This week’s CBTV show is entitled, “Labor Day: You Worked Hard for your Money, Make Sure it’s Working Hard for You.”
In this week’s Financial Tip, Tool, or Technique segment of the show, I gave four ideas to consider as alternatives to the low interest rates banks are currently paying, and the high volatility of the stock market.
Here is what I recommended and covered:
With yields on CDs and U.S. Treasury notes at or near record lows, retirees are searching for other “safe” investment alternatives that can help them earn more interest income during their golden years.
So, here are my 4 keys to earning better than average returns with little or no risk:
1) Fixed Indexed Annuities - FIAs are a popular choice as they offer investors a “no-market-risk” opportunity to participate when the market goes up, but lose no principal when the market goes down. Annual gains, by the way, are “locked in” on your anniversary date. FIAs generally offer higher interest earnings than CDs and have either no fees, or very low annual fees compared to mutual funds and bond funds.
2) Index Certificates of Deposit – These types of CDs are FDIC insured, with your principal returned to you upon reaching the maturity date, typically between 3-10 years. Most use a “term end point” crediting structure, in which gains are not credited until the end of the multi-year period. Your total interest is a percentage of the equity or commodity index gain. Liquidity can be an issue though, as you may not have access to your principal until maturity.
3) Index-Linked Notes – Some index-linked notes are fixed, but most are floating, while a few are a combination of the two. They offer a percentage of the index gain over a period of years, or computed more often with a cap. The index link could be the S&P 500, the Dow Jones, the price of gold or inflation. Some notes pay the principal amount upon maturity, while others give you the market value. Like Index CDs, liquidity is not guaranteed, and these notes are not FDIC insured.
4) Gold – This precious metal has never been more valuable than it is today! As long as the markets remain volatile worldwide, the price of gold will continue to go up. There is a “safe-haven” demand for gold, like no other investment right now. However, if you don’t currently own gold, the price of entry is a little steep.
Hopefully, one or more of these options will work for you. However, these investments are not for everyone, so always consult a good financial advisor to learn about “safe” investment opportunities that may benefit you. By doing so, you can ensure that your money will continue to work hard for you, even during these turbulent times.
I would like to hear any comments or questions you have about these investment options, and what your thoughts are on the current state of the economy. Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!
- Matt
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