A certificate of deposit (CD) a FDIC-insured financial instrument issued to a depositor by a bank or other financial institution such as a savings and loan. Certificates of deposits have a fixed term of a number of months or years during which the depositors may not remove their funds without incurring withdrawal fees. Depositors earn a fixed or variable return on their funds and receive the principal plus accrued interest at the maturity date. CDs are often perceived as low risk investments that are comparable in some ways to immediate fixed annuities.
A common question is how annuities compare to other financial products that seem similar such as bonds, certificates of deposit (CD) and money market funds. After all, each of these products promises to provide some type of fixed return in exchange for your investment.
Looking at a simple life annuity can help answer this...
