Multi-Year Guaranteed Annuity Comeback

Jun 6, 2023 | Investments

Why Multi-Year Guaranteed Annuity is Making a Comeback and Why Now is the Time to Act

An MYGA (Multi-Year Guaranteed Annuity)  is a type of fixed annuity that provides a guaranteed interest rate for a set period of time, typically between three and ten years. Here are some potential benefits of buying an MYGA right now:

  • Predictable returns: With an MYGA, you know exactly what interest rate you will earn over the duration of the annuity. This can be an attractive feature for those who want to ensure a guaranteed return on their investment.
  • Low risk: MYGAs are considered low-risk investments because the insurance company guarantees the interest rate. This makes them a good option for those who want to protect their principal investment.
  • Flexibility: Many MYGAs offer options for partial withdrawals or annuitization, which can provide flexibility for those who may need to access their funds before the end of the contract term.
  • Competitive rates: With interest rates remaining historically low, some MYGAs may offer more attractive rates than other fixed-income investments.

Why Should I Buy an MYGA Now?

MYGA rates are based on interest rates meaning the higher interest rates are, the higher your returns will be. This means you can take advantage of locking in high fixed rates before interest rates come down. E.g.

Let’s say the MYGA offers you a fixed rate of 5% per annum over a 10-year period which is roughly what the market is offering, up from under 2.50% a couple of years ago. This means every year you are guaranteed to get that 5% rate which compounds each year. If you keep the MYGA in place until the end of the 10-year period, your annualized return is actually 6.29% due to the benefit of compounding. Below you can see that from USD 100,000 investment, you would end up with USD 155,133 (assuming no withdrawals are taken).

It’s important to note that MYGAs are not suitable for everyone and may not be appropriate for your particular financial situation. You should carefully consider your investment goals, risk tolerance, and other factors before making any investment decisions. It’s also a good idea to consult with a financial advisor to determine whether a MYGA is right for you.

This communication is for informational purposes only based on our understanding of current legislation and practices which are subject to change and are not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

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Schedule an Obligation-free Call With an Adviser

By scheduling an appointment with an adviser they will reach out to you at your requested time. 
Personal advice, whenever it suits you.

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