By periodically investing in an index strategy, the know-nothing investors can actually outperform most investment professionals.

Whether you’re already retired, a few years away, or recently changed jobs, like most people, you want to protect your hard-earned money and see it grow. But with today’s lower interest rates, safer investment products like CDs, money markets, and bonds may not provide the growth potential you need for retirement planning. You can turn to the stock market, but that means taking on risk, maybe more than you’re comfortable with.

What if you could have both protection and the opportunity to grow your money?

You can, with a fixed indexed annuity.

Below are answers to some of the most frequently asked questions about this popular product.

A fixed indexed annuity can be a smart choice as part of your overall financial strategy for several reasons:

• You can benefit from protection, while still maintaining the opportunity for growth
• You can earn interest based on the performance of your selected indices without the risk of actually being invested in the stock market
• Your money is protected from any market downturns (assuming you abide by the terms of the contract)
• Your money can grow faster with the power of tax deferral
• You have access to your money at any time during your contract term—penalties and/or fees may apply depending on when and how much

A fixed indexed annuity (FIA) is a tax-deferred financial tool designed for the long term offered by insurance companies. Your account value is protected against market loss, but has the opportunity to grow by earning interest based on the performance of an index or indices that you choose. You also have the ability to allocate some or all of your money to a fixed rate strategy that earns a guaranteed interest rate. When you feel the time is right to start receiving income payments, you can annuitize your contract for a specific period of time or for the life of the annuitant.

To help balance the value of the downside protection, the insurance company imposes an upper limit, or “cap,” on the amount of interest you can earn in a given period. But again, it’s important to remember, you cannot lose money based on market declines. It’s that peace of mind that makes fixed indexed annuities so attractive.

Fixed indexed annuities typically offer you a choice of strategies for potentially growing your money: a fixed interest rate option and index-based options that credit your interest based on a cap rate or participation rate strategy.

The fixed interest rate strategy earns a guaranteed interest rate for a period of one year. The interest rate is declared at the time you purchase your contract and renews annually on your contract anniversary at the new current rate.

With index-based strategies, your money has the potential to grow based on the performance of one or more market indices, such as the S&P 500®. The interest rate you can earn is usually calculated over a predetermined time period and can vary based on the features of the annuity, including the option to allocate your money into a strategy based on a cap rate or participation rate. A cap rate is the upper limit of interest that can be credited during the term. A participation rate is also an upper limit, on what can be credited, but is based on a specified percentage of the index's performance. Cap rates and participation rates are set at the time of your initial contract purchase and reset after each term.

Your principal and earnings are protected by the safety of a floor. The floor prevents your annuity from losing value even if the index declines during your term. Your principal and any interest credited are protected. You cannot lose money based on market performance.

Fixed indexed annuities are designed for long-term financial planning purposes. However, if you need to withdraw money, you can. Keep in mind, however, that depending on how much you take out and when, you may incur penalties and/or fees. These can vary by product and state. Ask your financial professional for details.

One of the benefits of any annuity is tax deferral. You pay no taxes on any interest you earn until you make a withdrawal, so more of your money stays invested, any interest credited can continue to compound, and your assets may accumulate faster than with taxable investments like CDs.