Wise Indexed CD vs. Fixed-Index Annuity

Wells Fargo’s SGI Wise US Index equity linked CD is a great investment opportunity.  In comparison to a fixed-index annuity product, this wise indexed CD has more of what we recommend.  One of the biggest differences between these investment products is FDIC insurance.  Equity linked CDs are covered by FDIC insurance while fixed-index annuities are not.  While both products guarantee your principal, the minimum guarantee varies with fixed-index annuities.  The participation rate for Wells Fargo’s equity linked CD ranges from 90-110% which is a very good rate.  Rates range with different fixed-index annuity products.  There are no caps, spreads, averaging or moving parts with the wise indexed CD, but fixed-indexed annuities have all of those.

Investors have limited liquidity with equity linked CDs inside of their set time frame, while fixed-index annuities have a 10% free withdrawal.  You will not lose potential gains on withdrawals with the wise indexed CD, but you can with the fixed-index annuity.  Both products have some type of tax deferrals, but the wise indexed CD is the only one without a 10% penalty for withdrawals before age 59 1/2.  Compare equity linked CDs and you’ll see that with no contribution limits and a simple and transparent product, you have yourself a good investment.  Fixed-index annuities are not always transparent and have a $1 million limit on contributions.  Wells Fargo’s SGI Wise US Index equity linked CD is definitely a product worth speaking with an expert about.

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