Episode 015: Which is better...CDs or MYGAs?

The Annuity Man

Certificates of Deposit (CDs) are a very popular product for people to fully protect their principal while receiving a contractually guaranteed interest rate every year.  Most CDs are sold by banks and brokerage firms, and they are backed by FDIC (Federal Deposit Insurance Corporation).  My mom loves her CDs, just like many other millions of Americans.

Multi-Year Guarantee Annuities (MYGAs) are not as popular as CDs, but is the annuity industry's version of a CD.  MYGAs offer full principal protection and a contractually guaranteed interest rate.  The primary difference between CDs and MYGAs is that in a non-qualified account (i.e. non-IRA account), the interest grows tax-deferred.

CDs and MYGAs are both commodity type products.  With MYGAs, you need to shop all carriers for the highest contractual yield available.  MYGAs are classified as fixed annuities that are issued by life insurance companies.  Fixed annuities are approved and regulated at the state level, so you need to find the highest yield and duration for your specific state of residence.

So which one is better?  The answer is neither.  They both are good.  They both fully protect your principal.  They both provide a contractually guaranteed interest rate for a specific period of time that you choose.  And by the way, the both work well together.

In this episode, The Annuity Man discusses:

  • The differences and similarities between these two products
  • Why buyers should consider both MYGAs & CDs
  • The value of using a Laddering Strategy
  • Where CDs & MYGAs fit in your portfolio

Key Takeaways:

  • MYGAs & CDs function exactly the same
  • FDIC backed CDs are the safest guarantee available
  • MYGAs are backed by the issuing carrier and a state guarantee fund
  • CDs are for 2 years or shorter & MYGAs are for 3 years or longer

Fun with Annuities Podcast is hosted by America’s Annuity Agent, Stan Haithcock, The Annuity Man. Hear brutal annuity facts with no sales pitches from the top independent agent in the country, licensed in all 50 states. Author of 7 books, Stan dives deep on all annuity types and strategies. It’s fun, learning the contractual truths on how annuities actually work and if they’ll fit your personal retirement lifestyle. Listen in on how you can be livin’ the reality, not the dream.

Listen on Stitcher, Apple Podcasts, and Spotify. Get the best and highest confinement care and enhanced benefit quotes using Stan's proprietary annuity calculators. You can also receive all 6 of The Annuity Man Owner's Manuals for free and under no obligation and see a live feed of the best fixed rates for your specific state of residence.


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