Why Fixed-Rate Annuities Deserve a Spot in Your Fee-Based Portfolio (Despite What Those Know-It-Alls Say)

So, you're thinking about adding fixed-rate annuities to your oh-so-fancy fee-based managed portfolio? Some so-called "experts" might tell you that they're too simple (or, dare I say, boring) for your sophisticated financial needs.

But guess what? MYGAs (that's multi-year guaranteed annuities for the uninitiated) can be a pretty spicy addition to your portfolio. So grab a drink and settle in, because we're about to dive into the world of MYGAs and why they might just be the secret sauce you need.

MYGAs: The Secret Ingredient Your Fee-Based Portfolio Has Been Missing

Think of MYGAs as the salt to your investment soup. They're relatively simple annuities that guarantee a set return for a specific period (usually between two and ten years). They're kind of like CDs, but cooler – the quoted yield includes all fees, and they've historically had higher yields than CDs (score!). That makes them pretty attractive for investors hunting for lower-risk investments.

MYGAs are particularly tasty for fee-based portfolios because they offer yields that are downright delicious compared to other low-risk investments. And while your financial advisor might charge extra fees for managing your MYGA-filled portfolio (everyone's gotta make a living, right?), studies show that their professional advice is worth its weight in gold (or at least annuities).

Don't Just Take My Word for It: MYGAs Are Getting Noticed

According to LIMRA, fixed-rate annuity sales hit a whopping $113 billion in 2022 – that's more than double the sales in 2021. Clearly, people are catching on to the MYGA craze (and with good reason).

MYGAs come with guarantees and potential tax benefits that traditional investments just can't compete with (sorry, stocks). Plus, annuities can generate income for life – try getting that kind of deal from your 401(k)!

Fee-Based MYGAs: A Flavorful Twist on a Classic Recipe

While traditional MYGAs often include a 2-3% commission, fee-based MYGAs leave that extra cost in the dust. And with guaranteed rates that are typically higher, it's no wonder investors are considering the switch (after all, who doesn't love getting more bang for their buck?). Just make sure you chat with your financial advisor to figure out which type of MYGA will make your portfolio sing.

And let's not forget – holding a MYGA in a fee-based account is a lot like holding a portfolio of mutual funds or ETFs that don't change much over time. So, if your fee-based advisor thinks adding a MYGA will boost the risk-adjusted return of your portfolio, it's probably worth giving it a shot.

The Cherry on Top: Behavioral Benefits of Annuities

Here's a fun fact: retirees who have a higher share of their wealth in longevity-protected income (like MYGAs) tend to feel more comfortable spending in retirement. That's right – MYGAs can basically give retirees a "license to spend," making retirement a whole lot more enjoyable. And who doesn't want that?

Don't Let the MYGA Party Pass You By

To sum it all up, fixed-rate annuities (especially those spicy MYGAs) are a smart and flavorful addition to fee-based portfolios. So, ignore the naysayers and their outdated opinions on simplicity. MYGAs offer attractive yields, guarantees, potential tax benefits, and that extra pinch of confidence retirees need to truly enjoy their golden years. Talk to your financial advisor and see if MYGAs are the perfect ingredient for your investment recipe.

A Dash of Caution for the Road

Of course, as with any investment, it's essential to do your homework and make sure MYGAs align with your personal financial goals (and risk tolerance). Don't just take my word for it – or anyone else's, for that matter. Consult with your trusty financial advisor to determine which type of MYGA is the ideal fit for your unique financial situation.

In the end, MYGAs may not be the flashiest investment on the block, but they sure do bring a lot to the table. So, don't let their simplicity fool you – sometimes, the simplest ingredients can create the most mouthwatering dishes. And who knows, maybe adding a pinch of MYGA to your fee-based portfolio will be just the kick you need to reach your financial goals (and have a little fun along the way).

Happy investing!