4 Words: Shootin' It Straight With Stan®
Today's topic is four words. Never touch the principal. Those are the four words I want you to focus on. Never touch the principal. What am I talking about? I am talking about the interest rate environment we're in right now at the time of this blog. Look at the date between CDs that I don't sell, treasuries that I don't sell, and Multi-Year Guarantee Annuities that I sell more than anybody. MYGAs are the annuity industry version of a CD. The difference between a MYGA and a CD is that in a non-IRA account, the MYGA interest grows and compounds tax-deferred. Does it make it better than a CD at all? That's just the difference. That's the primary difference. The other difference is banks and brokerage firms issue CDs, and MYGAs are issued by life insurance companies that issue annuities. But you literally can live off the interest. A lot of you out there. Not all, but a lot.
In the calls I'm getting now, I always ask two questions. What do you want the money to contractually do, and when do you want those contractual guarantees to start? And if the answer is principal protection and income, we are now at a point where that can be feasible. Now, how do you choose between CDs, MYGAS, and treasuries? If you want to lock in a duration of less than three years, do not buy MYGAs; buy CDs and treasuries. If you want to lock in a guarantee of more than three years, buy MYGAs. That's not a sales pitch. That's just getting you the highest contractual guarantee. You can visit our live MYGA rates and pull up the best MYGA rates in the country filtered by state in duration 24, 7, 365. And if you want to buy one, we take care of all the paperwork from start to finish. But I love the 4 words never touch the principal.
I grew up in the south in Gaston County, North Carolina, and we lived beside my grandfather, Hunter Garrison, and his wife, Margie, one of the best cooks of all time. Seriously. She had one of those pie safes. Remember those old pie safes? And yes, there were pies in there, and yes, there were cookies in there. And the one thing that I wanted when they passed, I got it, was that pie safe. And here's the real kicker of it all, it has a shotgun blast across the front of it because my grandfather Hunter dropped a shotgun one day, and it went off, and it shot into the pie safe. Let me tell you something. That thing is so important to me. But getting back to that story, I remember Hunter Garrison and his brother T.W. Can't make that up. They call him H.O And his brother T.W. They would sit around talking about the Jimmy Carter CDs they were getting, 12 and 14 and 16. And for all you old-timers out there, you remember that. Are we going back there? I doubt it. But we're at a place now where we have yet to see these types of guaranteed interest rates. And when I say guaranteed, I mean contractually. This isn't some pie-in- the-sky nonsense. Unicorns chasing the butterflies. This is contractual for the duration that you can get 5% or more at the time of this blog. Please look at the date.
Many people can peel off that interest and never touch the principal. Those are the four words, and live off that interest. I mean to fly over America, the parts of America that the politicians make fun of, and then when they visit, they act like goobers because they've never even been there before. Fly over America, which is America. I'm not putting people down from New York City because my daughter lives in New York City. Still, the point is, fly over America, middle-class America, hardworking America, they know what I'm talking about. They've worked hard. They don't want to put their money at risk, and they would love to peel off the interest and just live off that and never touch the principal. Not only because they've worked hard but from a legacy standpoint to leave for their children.
Never lose your principal. Never lose a penny. That's another four words. It's important. Understand that with lifetime income products, which are fantastic with annuities, you have Single Premium Immediate Annuities, Deferred Income Annuities, Qualified Longevity Annuity Contracts, and Income Riders attached to either index or variable annuities. When you take income from an income annuity like those four and turn on the lifetime income stream, the income stream is a combination of return of principal plus interest. Nothing wrong with that because you'll get paid as long as you're breathing. But when people say, Stan, I need income. The first place I'm going right now is to tell me your asset base. Obviously, the industry frowns on more than 50% in annuities total. But if you have an asset base where you can combine annuities, MYGAs, CDs, and treasuries and live off the interest, why wouldn't you do that? Fear of missing out? Really? Aren't you tired of the ups and downs of the markets? I'm not putting it down. Sure, that's great. Historically, that's great, but I'm growing weary of that. Well, you need to write it out. If you're just there for seven days of the last 10 years, that's where all the returns are. That's the reason you got to hang in there. And the professional dart throwers tell you that as they're charging you a fee. Nothing wrong with that. I came from Dean Witter, Paine Webber, UBS, and Morgan Stanley. But we're at a place now with you retirees, pre-retirees, and people who are thinking about retirement that we can pull a lot of this off and never touch the principal. Does that sound good to you? It sounds good to me.
Being from Gaston County, North Carolina, rural America, farming America, mill America, textile Mill America. That's where I grew up, and people work hard for their money, and when the Jimmy Carter CDs hit, they took advantage of it. Yes, it wasn't perfect because it affected other things, but we're at a point now where you can live off the interest. So this is what kills me. Every single person that I say let's try to live off the interest. Tell me your total assets. Let's figure it out between CDs, MYGAs, and treasuries. The first question from most people is, well, Stan, what happens when they go down? This is great right now. We could lock it in for five, seven, and 10 years, but what happens when it goes down? Then we figure it out! Or, well, Stan, I mean, where do you think interest rates are going? Well, I wouldn't be talking to you if I knew that. I'd be on my lear jet trading interest rate futures. The point is, seize the day with these interest rates because who knows where they're headed. Does this country have 31 trillion in debt in counting? Yes, it does. And when the fed raises rates, it's like me and you, if we had a mortgage, just voluntarily raising that interest rate on the mortgage makes no sense. We'd want to lower it soon.
So, let's cover that question. What happens if rates go down? What happens if rates go back down to one or 2%? Then what do we do at that point in time? We look back at your asset base and see what you can live on by not touching the principal. And then, at that time, we will look at a Single Premium Immediate Annuity for lifetime income. In other words, we let the interest rates force our hand on what we will do® to the strategy. We don't try to predict the future. We don't try to buy now for the future.
What we do is live for today and the contractual guaranteed rates that are available. If they go down in the future, then we might have to pivot and buy an Immediate Annuity to make up for some of that interest rate loss if interest rates go down. But let's look at the flip side. What if interest rates go up? Good question. Then we continue the party, and we continue the contractual train. We continue to peel off interest and never touch the principal. I will guarantee you, male or female, it doesn't matter, that your spouse or significant other, one of you, loves that strategy. One of you might be a market maven and trading managed futures, options, butterfly spreads, and all that condor stuff. But one of you loves what I'm talking about. One of you loves never touching the principal. One of you loves never paying a fee. One of you loves peeling off that interest. One of you loves getting to that duration at the end, whether it's a three or five or seven, or even a 10 year, and having the exact amount of money you started with. Fees haven't eaten you up. You have yet to be eaten up by volatility, taken the interest off the top, and never touched the principal. Can I hear an annuity amen out there? Virtual high five.
Annuities are very, very simple if you make it that way. Most agents want to sell you the most complex products on the planet that they can't even understand. And that's coming from the person that's written seven books on the subject. I get it, I understand it, but to me, it's all about simplicity. To me, it's all about four words. Never lose the principle. I know it sounds too good to be true. I know what you're saying; what's the catch? There is no catch. You're buying CDs, you're buying treasuries, and you're buying MYGAs. And let's throw one more in there. At the time of this blog, you can get phenomenal money market rates. How long are they going to last? I don't know. You don't know. Enjoy them while they're here. Lock them in. Make this easy. Stop trying to be a Svengali of market timing. Stop it. This all started a year ago when this whole thing hit me, and I was on the phone with very good clients from Alabama, and they made me come up with the phrase, "You've won the game; why are you still playing?" In other words, they had enough money to peel off the interest, live off the interest, never touch the principal, and never worry about markets again. And they did it. And the video I did it's called You Won the Game, Why Are You Still Playing? Ask yourself that. And then think of those four words again. Never touch the principal. Sound appealing? To me, it does.
I'm proud of growing up in North Carolina. I mean, you can hear the Southern in me. There's nothing wrong with that. There's nothing wrong with missing out on the markets and missing out on the next crypto and missing out on the next Tesla and missing out on the next Meta, and missing out on Jim Kramer's calls. It's okay to miss all that. Do you care that much, or would it be cool to look up five years from now, having peeled off all the interests from your MYGA, CD, or treasury, and still have all the principal left? Think about that. Run that in your head. Four words, repeat them. Never touch the principal.
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.