David RacichPRO
    Fountain Hills, Arizona
    What type of mutual funds and annuities are we attempting to differentiate? Product suitability determined by a personal financial profile that establishes risk tolerance and tax deferral as a priority, must first be developed. Keep in mind that annuities can have crediting methods that have market risk as well as mutual funds. The investors economic and product suitability is the determination, not comparing investments at a macro level.  

    Answered on June 9, 2013
  2. 5082 POINTS
    J Paul Wilson CFP, CHFC
    Certified Financial Planner, JPW Insurance Retirement Investments, Halifax, Nova Scotia, Canada
    In Canada, variable annuities are referred to as segregated funds or seg funds. They are similar to mutual funds, but there are differences. Which one is better depends on your objectives.  Both offer diversified investment opportunities to build wealth. In addition, segregated fund policies provide important wealth protection, business and estate planning solutions.

    The key differences:

    Guarantees on your principal - The money you invest in a seg fund is guaranteed up to 100% upon death or maturity.

    Locking-in market gains - Some seg funds allow you to lock in market gains ("resets") that can increase the amount payable at death or maturity.

    Bypass probate - Seg fund death benefit proceeds are paid directly to a named beneficiary instead of your estate. This bypasses probate, a public process that can be both costly and lengthy.

    Creditor protection - By designating a qualified beneficiary on your seg fund policy, your investments maybe exempt from seizure by creditors in the event of unforeseen bankruptcy or legal proceedings.

    Segregated funds are well suited to:

    Business owners looking for creditor protection succession planning or emergency fund solution.

    Pre-retirees looking for wealth accumulation but want to limit potential losses with maturity and death guarantees.

    Pre-retirees and retirees looking to preserve their legacy and transfer their estate in the most private, timely and cost-effective way.

    If you have further questions. or feel I could be of assistance, please do not hesitate to contact me.  There is addition information available at www.ProtectandGrow.ca
    Answered on June 30, 2014
  3. 0 POINTS
    Head Librarian
    InsuranceLibrary.com, South Dakota
    An annuity is an insurance product. It is written by an insurance company. It protects. A mutual fund is another name for an investment company. It is a security that invests in other securities. While they might be a part of an overall financial plan they serve different purposes and cannot be compared. Most financial plans would be advised to have both.
    Answered on September 5, 2014
  4. 21750 POINTS
    Jim Winkler
    CEO/Owner, Winkler Financial Group, Houston, Texas
    That is an excellent question! The answer is kind of difficult, though, as both are good for different reasons, and both might be bad for you for different reasons. Annuities are generally a safer vehicle for guaranteeing an income stream during retirement, as they typically will have provisions that will not allow you to lose your initial investment amount, even if everything else tanked. But annuities require that you set that initial investment aside for a number of years, and that can be an issue, if you have severe cash flow issues.Mutual funds can bring a greater return that a lot of annuities, but unless you have really done your homework, the fees associated with your fund can eat the return alive, and you can end up not making the return that you could have. Statistically most mutual funds make money, but again, if you invest in the wrong one, there's no guarantee that you recoup your initial investment, let alone a profit. You also need to do the work to get the money out of your fund, unlike an annuity that has a set payment amount and schedule. A really solid retirement plan is diversified, and can include both types of investments; If you're forced to choose one or the other, that's a decision that needs a lot of soul searching and planning, and a trusted adviser to help. I hope that helps, thanks for asking!
    Answered on September 5, 2014
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