3 Strategies for Principal Protection

At the time of this blog, the markets are volatile, inflation is high, and political and global uncertainty is everywhere. A lot of people are tired of the ups and downs and just want safety. They want to make sure their principal is protected while still getting a fair return. That’s where the Principal Protection Trifecta comes in.

When you boil it down, there are only three products that provide complete principal protection, pay a guaranteed rate, have no annual fees, and let you know exactly what you’re going to earn. They are:

1. Certificates of Deposit (CDs)

CDs are issued by banks or brokerage firms and are FDIC- or SIPC-backed up to certain limits. They pay a fixed interest rate for a set term, and that interest can either be withdrawn or left to compound. At the end of the term, you get your full principal back, guaranteed.

You can buy CDs directly from your bank, from a brokerage, or even shop around online for competitive rates. While CD interest is taxable in the year it’s earned, they remain one of the safest and most straightforward principal protection vehicles available.

2. Multi-Year Guarantee Annuities (MYGAs)

A MYGA is the annuity industry’s version of a CD. It pays a fixed interest rate for a set number of years, but the interest grows tax-deferred if it’s held in a non-IRA account. That means you don’t pay taxes on the growth until you take the money out.

MYGAs have no annual fees and allow you to withdraw interest each year without penalty. The key difference from CDs is that the safety of your principal is backed by the claims-paying ability of the issuing life insurance company — so carrier strength matters. You should only consider companies with strong financial ratings.

At The Annuity Man, you can run live MYGA quotes from all carriers without speaking to anyone — and we represent virtually every MYGA company in the market.

3. U.S. Treasuries

Treasuries are backed by the full faith and credit of the U.S. government, making them the safest of the three. You can buy them without any fees. Treasuries pay a guaranteed interest rate, and certain types — like Treasury bonds and Treasury bills — have different maturities to fit your needs.

While Treasuries have annual purchase limits depending on the product, they’re unmatched in terms of safety. The interest is federally taxable but exempt from state and local taxes, which can be a plus for some buyers.

How the Trifecta Works

If your primary goal is to keep your principal safe while generating guaranteed interest, the Principal Protection Trifecta offers a straightforward solution. These three products share key traits:

• Guaranteed principal protection
• No annual fees
• Contractually guaranteed interest rates

The main differences come down to taxation, purchase limits, and the entity backing your guarantee. Treasuries are backed by the U.S. government, CDs by the FDIC or SIPC, and MYGAs by the issuing carrier’s claims-paying ability.

Ranking Safety

From a pure safety standpoint:

1. Treasuries – Full faith and credit of the U.S. government
2. CDs – FDIC/SIPC coverage up to applicable limits
3. MYGAs – Backed by the financial strength of the issuing carrier

Why This Strategy Makes Sense

Many retirees want predictable income without the fear of losing principal. If you can live off the interest these products generate — alongside Social Security, pensions, or other income streams — you can remove market volatility from your life entirely.

For example, if you invested $1 million across Treasuries, CDs, and MYGAs earning around 4–5%, you could generate $40,000–$50,000 in annual interest without touching the principal. That’s safety, predictability, and legacy protection all in one.

Final Thoughts

The Principal Protection Trifecta — CDs, MYGAs, and U.S. Treasuries — is simple but powerful. Each offers guaranteed principal safety, no annual fees, and predictable interest income. The right mix will depend on your goals, tax situation, and risk tolerance.

At The Annuity Man, you can get live MYGA quotes and compare them against what you can get in CDs or Treasuries. Remember — think differently, solve things contractually, and protect what you’ve worked hard to earn. That’s principal protection done right.