A Multi-Year Guarantee Annuity vs. CDs, Mutual Funds, and Money Market Funds: Which Belong in Your Portfolio?

Mar 11, 2025

As you likely know, diversification is key when it comes to portfolio allocation. Relying solely on stocks or cash may not be enough—depending on your situation, you might want to consider a mix of assets that provide growth, stability, and protection from market exposure. However, when it comes to safe, fixed-rate options, which ones make the most sense?

If you’re weighing the benefits of a Multi-Year Guarantee Fixed Annuity (MYG Annuity) from American National Insurance Company against alternative choices like certificates of deposit (CDs), mutual funds, bonds, or money market accounts, it’s important to understand how each one fits into your financial strategy. Let’s break it down.

MYG Annuity vs. Certificates of Deposit (CDs)

At first glance, a MYG Annuity and a CD look similar. Both offer:

A fixed interest rate for a set period.
Protection from market volatility.
Predictable growth over time.

However, a MYG Annuity has key advantages over a CD:

Feature	MYG Annuity	Bank CD
Interest Rate	Typically, higher than CDs	Lower, especially at traditional banks
Tax Treatment	Tax-deferred until withdrawal	Interest is taxed as earned income annually, reducing net returns
Liquidity	Up to 10% annual penalty fee withdrawals	Penalties for early withdrawals
Fees/Charges	No upfront fees; withdrawals may incur charges	Fees may apply

Advantage of a MYG Annuity vs. CD: An MYG Annuity could be a good fit for those looking for a competitive fixed return and tax-deferred growth over time. It may also be a good option for those over 59 ½ who want to receive ongoing income during the guarantee period with penalty-free withdrawal options.

MYG Annuity vs. Bonds

Bonds are often seen as a way to earn a predictable interest rate, but that can depend on the type of bond purchased. Here are some ways that an MYG Annuity is similar to, and differs from, a bond:

Feature	MYG Annuity	Bond
Market Risk	No exposure	Exposure
Interest Rate	Fixed for a set period	Varies: Fixed for U.S. Treasury bonds, variable for corporate bonds
Tax Treatment	Tax-deferred until withdrawal; earnings compound without annual taxes	Interest is usually taxed annually; reducing net returns
Liquidity	Typically, up to 10% annual penalty-free withdrawals	Penalties may apply for early withdrawals
Insurance	Backed by insurer	Treasuries backed by U.S. government; corporate bonds backed by the issuer

Advantage of a MYG Annuity vs bonds: An MYG Annuity provides tax-deferred growth and competitive, guaranteed rates without market exposure. It may also be a good option for those over 59 1/2 who want to receive ongoing income during the guarantee period with penalty-free withdrawal options.

MYG Annuity vs. Mutual Funds

Mutual funds provide long-term growth potential, but they come with market risks; unlike an MYG Annuity. Here’s how they compare:

Feature	MYG Annuity	Mutual Funds
Market Risk	No exposure —interest rate and principal guarantees	Exposure—value fluctuates with market conditions
Returns	Fixed interest rates	Variable rates, based on market performance
Tax Efficiency	Tax-deferred until withdrawal	Annual taxes on dividends and capital gains
Fees	No upfront fees; withdrawals over penalty-free amount may incur charges	Expense ratios, possible sales loads, and trading fees

Advantage of a MYG Annuity vs a mutual fund: A MYG Annuity can provide steady, predictable returns without stock market uncertainties and other fees.

MYG Annuity vs. Money Market Funds

Money market funds are often seen as a conservative place to park cash, but how is their growth potential compared to a MYG Annuity?

Feature	MYG Annuity	Money Market Fund
Rates	Guaranteed, competitive fixed rate	Variable, often low growth
Market Risk	No exposure—guaranteed interest rate	Minimal exposure
Tax Efficiency	Tax-deferred until withdrawal	Interest taxed as earned income annually
Liquidity	Typically, up to 10% annual penalty-free withdrawals	Typically, no penalties

Advantages of an MYG Annuity vs a money market account: An MYG Annuity typically offers higher growth rates than money markets, especially for long-term holding periods.

Which Belong in Your Portfolio?

If you:

Value stable, guaranteed returns
Want tax-deferral for long-term growth
Prefer diversification for a balanced portfolio
Enjoy DIY planning and products

… then an MYG Annuity from American National Insurance Company may be a good addition to your overall portfolio.

While CDs, mutual funds, and money market funds each have their place, a MYG Annuity offers a unique combination of security, tax-deferral, and predictable growth. For DIY planners who want market protection and predictable returns, it’s a compelling option.

Want to lock in a guaranteed rate while keeping your money working efficiently? Explore a MYG Annuity today from American National Insurance Company and take control of your financial future.

Information herein is not intended to be legal or tax advice. You should consult with your own attorney and tax advisor for your specific circumstance. Current U.S. tax law provides that earnings from an annuity are taxable only upon withdrawal as ordinary income. Any withdrawals in excess of the surrender free amount are subject to surrender charges or market value adjustments.

Penalty-free withdrawals allow up to 10% of the annuity value at the beginning of the year to be withdrawn annually, free of surrender charges. Any withdrawals, including interest-only withdrawals, will reduce the amount of interest credited to your contract. Withdrawals of earnings are subject to income tax. A 10% IRS penalty may be imposed for withdrawals before age 59 1/2.

Interest rates and interest rate guarantee periods are subject to change. At the end of the selected interest rate guarantee period, you can either withdraw all your money without penalty during a special 30-day window or continue the annuity and earn an annual effective interest rate declared annually on the policy anniversary. This special surrender option applies to a full surrender only and is not available for partial withdrawals or systematic withdrawals. American National is a group of companies writing a broad array of insurance products and services and operating in all 50 states. American National Insurance Company was founded in 1905 and is headquartered in Galveston, Texas. Not all products and services are available in all states. Form Series: MYG24; AI20 (Forms may vary by state). CA Form: MYG16(04).

Not available in New York