Are you living abroad and looking for a safe and effective way to grow your money with competitive returns and the peace of mind of knowing that your initial investment is protected? Fixed-term Annuities for Expats might be what you’re looking for.
What is an annuity?
Essentially, a fixed-term annuity is a type of insurance contract that offers the annuitant (the owner of the contract) a consistent income that is paid at regular intervals for a set term.
There are two types:
- Multi-Year Guaranteed Fixed Annuities: these come in 3, 5, 7 and 10-year terms and offer owners a guaranteed rate of return over a set period of time.
- Fixed-Index Annuities: these are available over 3, 5 and 7-year terms. They pay an interest based on the performance of a specific market index such as the S&P 500, the MSCI Emerging Markets Index or the MSCI EAFE. They allow buyers to benefit when the underlying financial market performs well. But they do limit the potential upside and unlike ‘Multi-Year Guaranteed Fixed Annuities’ they don’t pay a set interest rate regardless of the underlying financial market performance.
If you are looking to buy an annuity on your UK pension, you should read this blog here.
What are the current rates for Annuities for Expats?
Multi Year Guaranteed Fixed Annuity – Initial Interest Rate Term – Rates as of Dec 4, 23 & Jan 16, 24
| GBP | EUR | CAD | USD | |
| G3 – 3 Years | 5.00% | 3.60% | 4.85% | 5.50% to 5.60% |
| G5 – 5 Years | 5.00% | 3.80% | 4.85% | 5.75% to 5.85% |
| G7 – 7 Years | NA | NA | NA | 5.80% to 5.90% |
| G10 – 10 Years | NA | NA | NA | 5.80% to 5.90% |
Fixed-Index Annuities – Initial Cap Rate Annual Point to Point – USD – Rates as of Dec 1, 2023
| 3 Years | 5 Years | 7 Years | |
| S&P 500 | 9.00% | 9.55% | 9.70% |
| MSCI EAFE | 10.90% | 11.80% | 12.00% |
| MSCI Emerging Markets | 11.60% | 12.60% | 12.70% |
Annuities for Expats – Who is it for?
Whether you are at the beginning of your journey as an investor or have more experience – annuities offer a wide range of perks:
- A guaranteed income for a set period, perfect for anyone who has concerns about market volatility and who values stability
- Benefit from market gains but with no risk of loss
- Never lose your initial investment – principal/interest accrued is fully protected
- Flexibility – choose options that work best for you – if you change your mind you can always re-allocate them annually between fixed or fixed index annuities
- Available in USD, GBP and EUR.
- Seamless transition of your wealth to future generations with payments made directly to your beneficiaries
- Protection from currency fluctuations
- Highly attractive cap rates
- Death benefit equal to 101% of contract value
- Annual free partial-withdrawals during the term
Whether you want consistency in income with a guaranteed protection of your money or are simply looking to diversify your portfolio – annuities are unique in the benefits they offer investors.
What happens during the contract?
There are two parts of an annuity contract, which you can select:
- Accumulation: the money you have invested will earn interest – either at a fixed rate (guaranteed annuity) or at a rate linked with the performance of an index (fixed index; such as the S&P 500) but will be reinvested
- Payment: the money accumulated can be turned into a stream of income e.g. monthly (over the selected term) or the funds can be taken as a lump sum on an ad-hoc basis
Why Harrison Brook?
Harrison Brook is the perfect partner for expats living outside their home countries and looking to get started or continue their journey in investing. Our advisers provide honest advice that is available to you no matter where you are in the world.
We can offer our clients annuities for expats that will guarantee them an income and peace of mind – as well as a range of other financial solutions. And because we are fee-based rather than commission-based, our advisers are not incentivised to sell products, but instead take responsibility for our clients and give them the best guidance possible.
Our initial consultation is free so please get in touch if you would like to discuss annuities for expats or any other expat financial advice topics.
