Annuities vs. CDs | Which One is Right for You?

Annuities vs. CDs - Which One is Right for You?

This video compares annuities and CDs, highlighting their similarities in safety and guaranteed returns, while explaining key differences in payout structure, tax treatment, and insurance coverage to help viewers choose the best option for their financial goals.
Video Transcript
Annuities vs. CDs Annuities and CDs are both safe investments that offer a guaranteed return. Annuities provide a steady stream of income over time, while CDs provide a lump sum when they mature. How Are They Similar? Multi-year guaranteed annuities (MYGAs) are similar to CDs. Both MYGAS and CDs require a lump sum of money to be invested, and both guarantee a fixed rate of return and principal protection. Overall, fixed annuities and CDs are both safe investments with a guaranteed rate of return. How Are They Different? Annuities:
  • Designed to pay a stream of income over time
  • Insured by the issuing insurance company & state guaranty associations
  • Grows tax-defer
CDs:
  • Designed to pay a lump sum at maturity
  • Insured by the FDIC up to $250,000
  • Lower interest rates
Which Is Right For You? When choosing between an annuity and a CD, consider your needs and preferences. Annuities are suitable for those looking for a stream of retirement income, while CDs offer guaranteed return. Consider your investment horizon & decide what you want to do with the money after you collect it.