3 Years in or 3 Years Out: Shootin' It Straight With Stan®
Today's topic is, three years in or three years out when you're looking at fixed rates. My rule is, if it's three years or in, you're buying CDs and treasuries. If it's three years and out, you're buying Multi-Year Guarantee Annuities or Fixed Rate Annuities, the annuity industry version of a CD.
Of course, I don't sell treasuries or CDs, but I love them. I'm okay with you buying that and not buying stuff from us. That's fine as long as you're purchasing Contractual Guarantees and shopping for the highest rates.
Telling The Truth
As my grandfather told me a long time ago, and you've heard me say this, he said, "Stan, if you tell the truth, you don't have to remember anything." If you want to know the secret to The Annuity Man's® success, we're the top annuity sales organization on the planet because that's our mantra. We're going to tell you the truth because we don't have to remember anything. And it works, even if it means we don't get the sale. I get calls all the time, and that's where I get most of my good ideas for discussing topics. When I talk to you or my team talks to you, they say, "Well, he said this. Or she said this." And I'm like, "Well, that's interesting. That makes sense. That's probably on many people's minds, so let's cover it." When you're looking to protect the principal, never lose a penny. Never pay any fees, no management fees or gotcha fees, IRA fees, or annual fees. When you want Principal Protection and have the potential to take interest out, if you need the interest or let it grow and compound, whatever, it comes down to the duration you want to lock that money up for.
Lock It Up
When I say lock that money up, that's temporary. If you buy a one-year CD, you're in that CD for one year. If you buy a five-year MYGA, you're in that MYGA for five years. There are surrender charges if you pivot out before those five years. If you hold it to term, we can send all the money to you or back to the IRA at Fidelity, Vanguard, or wherever. In other words, you control the asset. Same thing if you bought a two-year treasury. But you need to ask yourself, how long do you want to lock the money in? If it's less than three years, then Multi-Year Guarantee Annuities historically will not provide the highest Contractual Guarantee. If it's three years and out, Multi-Year Guarantee Annuities, the annuity industry version of a CD, will historically provide the highest Contractual Guarantee available compared to CDs and treasuries.
That doesn't make it better than CDs and treasuries. And CDs and treasuries aren't better than Multi-Year Guarantee Annuities. They're one and the same from a strategic standpoint. From a safety standpoint, here's how I rank them. The top one is the safest money down to the lowest. Rank number one for total safety, treasuries. Why? FDI, F stands for federal. F stands for they can confiscate our money, get our money, and tax us for the money. F stands for federals. Number two is CDs. FDIC insured, and again, F stands for federal. F stands, they can take our money, confiscate it, and tax us for it. Then number three, from a safety standpoint, is Multi-Year Guarantee Annuities because the focus of that decision on which carrier to go with, annuity company, annuity carrier to go with is the Claims- Paying Ability of that annuity company.
Now, state-guarantee funds back up annuities to a certain limit. Each state is different. You can go and look at your state of residence at NOLHGA.com and then pull up your state. There are three boxes to the right. You can click your state and then hit frequently asked questions, FAQs, etc., on your state. Typically, six, seven, and eight questions will tell you what that limitation is. It could be per company, per carrier, or per owner. It could be a lot of things. The bottom- line is don't go down the rabbit hole of state guarantee funds.
I just did a live event. And every month, I do this YouTube live event. I encourage you to come and witness that factual free for all where you could ask me questions live. For the last one we did, we had to shut it off after an hour and 15 minutes, and people were going crazy. It was great.
Claims Paying Ability
The bottom line with Multi-Year Guarantee Annuities, we're looking at the Claims-Paying Ability of the carrier. When I look at the Claims-Paying Ability of the carrier with MYGAs, we're dating them, not marrying them. With Lifetime Income, we're marrying them. You need to look at Claims-Paying Ability. Say we buy a four-year MYGA. We're going to be there for four years. After that, you can move the money back to where it came from. We can also roll it to another MYGA, but most of the time, we're going to roll it to another MYGA with a higher Contractual Guarantee.
This applies to CDs and treasuries as well. You own it for what it will do, not what it might do®. Stop buying things on hypotheticals, theoretical projections, hopeful, historical, owned it 10 years ago, unicorn, chasing the butterfly, never catches it. Don't buy that. Buy Contractual Guarantees, period. I just did a video on the Principal Protection trifecta, which, as you know now, are treasuries, CDs, and Multi-Year Guarantee Annuities. I also did a video called the I Bond, No Brainer. I don't sell I Bonds, but go to treasurydirect.gov, and you can buy them directly without anyone getting involved, period.
Hopefully, in the near future, you will be able to buy annuities directly without interaction with an agent. Now, you have to interact with an agent, and if you're going to do that, why wouldn't you choose me? Wouldn't that be fun? And you're with the top organization anyway. But we're preparing our site. And we're just announcing a little bit in the first or second quarter of next year, and we're going to have a brand-new site. We'll have a new way for people to purchase annuities, and we're going in that direction. We are dragging the industry across the finish line to make it pro-consumer. I've already trademarked the saying that, The Annuity Man is where annuities are bought, not sold.
How to Choose?
Let's get back to the topic. You're looking to lock in guarantees. You're looking to protect the principal. You're looking for a guaranteed interest rate. You don't want to pay any fees. You want it to be, regardless of account type, IRA, non-IRA, or a Roth IRA. You're looking for that. So how do you choose from a duration standpoint? Very simple. Three years and in, CDs and treasuries. Three years and out, Multi-Year Guarantee Annuities. Now, caveat side note. There will be agents that say, "Well, I agree with Stan. Of course, he's a really good friend of mine," and I never met him. But three years now could also be an Indexed Annuity—the historical returns of market upside with no downside. There's Principal Protection and market participation. Why wouldn't you want to do that? My comment on that is there's nothing wrong with Indexed Annuities. We sell more than anyone as an efficient and cost-effective Income Rider delivery system.
For future income needs, if you want a Lifetime Income pension, say, starting in five, seven, or nine years from now, but you do not. Listen to me closely. You do not compare Multi-Year Guarantee Annuities and Indexed Annuities when buying and locking in Principal Protection with interest. Because Indexed Annuities, there is nothing wrong with them, but there's no guarantee on any return. Listen to me. Yes, there's some minimal thing that doesn't matter it's so low, it's ridiculous. But I'm talking about real guaranteed interest rates. The only guarantee of an Indexed Annuity is that you will not lose your money. That's fine. That's great. Zero is your hero, as they say at the bad chicken dinner seminar. No, you're the zero player that's saying that.
When looking at the trifecta, which does not include Indexed Annuities, it's MYGAs. Why? Because Multi-Year Guarantee Annuities, Fixed Rate Annuities, the annuity industry version of a CD guarantees an annual interest rate contractually. I mean, that's what you want. There's no zero is your hero. If you're going to do that, bury it in the backyard. That's a zero as your hero as well. But if you want guaranteed interest rates, there are three choices to protect the principal. And all you bond freaks out there, calm down please because you know what I'm talking about. Bond valuations can fluctuate up and down.
You need to look at three things to protect the principal and get a guaranteed contractual interest rate: CDs, treasuries, and Multi-Year Guarantee Annuities, aka Fixed Rate Annuities, aka annuity industry version of a CD. So, what's the rule? Repeat it back to me. Three years and in, CDs and treasuries. Three years and out, Multi-Year Guarantee Annuities. It's really that simple.
Never forget to live in reality, not the dream, with annuities and contractual guarantees! You can use our calculators, get all six of my books for free, and most importantly book a call with me so we can discuss what works best for your specific situation.