InsuranceDoctor.us.
See below to read my Lucky 13 Advantages of Fixed Rate Annuities:
- Guaranteed Interest Rates: You know exactly how much money you have at the end of the term.
- Guaranteed Principal: Your principal is protected regardless of market conditions or company performance.
- Interest Rates: Higher than CDs, bonds, or T-Bills.
- Tax Deferred: You do not pay income taxes until you start withdrawing funds which allow for faster accumulation hence providing you with greater income.
- No Fees: You pay no annual management fees while funds accumulate and no fees on death benefits to heirs.
- Protected From Creditors: If you get sued creditors cannot go after/attach fixed annuity funds.
- Bypasses Probate: Fixed annuity death proceeds bypass probate hence they are private, saving on estate fees and going directly to named beneficiaries outside the will.
- Lifetime Income Options Available: At any time your annuity may be converted into an income stream you cannot outlive.
- Annual Withdrawal Options Available: Most fixed annuities allow for 10% annual no-fee withdrawals.
- Annuitization: This unique annuity feature allows the policyholder to take a guaranteed income for life and/or a period certain, and have a portion of the income excluded (an exclusion ratio) from taxation.
- State Protection: Should the annuity insurance company become insolvent, there are state protections (depending on what state you are in) with limits between $250,000-$500,000 in most states.
- Piece Of Mind: Annuities are secure and offer peace of mind to account holders knowing they are safe from harm’s way.
- Lowers Your FAFSA Score: For those parents with college-bound students looking to qualify for merit-based (FREE) endowment money, repositioning parental assets into FAFSA-friendly Fixed Rate Annuities can lower your FAFSA score by almost $6000 for every $100,000 moved out of non-FAFSA friendly financial vehicles.
My firm has over 20 years of experience with Fixed Interest Rate Annuities and we have access to over 100 insurance companies to shop interest rates for clients. For those “Financial Wave” readers interested in learning more about major opportunities coming soon for “Fixed Interest Rate Annuities,” feel free to reach out to me at Rob@InsuranceDoctor.us.