Annuities vs CD's which is better?

Annuities and CDs are similar they are both safe, secure investments with guaranteed rate of returns based on interest rates.

Both CD's and Annuities are offered by large financial institutions, CDs are issued by banks, Annuities are offered by insurance companies.

The main differences between Annuities and CDs is that Annuities carry several advantages such as:

1. Generally Higher returns
2. Tax-Deferral
3. Liquidity

CDs do have FDIC protection to guard against Bank or banking industry failure, but Annuities also have safety measures put in place by the state to ensure Insurance companies have reserve pools in place.

FDIC insures CD's for $250,000 per depositor
New York State insures Annuities for $500,000 per depositor
(plus backing of the company you buy from)

Annuties being tax deferred is a big advantage, the deferred tax on your interest remains in the investment earning you more and more money, instead of being paid out to state and federal tax agencies on a yearly basis. Making your gains much higher.

CDs do not allow you to withdraw any money during the selected term. Period. However Annuities have provisions that allow you to withdraw money, generally 10% of your account value annually plus many contracts allow you to remove the earned interest on a monthly basis.

Annuities get two thumbs up!!

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