Welcome to Seriously Safe Cash everyone!

Today we're going to look at one of the most popular financial instruments available to investors right now - Annuities.

To put it simply, an annuity is an insurance policy that pays out income over time. After you make an investment, the annuity then makes payments back to you or the beneficiary for a set period of time. Payments may come annually, monthly, or all at once. Annuities are quite popular among investors who wish to receive a steady income after retirement.

The United States Security and Exchange Commission define an annuity as a contract between the purchaser and an insurance company, under which payments or a lump sum is made. The insurance company in return agrees to make periodic payments to the purchaser or beneficiary at some point in the future.

The two most common types of annuities are "fixed" and "variable." Fixed annuity means that the insurance company guarantees that a minimum rate of interest will be earned over the amount of time in which your account is growing. Periodic payments are guaranteed by the insurance company of a predetermined amount per dollar in your account.

With a variable annuity you may be able to use your purchase payments for certain investment options, typically mutual funds. The rate of return on purchase payments and the amount of the periodic payments you or your beneficiary will eventually receive could vary depending on the performance of the investment options you have selected.

While annuities can be great for some they can come with high fees and expenses that may not be the best option for some investors. The best bet is to thoroughly educate yourself on what are your option and speak with a financial planner before making any major decisions.

Check back with us in a few days for another informative update on Seriously Safe Cash.