A fixed annuity pays a set return each year that’s partially guaranteed by the annuity company. It’s more like a bank CD or a savings account because you can predict how your money will grow without worrying about what’s going on in the stock market. This certainty, however, comes at a cost: In the long-run, a fixed annuity will likely earn less than an indexed annuity.
If you have a short-term goal or just want to grow your money by a definite amount, a fixed annuity could be a good choice. If you want more growth and don’t mind a little more short-term unpredictability, an indexed annuity could be better.
