What is the best alternative to a CD right now?
Well, I just got off the phone with a client of mine who called me in a panic… with a financial problem, of course. I could sense the distress in her voice. Fortunately, I was able to help her out and would like to share how with you. Before I do that, though, let me tell you a bit more about her.
Judy is 56 years old and is a life insurance client of mine. She and her husband both work full-time. She doesn’t have a 401K plan through work, so she’s been investing in an IRA for the past few years, with the intent of saving up for a planned retirement age of 65. I wasn’t surprised when she said that things hadn’t been going according to her plans so far. In her words, “My investment has not produced any money since I began putting money into it a few years back, in fact I have lost some of my investment. If things continue like this, I’m going to have to work until I’m 100 years old!”
When I asked her what she was investing in, she said mostly mutual funds and bonds. She admitted, “I didn’t know you could lose money in bonds.” She told me she was looking for a place to transfer the money that would stop the bleeding in her account and make some positive gains for her, so she looked into CD’s. Well, that frustrated her even more when she saw how little they are paying right now (2-3%), so she called me to see if I had any ideas.
I told her I could help her transfer her money into a safe investment with a much higher yield than CD’s. We can accomplish this with my 3 year guaranteed investment product paying a fixed rate of 4.7% annually. I also have a 5 year paying 5% annually*. This is a fixed annuity, which is like a CD but is issued by an A rated insurance carrier rather than a bank.
I explained to her that insurance companies are a heck of a lot more financially stable now than banks. In the end, I recommended the 5 year fixed annuity. This way, she can let her money grow tax deferred until she’s 61, and then see how the economy is doing, and can put her money wherever she wants.
Needless to say, Judy was thrilled to hear me say 5%, when she thought she’d have to settle for two or three for guaranteed rates. And I’m thrilled too that with my help, Judy won’t have to work for the rest of her life, after all.
CALL NOW FOR CURRENT ANNUITY RATES (619)564-4873
Perhaps you’re in the same boat as Judy right now. If you’ve done your homework, you probably know that corporate bonds are paying 3-4% (for A rated paper). U.S. Treasuries are paying next to nothing. According to Bankrate.com, the best 3 or 5 year CD rate now is 3.4%. Nothing else is above 3. Five percent is the best rate in America right now for A rated paper.
So if you do have a problem like Judy’s, I would love to speak with you about your particular situation and see if I can help you too. You can call me at 619-564-4873. I have the best alternative to a CD in the U.S.
*Please note these rates change on a monthly basis. The rates offered in this article are from February 2009.
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