FYI: A mutual fund is a pool of money that invests in a variety of different instruments, like stocks, bonds or cash. Annuities are also an investment vehicle that gives investors several benefits. Variable annuities, in particular, also offer investors diversification by using a sub-account that invests in a variety of different instruments, just as a mutual fund does. In general, both mutual funds and annuities can help individuals reach their investing goals – be it for capital appreciation or for regular income after retirement.
When discussing annuities, there are several different types. The term annuity generally refers to an insurance product that offers guarantees. Fixed annuities guarantee a specific interest rate as well as the original principal. They offer a fixed rate, similar to a certificate of deposit, to its holders. On the other hand, variable annuities often come with guarantees of specified income or withdrawal benefits.
They are more similar to mutual funds in that both invest in a pool of money that is diversified among stock, bonds and cash. For purposes of comparisons, variable annuities will be the main focus of this article.
Both mutual funds and annuities can be purchased through a broker-dealer and through a corresponding financial advisor, or, sometimes, they can be purchased directly through the issuing company. Vanguard and Fidelity are two of the most popular investment companies, and the public can buy both mutual funds and annuities directly.
Regards,
Ted
http://mutualfunds.com/education/mutual-funds-versus-annuities/
