What is one benefit of purchasing a fixed annuity?

Purchasing a fixed annuity offers the benefit of guaranteed interest rates, which means that the annuity will provide a set rate of return over a specified period. This feature is particularly appealing for individuals seeking stability and predictability in their investment. In times of market volatility, a fixed annuity assures the policyholder that their money will grow at a consistent rate, regardless of changes in interest rates or stock market performance. This characteristic makes fixed annuities a popular choice for those approaching retirement or seeking a reliable income stream, as they can help in planning for future financial needs without the anxiety associated with fluctuating investment returns.

Other options, such as high-risk investment potential and immediate liquidity, do not align with the nature of fixed annuities, which are designed to minimize risk and usually require a longer-term commitment before allowing withdrawals. Tax-free withdrawals are also not generally applicable, as annuities typically allow tax deferment on growth but do impose taxation on withdrawals.