Q: What do you think of an indexed annuity as an alternative to cash? It would be capped at 6 percent, lower than the potential in the market but higher than any other interest that would be the principal.
A: As a rule of thumb you should always keep 3-6 months worth of expenses in cash, CDs, or something similar. I understand that it is not paying you much but you need to be able to get to this money if you have a true emergency. These indexed annuities are very expensive and they lock up your money for years. Take any extra money and invest it safely somewhere for a decent return. I would question anyone who is offering this to you as a solution for cash. They are a commissioned life insurance salesperson.
Below is the link to NAPFA. You can go here to find a “Fee Only” advisor.