Q&A Friday: Can MYGAs Be a Substitute for Bonds?

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Welcome to Q&A Friday. I am your host

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Stan the Annuity Man, America's annuity

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agent licensed in all 50 states. Today's

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topic and question is from Dwayne L.

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It's not his last name. The L is a is

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I'm not telling his last name, but his

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question was a good one. Is can MAS be a

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substitute for bonds? Now, let's go

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backwards a little bit because some of

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you go MAGA, what's a MAGA? Multi-year

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guarantee annuity. It's the annuity

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industry's version of a CD. guaranteed

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interest rate for a specific period of

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time, three, four, five, six, seven,

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eight, nine, 10, whatever you choose.

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You can go to my site at the annuity

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man, pull up the live MA feed for your

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state and see for yourself. But just for

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a second, I know a lot of you out there

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going, Stan, you keep you keep showing

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the cool swag. What do you got on today?

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This is a denim Adidas stand the annuity

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man. You can't find that. You can't buy

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that. That's a special order player. You

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know what I'm saying? But let's get back

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to the bonds. I do know a little bit

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about that because when I first started

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in the financial services world, I

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started with Dean Witter. Remember that?

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A bunch of you old people out there?

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Dean Witter, then I went to Payne Weber.

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Remember that? And then Payne Weber was

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well, it kind of went this Dean Witter.

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Then it was Morgan Stanley because

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Morgan Stanley bought Dean Wedder. And

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then I went to Payne Weber. And then

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Payne Weber was purchased by UBS. So I

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worked for all four of those firms in a

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really nice suit. You wouldn't I mean,

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you talk about bringing it double

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breasted tie and the whole thing. Don't

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do that anymore. Okay. So, I know bonds

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backwards and forwards. I understand

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corporate bonds. I understand bond

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funds. I understand municipal bonds. I

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love municipal bonds. Um,

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but can MAS be a substitute for that?

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I'm not sure. I really don't think so.

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And let me tell you why. Bonds

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can be bought and sold on they're

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liquid. They can be bought and sold on a

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daily basis. The good and the bad of

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that is if people want the bonds, you

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know, you can sell them immediately. If

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they don't, you can't. But there's

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there's the underlying value of a bond

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can fluctuate but the coupon the yield

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cannot.

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Okay. So I don't think you can do an

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apples to apples. Are they both fixed

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rates? Yes. But with multi-year

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guarantee annuities that underlying

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value is static. It cannot go down or

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up. Whereas bonds it can go down or up

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based upon interest rate movement. When

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you buy a MA, you're locking in that

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guaranteed interest rate for the

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specific period of time that you choose.

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I think that the better use of Migas and

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bonds would be together. So, if you're

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looking to put together a fixed

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portfolio that have as interest rates

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that you can peel off, you could do

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bonds, you could do CDs, you could do

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money markets, you could do um MAS, and

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I guess you could throw in preferreds,

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those type of things. Obviously, I know

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what I'm talking about there, but I I

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don't do that market stuff anymore. I

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only do will do, not might do,

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contractual, guaranteed, fixed

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annuities, period. That's the lane I'm

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in and that's the lane I dominate. I'm

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the grill in the room. I understand it.

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But I do understand bonds. I appreciate

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Dwayne asking that because a lot of

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people, I'm not going to buy bonds. I'm

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going to buy netties. Well, let's take

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municipal bonds as an example. Municipal

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bonds, that yield is tax-free.

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I'll never forget back in the day when

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the.com bubble was going. I was with

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Morgan Morgan Stanley. There were 6% AAA

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municipal bonds that I couldn't give

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away because everybody wanted to buy

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some dot thing that was worthless. But

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that was income tax-free. And to this

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day, what 25, 30 years later, I still

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get thank you notes for the people that

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I convinced to buy the 6% AAA municipal

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bonds because they're still getting that

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taxree. So I don't think you can b you

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can you can compare them or replace

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bonds with migas but I think they can

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work well together if your if your

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desire is to peel off interest and

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really not put the principle at risk.

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The only thing I tell you on the bonds

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you know do what you want to do just buy

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quality just like we do at the annuity

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man with with annuities. We buy quality

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companies that can back up the claim. So

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MAS and bonds they can work well

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together. Can Midas replace bonds? I

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don't think so. And that's coming from a

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person that worked on Wall Street for a

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long, long time before I found the

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light,

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found the logo,

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and found my role in life, which is to

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tell the brutal truth about annuities.

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My name is Stan the Annuity Man. See you

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next time.