I Bonds vs MYGA’s: Fixed Income Opportunities Analyzed, Podcast

I Bonds are an inflation adjusted Savings Bond sponsored by the US Treasury that have received a lot of attention in recent months due to their high advertised rates. As we highlight in this week’s episode of the podcast, those high rates are not necessarily built to last. As inflation rates normalize, their current Fixed Rate is 0.0%, meaning returns will be much less exciting than they are right now going forward. Further, as Chaim notes in the episode, the policy direction is to fight inflation (and the Total Return of I Bonds, consequently). As we say in the finance industry, don’t fight the Fed!

MYGA’s create an interesting contrast in that they have guaranteed annual rates for the lifetime of the investment. That creates a potential complimentary strategy with I Bonds, as we discuss, in that an investor can have some funds allocated to Variable Rate bonds like I Bonds and and a complimentary allocation to a Fixed Rate option like a MYGA. We also discuss the fact that in contrast to the recent past, the rates currently offered by MYGA’s present a more compelling alternative to other means of investing in Fixed Income, as MYGA’s do not go down in value as Interest Rates increase.

As always, we love talking about these options and are starting to talk with clients about the possibilities MYGA’s offer in annual rebalance and implementation discussions. Feel free to add this to the agenda of our next meeting if you’re an existing client. If you’re thinking about MYGA’s and haven’t talked with us before, we’re happy to analyze these as well as alternatives any time.

Enjoy the episode and we’ll be doing another episode that, like this one, is a little less Macro-policy and economics driven next time!