Add a fixed annuity to your investment portfolio to take advantage of tax deferred funds that will be available when you retire. These highly specialized insurance contracts are made between individuals and financial institutions give you the choice of receiving a guaranteed income for a certain period or until the death of the individuals identified in the contract. Annuities have become extremely popular investment tools precisely because of this guarantee.

Even if you've been running a business for many years, you may need to access professional sources that explain a fixed annuity for beginners. Key points for you to keep in mind as you search for the most profitable investment solutions include the following:

1. Compare various definitions of a fixed annuity.

2. Explore different types of fixed annuities before deciding which one is right for you.

3. Learn how and where to buy a fixed annuity.

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Find out what a fixed annuity is

Learn about fixed annuities from professionals who explain their history and purpose in everyday language.

I recommend: Fixed Annuity Direct compares fixed annuities to certificates of deposit and explains how they help you build tax-deferred savings for retirement. Annuity.net touches upon the difference between a fixed annuity and a variable annuity. The Securities and Exchange Commission offers further analysis of these different annuities. Check out the comparatively terse definition at Investor Words.

Decide on a particular fixed annuity after exploring the many types available

Examine the pros and cons of fixed annuities before making your final purchase. Read advice from finance professionals who explain how they made their own investment choices.

I recommend: Investopedia summarizes the main types of fixed annuities. Insurance Information Institute discusses the benefits of immediate versus deferred annuities. Go to Money-Zine.com to find out why an investor might prefer a deferred annuity. Get the pros and cons on different annuities at Variable Annuity Facts.

Get started on purchasing a fixed annuity

Let the professionals take you step by step through the process of purchasing annuities online.

I recommend: Use the planning tools at Mutual of America to learn how to buy fixed annuities. New York Life takes you through the decision making process as you prepare to buy fixed annuities. Market Watch explains the fees and restrictions and also advises you on pitfalls to avoid. Vanguard helps you get started purchasing annuities online.

A fixed annuity is one of the safest ways to save and invest money for retirement. You pay a premium or lump sum upfront now to guarantee yourself fixed-payment amounts for a specific time period in the future. Because a fixed annuity is tax-deferrable, using the money to invest in stocks and bonds can yield higher returns, or more money returned to you, in your retirement years.

There are four main types of fixed annuities to consider:

1. Equity-Indexed Annuity earns interest based on increases in the rates tied to the stock index of the annuity.

2. Market-Value Adjusted (MVA) Annuity allows early withdrawals subject to current interest rates at the time of withdrawal.

3. Single and Flexible Premium Annuity uses deposited money paid in one lump sum or in a series of scheduled payments.

4. Immediate Fixed Annuity offers payouts from the account immediately after purchase.

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Investigate stock indexes when you consider an equity-indexed fixed annuity

Do your research online to determine what types of stocks and markets most appeal to you and your financial needs. Review equity-indexed fixed annuity information and rates with your financial adviser.

I recommend: Follow stock indexes and interest rates daily by subscribing to online easy-to-understand video programs offered by StockMarketVideo.com. Get web-based, real-time access to all the world’s markets through LiveCharts. Use the Fixed Annuity Calculator from CCH for fixed annuity help as you weigh out your options.

Determine your needs for early withdrawals from your fixed annuity

MVA fixed annuities do not penalize for withdrawing funds early, but that money is subject to the current interest rates available, be they higher or lower than the rate you orginially invested the money under.

I recommend: Charles Schwab offers a 3-10-year MVA Annuity with multiple benefits to purchase and valuable, fixed annuity advice. AIG also offers MVA fixed annuity information for its products.

Calculate fixed annuity payments and determine your best entry option

Fixed annuity purchases occur two ways: all at once or over a scheduled period of time. The amount of money you currently have in your possession and how much of it needs to be disposable for present use determines which payment option will suit your abilities.

I recommend: Navy Mutual offers military personnel annuities in single- and flexible-premium payments. Visit Lincoln National for more information on the Flex Fixed Annuity.

Consider immediate fixed annuities, if you are close to retirement

The least complicated fixed annuity formula is the immediate annuity, which begins payouts as soon as you purchase the account. There are less rate calculations, less terms to adhere to and less account management required with this type of fixed annuity.

I recommend: MetLife’s MAX Income Immediate Fixed Annuity is one of its most popular products. Get an online quote on immediate annuity products offered by FSD Financial Services.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  People who don't want to face steep penalties for emergency withdrawals from 401Ks find fixed annuities to be a more flexible option. Fixed annuities are the best investments for people who consider themselves conservative investors and want to have their future fixed income guaranteed. A fixed annuity formula is available for every type of investor wanting to play it safe.

A fixed annuity is one in which insurance contracts are drawn up to make specifically designed and defined payments to the annuitant. This schedule of payments takes place for the amount of time designated in the terms of the fixed annuity contract. In many cases, this continues until the annuitant passes away. Both the earnings and the principle of the fixed annuity are guaranteed by the insurance company. A fixed annuity is considered to be a positive financial instrument for individuals and businesses who are interested in receiving a fixed income through investments. This industry can be a bit confusing, even for those who are familiar with the field. As a result, fixed annuity education and training options should be carefully considered.

Fixed annuity education and training can come from a number of different sources and venues. Some of the most popular options with respect to fixed annuity education and training include:

1. Attending classes assisting in fixed annuity education and training.

2. Enrolling in seminars and training programs that dissect fixed annuity options and information.

3. Become certified to work with fixed annuities and other aspects of the industry.

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Attend classes teaching about the nuances of fixed annuity

Classes can offer some of the most basic information about a topic. Fixed annuity classes can offer a solid foundation for those who are interested in the industry and the options available.

I recommend: ABTrainingCenter.com offers a number of courses with relation to fixed annuity. These classes discuss what annuities are, the tax benefits of annuities, the types of annuities available, including fixed annuity options and more. Meanwhile, ResearchandMarkets also offer online courses with respect to fixed annuity options, a great area to learn about during these trying economic times.

Consider attending fixed annuity seminars and training programs

Seminars and training programs allow individuals an opportunity to take part in an environment which is conducive to asking questions and learning. There are also many other individuals attending these types of programs, which allows for networking and a more in-depth discussion of the materials being presented, in this case fixed annuity options and specifics.

I recommend: CALAnnuityCE.com offers training programs to individuals interested in learning to work with fixed annuities. This site answers the questions frequently asked by those who would attend their fixed annuity training sessions.

Become certified to deal in the fixed annuity industry and market

Some employers and businesses are required to take on employees who are certified to assist in the areas of fixed annuity and variable annuity options. Certification courses allow individuals to get a more in-depth and personal education with respect to the industry.

I recommend: The Institute of Business and Finance offers a certification program to help individuals become Certified Annuity Specialists. The CPA Training Center offers similar certification courses, covering the basics of annuities and an exploration of variable and fixed annuity options and capabilities.

A guaranteed income sounds pretty good, right? Fixed annuities are so popular because they guarantee income to those who choose to use that retirement investment option. Annuities work like a loan in reverse. You pay an annuity company for a contract. The company that holds your funds disperses it back to you plus interest for the life of the contract. Annuities are considered a very conservative investment and benefit those who are near retirement the most.

To help you select from annuity options, consider these following key terms.

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Fixed annuity

Retirees can enjoy guaranteed income from fixed annuities. These annuities allow an individual to accumulate tax-deferred funds. These funds are then dispersed after a specified period of time (usually five or 10 years).

I recommend: Find an explanation of annuities through FixedAnnuityDirect.com.

Tax deferred

A tax deferred investment, such as an annuity, allows the investor to pay taxes at a future date instead of in the year the investment produces income. In a tax-deferred retirement account, taxes are not paid until funds are withdrawn during retirement.

I recommend: Check this Learning Markets example of tax deferred investing.

Equity-indexed annuity

An equity-indexed annuity is one linked with a stock. This type of an annuity gains interest using a calculation based on the ups and downs of the stock index linked to the annuity.

I recommend: AnnuityAdvantage explains equity-indexed annuities and gives some advantages and disadvantages.

Market value adjusted annuity

With a market value adjusted annuity, you can select the time period and interest rate of the annuity. You also have the flexibility to withdraw funds before the end of the contract. When you withdraw early, the interest rate is adjusted to reflect changes from the start of the contract to withdrawal.

I recommend: Learn more about market value adjusted annuities, including costs and compensation, from Morgan Stanley.

Flexible premium annuity

When the amount of money you put into your annuity each year varies, you have a flexible premium annuity. The amount you must put in is set up by your annuity company and must adhere to certain minimum and maximum guidelines.

I recommend: Learn more about flexible premium annuities and how they work through USInsuranceOnline.com.

Immediate fixed annuity

Unlike a fixed deferred annuity, with an immediate fixed annuity you immediately start getting a return on your investment. Checks can be set up to be issued monthly, quarterly or whatever you and your annuity company decide. In contrast, the fixed deferred annuity takes the earnings and re-invests them. Then when the contract ends, investors are paid one lump sum.

I recommend: Review information about how immediate fixed annuities work, the taxes involved and potential drawbacks through The Money Alert.com.