Take the 2-minute tour ×  This is a personal finance question as
annuities are only as good as the company that insures them.
Annuities from reputable companies often yield 7% or more on
paper before any fees, taxes or distributions etc.  The question
is: how are annuities able to yield that much, what exactly are
the contents of annuities. Other passive investments such as
savings accounts, bonds and CDs only yield a fraction of a
percent currently. Regarding bonds, low interest means it is
less risky.  I haven't been able to get a straight answer from
anyone, even investment bankers and annuity sellers about this,
I have a general idea though but need it confirmed. I know for a
fact some annuities are practically guaranteed by new people
opening annuities, and even if that wasn't the original intent,
that is the outcome after a steady stream of clients comes in
(ie. continuous retirees in a state run institution).  The
reasons its difficult to get a straight answer is because:  1)
The issuer gets to collec