You may be getting older and want to add some income to your retirement. You want to defer taxes until later when you’re in a lower tax bracket than you are right now. A five-year guaranteed annuity may be the right financial vehicle for you.
What Is a Multi-Year Guaranteed Annuity?
A multi year guaranteed annuity (MYGA), also called a CD-type annuity, because it shares similar properties to CDs, is a tax-deferred investment that allows you to pay premiums to an insurance company in exchange for a guaranteed, fixed interest rate for a certain period of time.
A MYGA works by gathering a lump sum to accrue interest.
At the end of your payments, you can receive the lump sum you’ve paid in, plus interest, minus taxes. You could also choose to roll it into another MYGA or a different type of annuity.
How Do You Invest in a Multi-Year Guaranteed Annuity?
The first step to investing in a MYGA is to talk to your financial advisor to see if it makes sense for your particular situation. MYGAs aren’t the right investment vehicle for everyone. If your financial advisor gives you the go-ahead, start shopping around to find a MYGA that gives you the best return on your investment. You’re typically going to find a lower interest rate; the tradeoff is that your MYGA isn’t subject to market fluctuations. It’s a very safe investment.
If you want a secure investment with a guaranteed return, a MYGA could be the right vehicle for you. Ask your financial advisor about it today.
