Short Term Annuity Accounts

Fixed annuities are hot investments right now and for good reason. They offer guaranteed fixed rates, competitive returns, and are also incredibly safe investments.

Choosing the best fixed annuity at the right time maximizes growth and income. Currently, short-term annuity accounts offer some of the highest returns seen in decades. This is great for investors who want full liquidity in a short amount of time.

In fact, shorter term accounts (five years and under) have higher yields than most longer term policies. Many one, two, three, four, and five-year annuities provide better returns than accounts with terms of six to ten years.

There is a reason for this. The investments that power annuity returns have terms as well.

Who Offers Short Term Annuities?

First, a little background. Only insurance companies offer annuities. Even if you get your annuity from someone at the bank, it’s still an insurance product from an insurance company.

And insurance companies have rules about what they can purchase to fund their portfolios. The primary assets they purchase are United States Treasury Bills. And when you look at their returns, you will see shorter durations offering higher yields than longer maturities.

This is known as an inverted yield curve. It does not usually bode well for the economy, but it allows for very competitive annuity rates. (An inverted yield curve is linked to an economic recession.)

Other than Treasuries, most insurance companies purchase corporate debt and bundled consumer debt. Insurance company portfolios are usually at least 70% Treasuries. And with government debt offering some of the highest returns in years, annuities are highly competitive… and safe.

One Year Annuity Accounts

The shortest annuity term available is one year. And there is only one company offering a one year account. After twelve months, your money is free and clear of surrender charges. It is completely liquid.

You can take your entire principal and interest growth and invest your funds elsewhere. This is a great account for those who feel yields will be higher in the future. It’s also appropriate for those who have their funds earmarked for something else in the future.

Best Rates On A Two Year Annuity Policy

There is much more competition in the two year (and longer) annuity durations. While everyone’s idea of a short term investment is different, most would agree that two years is not long when considering today’s yields.

Two year policies allow investors to lock in higher rates and shop with different insurance companies. These policies are also great for those who want to incorporate a laddering strategy. It can be wise to have different tranches of short term annuity money come due every year or so.

Medium Term Duration Of Three Years

Three year fixed annuities are a bit longer, but the yields are just as attractive. These policies are on the longer end of a short term strategy, but compare favorably with certificates of deposit at the bank.

In fact, most offer higher returns. And insurance companies have very strong reserve requirements. That makes it all but impossible for there to be a run on an insurance company that exposes customers to any losses.

Our clients use longer term annuity policies for savings and accumulation toward retirement. In other instances, 3-5 year terms are used for regular interest withdrawals.

Many of our clients want to guarantee a regular fixed income stream without reducing their principal. Annuities of all terms are great investments for both savers and those who desire systematic income.

Contact Us For More Information

Of course, we offer annuities with longer durations as well. You can view all of our options by clicking here.

In fact, some policies offer guaranteed rates for as long as 20 years. In these uncertain times, it may be wise to diversify your portfolio. Stocks and bonds are extremely volatile and hard to count on for regular income. Additionally, we’ve seen at least three enormous banks fail as well.

You may want a safe and insured asset that you can count on. Short term annuity accounts offer a reliable and secure place to ride out financial storms.