MYGA | The Annuity Industry's CD - YouTube

Hello America. Stan The Annuity Man. I'm America's Annuity Agent. Licensed in all

50 states including the one that you're sitting in that I'm assuming is very

beautiful and picturesque. Nod your head, of course. Alright, producer what do you

think of the shirt? "I found this humorous." Get it? Get it? Do you get it?

It's the bones. Humerus bone. Got it? Hey, enough about that. It's that simple. The

simplicity of this shirt is what we're going to be talking about today. The

simplicity of multi-year guarantee annuities and how they work. And oh by

the way, multi-year guarantee annuities are the industry's version of a CD. A

certificate of deposit. So, if you hate all annuities then I guess you hate all

CDs which is probably not the case. So, with that, I'll be back in 2 seconds.

I've got my trusty pen. I'm going to sprint, crawl, climb to the whiteboard and

we're going to break this thing down after this.

Alright. Since multi-year guarantee annuities are the industry version of a

CD, certificate of deposit. By the way, great story: My mom, 81 years old, St.

Augustine Florida and I just... You know, I don't like doing business with family

because then when you go to the family gatherings all they talk about is

business. So, people like, "Well, don't you tell your mom MYGAs because she's the CD

buyer?" No. Because I don't want my mom saying, "Hey, can you help me explain this?"

It's a CD, mom. It's a guaranteed interest rate. Love my mom. 81 years old. She goes

to the bad chicken dinner seminars. And eats all the agents food, I really

appreciate that. But should she buy MYGAs? If she wasn't

my mom, I'd sell her MYGA. But she's my mom. You don't sell your mo anything. You

know better than that. Alright, let's talk about MYGAs and CDs.

Producer, can I go from that side? Because you see, I'm not left-handed. What

do you think? Nod your head. No, you said no and now you're saying... Okay, well here

we go. As they say, I was going to say I'm not amphibious. It's ambidextrous. But I

was going to trust. Okay, I'm not in amphibious. MYGA, principle protection. I'm just

going to put PP. CD, principle protection. What does that mean? You're not going to

lose any money. That's a good thing. Number 2, what's the difference? That's

the same. So, this is the same. This is the same. Duration, you can choose your

duration. I'm not going to put CD. Because that makes no sense. So, you

can choose your duration. What does that mean, Stan? In English, that means if you

want a one-year CD, you can choose it. If you want a 3-year MYGA, you can

choose it. Oh, by the way, the differences between these 2 is that typically, this

the shortest term (ST) is 2 years that you can buy. With a CD... Shoot, I'm assuming

you can do 3 months, 6 month, whatever. I mean, you can really do some

short-term stuff over here which is great. I love CDs. I don't sell them but I

love them. Because they protect your principal. And in this time that's a good

thing. So the multi-year guarantee annuities. Did you hear the word thing, producer? I

said, "thang". That's that North Carolina thing coming out. Okay. So, does principle

protection. Choose your duration, choose your

duration. 2 years of the shortest. You can go to as short as 3 and 6

months. Now, what's the difference between the 2? Those are kind of the same. Oh, by

the way, no fees. Are there commissions in both? Yes, there are commissions in both.

There's no philanthropist out here. I'm getting paid if I sell you one. This, the

bankers getting paid if they sell your CD. And that's okay. It's built in and

hidden from the client. I'm not sure that's okay. But that's just the way it

is. Meaning that if you put a $100,000 into MYGA, you see a

$100,000 on your statement. But I think you paid a little

bit from the company one time. You don't ever see it. Same thing

with CD. Put $100,000 aim, you see $100,000

go to work. Did the advisor or bank or a broker get paid? Yes, they did. So, no fees,

there are commissions on both. But in essence they're pretty much the same

product. So, what's the difference? In 2 seconds after I clean the sport, I'm

going to show you. "Alrighty then" as Jim Carrey says in the movie. Let's look at

CDs and MYGAs in different types of accounts and how they perform. First of

all, the guarantees are the same. The interest rate guarantees are the same in

every single account, right? So, in an IRA, you put a CD in an IRA, you put a

multi-year guarantee annuity in an IRA. The interest grows tax-deferred on both.

In a Roth... And you put it in a Roth you can pull out the money anytime. You can

take it out tax-free. But here's the difference. Here's where the rubber meets

the road, miss producer. With a CD and a non-IRA, you have to pay taxes on the

interest. Taxes, taxes, taxes annually. With a multi-year guarantee annuity in a non-

IRA, deferred. Does it mean it's better than a CD? No. It doesn't mean it's better.

But there's a lot of people that won't guaranteed fixed returns annually. But

they don't want to pay taxes on the interest. Now, are you going to have to pay

taxes when you pull it out? Yes, you are. But you can defer them. You can push that

tax puck down the ice. Hockey analogy. Now, I'm going to clean this board and

then I'm going to tell you some Laddering strategies that you can work with both

CDs and MYGAs. Alright. So, multi-year guarantee

annuities, CD's are kind of the same thing. There's just some issues from the

standpoint of which account you use in it. Issues, meaning taxation. Remember in a

non are a setting, with CD's you have to pay taxes on the interest annually. And

with multi-year guarantee annuities, those taxes are deferred. Doesn't make it

better. Just that's the difference. Now, let's look at some laddering strategies.

The way that I look at... I don't sell CDs but I love them. You can go to... I think

the best source for CD rates is bankrate.com. I do not get paid by bank. I

don't know anybody there. They should send me a gift for that. But

if someone says, "Stan, what's the best CD rate?" That's where I pull, bankrate.com.

Where's the best market rates? Yeah, you guessed it. Theannuityman.com. But

if someone said, "Hey, I want to ladder maturities." Which people

sometimes ladder bonds and... I even latter income with annuities but

that's a whole another story. But let's say, "Hey, let's maximize

interest rates with the ladder." How would you do that on a 5-year? So, let's just

say someone said, "Okay, I've got a half a million dollars..." And forget the account

type. Because the account type... You know, whatever the account is. We've already

talked about the non-qualified and the IRA and the Roth IRA. But this 500

thousand, what I would tell them to do is okay let's put $100,000

in each tranche for lack of a better phrase. You have a one-year, a

2-year, a 3-year or 4-year or five year duration. Okay? So, in the one

year, you put 100. 2-year you put 100, etc. So, you're splitting up to

500 over this duration time period. Now, to maximize interest rate,

historically, this is what you do: You'd buy $100,000 CD,

$100,000 CD on the 2-year. And then the next 3

tranches would be MYGAs, historically. Would you shop all rates to see the best...

Who has the best rates in these tranches? Yeah. But historically, CDs win

in that short term duration. And you could even do the ladder differently. You

could say, "I want a 6-month and a 12-month. And you know, you can do

it any way you want. But you're buying the highest yield. And this is typically

how that ladder would look from a just maximizing

duration and maximizing yield, this would be a great fixed-rate ladder for

portfolio. Alright, let's talk about claims-paying ability because that's

important. It's important to my mom. She lost FDIC insurance. She doesn't know

what it is. But she loves it because she feels warm and fuzzy. And that's all that

matters, right? So, CDs are backed by FDIC, Federal Deposit Insurance Corporation.

Tinfoil happy people out there say, "But Stan, the government's in debt."

And blah, blah, blah, da, da, da. Trust me. That's the best coverage on the planet.

Now how are multi-year guarantee annuities covered? By the state guarantee

fund? Each state has a guarantee fund. I'm going to give you the address of where to

go to find it because each state is different. Of course. There it is. W-W-W,

N-O-L-H-G-A dot com. NOLHGA.com. And there you can pull up your specific state of

residence. There'll be some frequently asked questions.

And then you can pull up what the coverage is for your specific state. And

it's per policy parameter per company. But that's the way to look at it. And

typically you'll see anywhere from 100,000-dollar coverage up to

250 or 300 thousand-dollar coverage for multi year guarantee annuities. But in my

perfect world of unicorns chasing the butterflies, annuity unicorn station an

annuity butterflies, always buy your multi-year guarantee annuity-based

primarily on the claims paying ability of the issuing carrier. Not this state

guarantee fund. In fact, the industry frowns upon very severely. They do not

like agents saying "Buy this multi-year guarantee annuity because there's a

state guarantee fund." Okay? And they certainly don't want the agent saying "Buy

the multi-year guarantee annuity because the state guarantee fund is like FDIC."

It's not. It's not. FDIC is better. That means CDs are better but is better

coverage in my opinion. Alright, I've done another multi-year guaranty annuity

video about rates, MYGA rates. I'd encourage you to take a look at that. But also, let

me send you this book. Multi-year guarantee annuity owner's manual. And on

the back, that's me 40 pounds ago with a cold

annuity man steakhouse shirt. Producer, on the back of that, it says, "Own the steak,

not the sizzle." It really does. But I'm going to not only send you the multi-year

guarantee book. I'm going to send me the other 5 annuity owner's manuals that

I have published on Amazon. I'm going to send it to you for free if you go to the

annuityman.com and sign up there. Please hit the subscribe button as you listen

to this music. And I'll see you on the next video.