Showing posts with label Bank CD. Show all posts
Showing posts with label Bank CD. Show all posts
Tuesday, September 3, 2013
Monday, August 26, 2013
If you designed the perfect financial product would it look like this?
Many clients tell me they are looking for several contradictory objectives in an IDEAL financial product!
First, they want to know their principal is safe!
Second, they want a reasonable rate of return on their money!
Third, they want liquidity!
If a product could do all of these thing would you agree that this is a nearly perfect financial product?
A bank can give you the first and third items from the list but will not deliver the second. The market can give you the second and the third but cannot guarantee the first.
Its now possible to get a financial product that offers 100% liquidity from day one. Even though it offers great liquidity it is designed and optimized for long term growth or even for legacy purposes.
In addition it offers a reasonable rate of return in some configurations or the upside potential for double digit annual returns of over 12% in the best years and a mid single digit (4-7%) returns in an average year. It delivers all of this potential with outstanding safety and protection of principal.
That's the good news.
Now for the bad news. Not everyone can qualify to purchase this type of product. Minimum $ limits also apply. Contact us if interested in learning if this is right for you!
First, they want to know their principal is safe!
Second, they want a reasonable rate of return on their money!
Third, they want liquidity!
If a product could do all of these thing would you agree that this is a nearly perfect financial product?
A bank can give you the first and third items from the list but will not deliver the second. The market can give you the second and the third but cannot guarantee the first.
Its now possible to get a financial product that offers 100% liquidity from day one. Even though it offers great liquidity it is designed and optimized for long term growth or even for legacy purposes.
In addition it offers a reasonable rate of return in some configurations or the upside potential for double digit annual returns of over 12% in the best years and a mid single digit (4-7%) returns in an average year. It delivers all of this potential with outstanding safety and protection of principal.
That's the good news.
Now for the bad news. Not everyone can qualify to purchase this type of product. Minimum $ limits also apply. Contact us if interested in learning if this is right for you!
Friday, June 21, 2013
New financial products available
Everyone knows that interest rates have been extremely low for over 3-4 years. It's part of the the Federal Reserve Banks plan to "help the economy". Even with the slight increase in interest rate in the past week or so it is still almost impossible to earn a decent yet safe rate of return on our
money.
Did you know that it is possible to obtain a 6% guaranteed interest rate on a 96 month financial product. There are minimum purchase amounts of $40,000 - 60,000 with a maximumum of approximately $250,000. These are not liquid but you do receive monthly payments including but some return of principal and interest. Payments are level throughout the 8 year term. The interest rate is guaranteed at time of issue and payment of the contract. There is also a high degree of safety with this type of contract. This is what I would consider a Safe Money product with no stock market risk. They are compatible with a ROTH or Traditional IRA or can be used with non qualified money as well.
I think it is good to know that a reasonable Bank alternative is available today. Why would anyone want to put that amount of money in a bank anyway?
money.
Did you know that it is possible to obtain a 6% guaranteed interest rate on a 96 month financial product. There are minimum purchase amounts of $40,000 - 60,000 with a maximumum of approximately $250,000. These are not liquid but you do receive monthly payments including but some return of principal and interest. Payments are level throughout the 8 year term. The interest rate is guaranteed at time of issue and payment of the contract. There is also a high degree of safety with this type of contract. This is what I would consider a Safe Money product with no stock market risk. They are compatible with a ROTH or Traditional IRA or can be used with non qualified money as well.
I think it is good to know that a reasonable Bank alternative is available today. Why would anyone want to put that amount of money in a bank anyway?
Friday, October 24, 2008
Why Tolerate Low Current Yields
In Jan 2009 Social security payments are increasing by 5.8 % Remember that this is linked to partially compensate for the general inflation rate. It is not designed to increase the spending power of SS recipients. This means that the inflation rate is actually higher. When we look at the government Consumer Price Index data there are several possible numbers for the past
12 months they range from about 4.5-7.6%. Lets take a mid point at something like 6%
Now lets consider some current Yields on Traditional safe money Financial products
6 Month Treasury Bills Currently paying 1.44 %
30 year Treasury Bonds Currently paying 3.96%
10 year Treasury Bonds Currently paying 3.66%
This weeks Average Bank Cd yields
6 Month Bank CD---------Currently paying 2.17%
1 Year Bank CD ----------Currently paying 2.70%
5 Year Bank CD ----------Currently paying 3.46%
Investment in any one of these products means that you have less buying power than when you started at the beginning of the year.Even with the highest yield you will still have 2% less purchasing power after you hold the product for one year.
John Waggoner wites for USA Today . His article titled "Whats so great about Bonds? They Are not Stocks" appeared in todays paper. It is a nice overview of Bonds and how they work and why the are different from Stocks. He quotes numbers from Morningstar about this years performance averages. Short Term Bond Funds have lost 3.5%,Intermendiate Term bond Funds have lost 6.4%, and Long term Bond funds have lost 12.3% this year. Junk Bond are down an average of 22.8%.All of these numbers are quoted from Johns article. he also makes a point that when stocks do poorly bonds often do better.
The Ideal Safe Money Financial Alternative products Must do two things. They must protect your principal from risk and also has to have the chance to beat inflation!! Do any of the products listed in this article do both? There are other thing the Ideal Safer Money Financial Alternatives should do as well. They should have a minimum guaranteed rate of return. They should be able to participate in strong economic growth cycles. They should help insure potential lifetime income streams that you can not outlive.
12 months they range from about 4.5-7.6%. Lets take a mid point at something like 6%
Now lets consider some current Yields on Traditional safe money Financial products
6 Month Treasury Bills Currently paying 1.44 %
30 year Treasury Bonds Currently paying 3.96%
10 year Treasury Bonds Currently paying 3.66%
This weeks Average Bank Cd yields
6 Month Bank CD---------Currently paying 2.17%
1 Year Bank CD ----------Currently paying 2.70%
5 Year Bank CD ----------Currently paying 3.46%
Investment in any one of these products means that you have less buying power than when you started at the beginning of the year.Even with the highest yield you will still have 2% less purchasing power after you hold the product for one year.
John Waggoner wites for USA Today . His article titled "Whats so great about Bonds? They Are not Stocks" appeared in todays paper. It is a nice overview of Bonds and how they work and why the are different from Stocks. He quotes numbers from Morningstar about this years performance averages. Short Term Bond Funds have lost 3.5%,Intermendiate Term bond Funds have lost 6.4%, and Long term Bond funds have lost 12.3% this year. Junk Bond are down an average of 22.8%.All of these numbers are quoted from Johns article. he also makes a point that when stocks do poorly bonds often do better.
The Ideal Safe Money Financial Alternative products Must do two things. They must protect your principal from risk and also has to have the chance to beat inflation!! Do any of the products listed in this article do both? There are other thing the Ideal Safer Money Financial Alternatives should do as well. They should have a minimum guaranteed rate of return. They should be able to participate in strong economic growth cycles. They should help insure potential lifetime income streams that you can not outlive.
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