What is annuity and CD?
- An annuity is a financial product where an insurance company or a bank pays an income to the policyholder in return for a lump sum of money. The income is usually paid for a certain period of time.
- CD is a term used for the certificate of deposit.
- CD is a short term investment where the investor will get a fixed rate of interest.
- Annuity is long term investment where the customer will get an income from the insurance company for a certain period of time.
Annuity Vs. CD – Which Is Better?
When you talk about annuity vs. CD, then the first question that strikes your mind is which one is better? Well, if you have to ask this question, then you are not alone because this is the most common question asked by the people.
Annuity Vs. CD – Pros
- Annuity
- CD
- High Interest
- No High Interest
- Fixed Rate of Return
- Variable Rate of Return
- Taxable Income
- Tax Exempt Income
- Taxation
- Tax Free Income
- No Taxation
- Fixed Rate of Return
- Variable Rate of Return
- Fixed Term
- No Fixed Term
- No Minimum Investment
- Minimum Investment
- Lump Sum Payment
Conclusion:
Both annuity and CD are the best financial instruments, but if you have a fixed income, then annuity is the best investment option. If you are planning to invest for long term, then CD is the best investment option.
As you can see, there are a lot of differences between annuity and CD. So, when you are planning to invest, make sure that you have enough time to decide which one is better for you. I am sure that you will love the results.