Locking In Up To 9.65% In Year 1: What Happens After With A 6-Year Annuity?
📚 Main topics
- How the teaser-rate annuity worksA six-year MYGA example offers a first-year teaser rate of up to 9.65%, followed by lower base rates for years two through six. The video compares investment minimums, average annual yields, and maturity values. 3:08
- Questions to ask before buyingCheck the average yield over the full term, withdrawal terms, and what happens at maturity. The example allows 10% penalty-free withdrawals annually, but early withdrawals beyond that may trigger surrender charges. 6:13
- Other MYGA rate examplesThe video compares illustrative rates from highly rated insurers, noting that rates vary with investment amount, term, and insurer rating. 11:26
- Treasuries and agency bondsGetting a 5% yield from Treasuries or agencies may require long maturities and watching the market. Some higher-yielding agency bonds are callable, so their rates may not be locked in for long. 15:06
✨ Key takeaways
- Look beyond the teaser rateA high introductory rate can be less attractive once the lower rates for the rest of the term are included. Compare the average annual yield and the projected maturity value. 4:11
- Understand liquidity and renewal termsMYGAs can be illiquid, and some automatically renew at maturity unless you act within a specified window. Missing that window could lock your funds in for another term. 8:49
- Consider insurer strength and guarantee limitsThe examples include insurers with different AM Best ratings. The video advises staying within your state guaranty association’s protection limits. 10:24
- Every option involves tradeoffsMYGAs may offer attractive guaranteed rates but less liquidity, while Treasuries and agency bonds may be more liquid but require longer time horizons or active market timing. 18:12
🧠 Lessons learned
- Match the investment to your needsAnnuities are intended to provide safety and predictability; other investments may be better suited to goals such as growth, inflation protection, or liquidity. 10:24
- Be certain before giving up access to fundsConsider whether you may need the money before maturity, and make sure you have adequate emergency reserves before choosing terms that restrict withdrawals. 7:17
- Compare risks, rates, and terms togetherA higher rate alone does not determine whether an investment is suitable; consider credit strength, callability, surrender charges, and the full holding period. 17:10
🏁 Conclusion/next steps
- Compare and diversifyThe video suggests that investors may combine Treasuries, agency bonds, and MYGAs rather than choosing only one type of fixed-income investment. 18:44
- Verify current offersRates and minimum investment amounts can change, and the rate is not fixed until the annuity contract is signed. Review current terms with a qualified specialist before deciding. 10:24
Transcript excerpt
0:00 and up to 9.65% first-year teaser rate on a multi-year guaranteed annuity or MYGA. Might this be something for you? Hello, Diamond Estic members, super savers, and course fans. I hope you're healthy and well. So, 5% safe and guaranteed seems to be the magic number that many of our fixed income regulars often say would make them happy and sleep well at night. The catch, of course, is that in today's environment, 5% plus returns aren't easy
0:33 to find if you want them safe and guaranteed for, let's say, 5 years or longer. In fact, in our mind, you really only have two options here. If you're a safetyconscious investor who's trying to build your base, your first option is bonds backed by the US government such as zero coupon treasuries, also known as strips, and non-callable agencies and maybe normal treasuries. However, at the time of this taping on May 2nd, 2026, you may have to go out to 20 years or
1:04 more to really get to 5%. And your second option is multi-year guaranteed annuities or MYGAs which may pay 5% plus rates for your medium and long-term investments and are guaranteed as long as you stay within the limits of your state guarantee association. If you're willing to take on more risk, there are other options of course such as non-callable corporate bonds or munis, but these are not guaranteed and may carry different degrees of risk. So,
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