Safer Money-Growing Strategy #1: Fixed Annuity Laddering

If you’re a simple investor looking for safe and simple investing options, Multi-Year Guaranteed Annuities (MYGAs), which are a type of Fixed Annuity, can be an appealing option. They’re often compared to CDs because they offer a fixed interest rate for a set period of time - the rate is protected and guaranteed by a high quality insurance company. When combined with a laddering strategy, MYGAs can become a powerful and easy-to-understand tool for long-term financial planning.

What Is a MYGA?

A MYGA is a type of fixed annuity issued by an insurance company. When you invest in a MYGA, your money earns a guaranteed interest rate for a specific number of years—commonly 3, 5, or 7 years. Generally, the longer you're willing to leave the money in, the higher interest rate you can be offered.

Unlike stock market investments, MYGAs don’t rise and fall on a day-to-day basis. At the end of the guarantee period, you can typically renew, withdraw, or move your money without penalties.

What Does "Laddering" Mean and How Does it Work?

MYGA laddering simply means spreading your money across multiple MYGAs with different term lengths, rather than putting everything into one contract at the same time.

Each MYGA matures at a different point, giving you regular access to your funds and opportunities to reinvest at new interest rates.

How a MYGA Ladder Works

Suppose you have $150,000 you want to invest conservatively.

Instead of buying one 5-year MYGA with

$150,000, you might:

• Invest $50,000 in a 3-year MYGA

• Invest $50,000 in a 5-year MYGA

• Invest $50,000 in a 7-year MYGA

When the 3-year MYGA matures, you can:

• Withdraw the money if you need it

• Reinvest it into a new MYGA

• Use it for income

  
  

Over time, you’ll always have a MYGA maturing every few years, creating flexibility and consistency.

Why People Use MYGA Laddering

MYGA laddering is especially attractive to beginner investors for several reasons:

1. Manages interest rate risk. Interest rates change. Laddering helps you avoid locking all your money into one rate at one moment in time.

2. Provides predictable growth. Your interest rate is guaranteed, so you know exactly how much your money will grow during each term.

3. Improves liquidity over time. As each MYGA matures, you regain access to a portion of your funds without surrender charges.

4. Reduces reinvestment stressInstead of worrying about timing the market, you spread decisions out over several years.

Important Considerations

MYGAs typically limit withdrawals during the guarantee period, although many allow small penalty-free withdrawals. They are also designed for conservative growth, so returns may be lower than riskier investments over the long run.

As with any annuity, it’s important to understand surrender charges, renewal options, and how inflation may affect purchasing power.

Is MYGA Laddering Right for You?

MYGA laddering can be a strong fit for investors who prioritize safe investing, predictability, and simplicity, especially those nearing retirement or transitioning out of market-based investments.

By staggering your MYGA investments, you create a structured plan that grows steadily, adapts to changing rates, and gives you regular access to your money—without the complexity many investors want to avoid.

You can make an appointment with us today for a quote and personalized strategy.