Market-Linked CDs

Market-Linked CDs

These investments may yield more for you than the typical fixed rate of return.

   

Provided by Mike Fassi

 

You say you’re a conservative investor who wants more yield? Then you may want to consider market-linked CDs – certificates of deposit linked to the performance of a market index.

With yields on fixed-rate CDs so low right now, investors are turning to these indexed CDs because of their potential for comparatively greater returns.

These CDs credit you with a “participation rate” in return for your investment. For example, if the associated index rises 12% in a year and your participation rate is 50%, you get a 6% return. (That certainly beats a 1% return.) The linked index might be the S&P 500, the Dow Jones Industrial Average, a tech index, a global index – it varies per CD.1

A market-linked CD is usually a short-term investment. Most of these CDs have maturity dates of 3-5 years. The deposits typically range from $1,000-$20,000. You are guaranteed not to lose your principal if you hold the CD to maturity, for the Federal Deposit Insurance Corporation insures these investment vehicles.1

Indexed CDs do have some downsides. The interest on them is only paid when they mature, and before maturity, the CD might produce “phantom income” – that is, taxable interest you must report to the IRS. (These are not tax-deferred investments.) Some of these CDs are “callable” – if interest rates fall, the issuer has the option to execute a call and terminate the CD, paying you back your principal and accrued interest.1,2

If you decide to take money out of a market-linked CD before the end of its term, you will probably pay for that decision. You will likely be hit with a penalty as you redeem your principal. Some indexed CD contracts allow you to sell your CD before it matures, if you like – but if the linked index has performed poorly, there is the chance that you could sell at a loss since the value of the CD depends strongly on the performance of that index. These CDs can also be illiquid during their first year.1,2   

That said, there is much to like about these CDs. They offer you the principal protection guarantee of a standard certificate of deposit, plus the chance for notably better yield than a fixed-rate CD. You just have to recognize the necessity of holding the CD until maturity.   

 

Mike Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or mike@fassifinancialnetwork.com.

 

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – investopedia.com/articles/bonds/09/equity-index-cds.asp [8/25/16]

2 – finance.zacks.com/disadvantages-structured-cd-investment-11399.html [8/25/16]

 

Investing During Retirement

THE REALITY OF INVESTING DURING RETIREMENT

As retirees live longer, their portfolios need to be stronger.

 

Provided by Mike Fassi

 

Decades ago, the “typical” retiree left work for good between age 60-65 and typically passed away at about 70-75. Retirement lasted 10-12 years for many Americans. Now the picture has changed: some of us will spend 30, 40, perhaps even 50 years in retirement. (Imagine retiring at 55 and living to be 105 … it is possible.) We may live much longer than our parents, and if we do, we will need a lot more money.

A slight shift in outlook. Years ago, retirees were urged to invest conservatively – often, very conservatively. The idea was to build up your savings and net worth aggressively across two or three decades, and then adopt a risk-averse investment strategy for the “golden years.” But the reality of a 20- or 30-year retirement has changed that mentality.

The new presumption is that today’s retirees should never retire from accumulating wealth. Most Americans will not walk away from their careers with assets equivalent to 20 or 30 years worth of income. If you have $3 million in assets today, you may think you’ll have $100,000 a year to live on for 30 years. Sounds great, right? But that may not be enough. Questions of liquidity and taxes aside, what about the runaway costs of healthcare and eldercare? What about the effect of inflation across 30 years – do you remember what a gallon of gas or milk cost 30 years ago?

A new reality. You’re now seeing people in their sixties with the kind of portfolios that people used to have in their forties – portfolios with stocks, mutual funds, and other investments with appreciable risk. Sometimes they have to invest this way because they haven’t accumulated sufficient wealth for retirement. Or, they are simply being pragmatic about their long-term need to sustain wealth and keep their retirement assets growing.

What kinds of investments should you retire with? The answer to that question can only be determined after you carefully consider some variables, such as the age at which you retire, the assets you have saved up, the lifestyle you want to enjoy, family and health considerations, and how comfortable you are with certain types of investment. Be sure that you speak with a financial advisor who specializes in retirement planning before you make a decision to revise your investment portfolio. Even if you are ten or more years from retirement or plan to keep working into your seventies, I think you will find it eye-opening and useful. Most people underestimate their retirement income needs.

 

Mike Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or mike@fassifinancialnetwork.com.

 

These are the views of Peter Montoya, Inc., not the named Representative or Broker/Dealer, and should not be construed as investment advice. Neither the named Representative or Broker/Dealer give tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your Financial Advisor for further information.

 

Is America Prepared to Retire

Is America Prepared to Retire?

Two-thirds of us have no financial plan.

 

Provided by Mike Fassi

 

Only 48% of Americans say they think they are saving enough. And 30% feel that they are not even slightly confident that they are saving enough for retirement. That finding comes from the 2015 Consumer Financial Literacy Survey conducted by the National Foundation for Credit Counseling. (The survey collected data from 2,017 U.S. adults.)1

Only 40% of us keep a regular budget. If you are one of those two out of five Americans, you’re on the right track. While this percentage is on par with findings going back to 2007, the study also finds that only 29% of Americans are saving any part of their annual income towards retirement.1

Relatively few seek the help of a financial professional. When asked “Considering what I already know about personal finance, I could still benefit from some advice and answers to everyday financial questions from a professional,” 75% of respondents agreed with the statement. Yet only 12% indicated that they would seek out the help of some sort of financial professional if they had “financial problems related to debt.” While it isn’t surprising to think that 25% of respondents would turn to friends and family, it may be alarming to learn that 18% would choose to turn to no one at all.1

Why don’t more people seek help? After all, Americans of all incomes and savings levels certainly are free to set financial goals. They may feel embarrassed about speaking to a stranger about personal financial issues. It may also be the case that they feel that they don’t make enough money to speak to a professional, that a financial professional is something that millionaires and billionaires have, not the average American worker. Another possibility is that they feel that they have a good handle on their financial future; they have a budget and stick to it, they save in an IRA (like a quarter of Americans), or a 401(k) (nearly three out of ten Americans), and many use other investments (30%, according to the survey). But that 75% admission above indicates that a vast majority of Americans are not as confident.1

Defined goals lead to definite plans. If you set financial objectives and plan for them, you vault ahead of most Americans – at least according to these findings. A written financial plan does not imply or guarantee wealth, of course; nor does it ensure that you will reach your goals. Yet that financial plan does give you an understanding of the distance between your current financial situation (where you are) and where you want to be.

How much planning have you done? Retiring without a financial plan is an enormous risk; retiring with a financial plan that hasn’t been reviewed in several years is also chancy. A relationship with a financial advisor can help to bring you up to date about what you need to do, and provide you with more clarity and confidence when it comes to the financial future.

Mike Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or mike@fassifinancialnetwork.com.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – nfcc.org/wp-content/uploads/2015/04/NFCC_2015_Financial_Literacy_Survey_FINAL.pdf [4/15]

 

 

How Could a Fed Rate Hike Affect Retirees

How Could a Fed Rate Hike Affect Retirees?

As the central bank starts tightening, some positives & negatives may emerge.

 

Provided by Mike Fassi

  

Economists widely expect the Federal Reserve to raise interest  rates this month. Additional incremental rate hikes may follow in 2016. If you are retired (or soon will be), you will want to consider what gradually higher interest rates could mean for you financially.

Some of the effects are already being felt. Glancing at Freddie Mac’s weekly surveys, average interest rates for fixed-rate home loans climbed about 0.2% between October 8 and December 10 on assumptions of the federal funds rate rising. (Bond market behavior influences these rates as much as the yield on the 10-year Treasury.) Interest rates on other types of home loans increased less in that interval, but any upward move by the Fed could quickly send them north.1

As the price of money rises, it will cost more to use a credit card. When the federal funds rate rises, credit card issuers quickly adjust their interest rates upward. Retirees who routinely pay down the whole balance on their cards every month will be less impacted than those who let outstanding balances linger.2

Yields on fixed-rate investments are poised to improve. Risk-averse retirees may finally start to see appreciable rewards on such vehicles with a higher federal funds rate, especially if the Fed makes two or three more upward moves in 2016.

Retirees may see a great chance to exploit a laddered approach with fixed-income investments. By spreading their money over a few such investments with overlapping maturity dates, they can take advantage of the resulting liquidity and flexibility and reinvest money at the end of a maturity term into a subsequent fixed-income vehicle with a higher interest rate.

Long-term bond values are poised to fall. This is a basic outcome of a rising interest rate environment, and warnings about major oncoming losses in the bond market have been sounded for years. Retirees with an eye on the Barclays U.S. Aggregate Bond Index can take heart in the knowledge that historically, deteriorations in bond prices have been more than offset by the Index’s increases in yield.3

Bond yields, on the other hand, are poised to rise. Total returns on the Barclays U.S. Aggregate Bond Index have indeed diminished this year, although they are not yet in the red. In 2014, the index’s total return was 5.97%; as of December 9, it was 0.95% YTD. That could improve in the near term, for the index will be adding newer bonds over time with presumably higher yields to replace maturing bonds, thereby improving the average yield of the overall index.3,4

  

How will Wall Street react? One school of thought believes that higher rates will amount to a powerful headwind; another says the market has largely priced a December rate hike in, and will handle successive adjustments calmly. Opinions of equity strategists and fund managers meeting for USA TODAY’s December roundtable varied greatly – some saw the S&P 500 making no progress at all in 2016, others felt that a double-digit advance could happen.5

Bearish analysts note two factors that may slow the bulls to a trot. Rising borrowing costs for public companies could cut into their profits and thereby hurt their share prices, and if Treasury yields grow more attractive, appetite for risk might lessen. Bullish analysts are countering with the opinion that rising rates go hand in hand with an improving economy, one characterized by better cash flows, higher revenues, and higher corporate profits. As long as the Fed refrains from tightening too abruptly, they argue, 2016 could be a good year on Wall Street.2,5,6

A federal funds increase may affect retirees in other ways. Those retirees who are paying off private student loans (either those of their children, or their own) will contend with higher interest rates on those loans, as those rates ride on movements in the prime rate. The same goes for auto loans and other forms of short-term consumer borrowing.2

They may also affect your community, the goods and services going into and out of it, and your travel plans. Retirees that invest conservatively with a large cash position may have more money to spend, translating to an economic bump in retiree-heavy towns and regions. Imports to the U.S. will become cheaper. Also, retirees may find overseas travel less costly in the near future. Once Treasuries yield more, more foreign investment dollars will start to pour into the U.S.; that makes for a stronger dollar, to the benefit of Americans vacationing abroad.2,6

So, there are upsides & downsides to higher interest rates for  retirees. One thing is for certain: interest rates cannot stay at historic lows forever. When the Fed adjusts them upward, investors and economists across the world will react – and then move on.

Mike Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or mike@fassifinancialnetwork.com.

 

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – freddiemac.com/pmms/archive.html [12/10/15]

2 – thefiscaltimes.com/2015/11/09/10-Ways-Fed-s-Looming-Rate-Hike-Touches-You [11/9/15]

3 – marketwatch.com/story/how-your-bond-portfolio-can-survive-higher-rates-2015-04-23 [4/23/15]

4 – news.morningstar.com/index/indexReturn.html [12/10/15]

5 – usatoday.com/story/money/markets/2015/12/05/all-nothing-2016-top-stock-pros-say/76802904/ [12/5/15]

6 – theconversation.com/fed-interest-rate-hike-may-have-less-of-an-impact-than-you-think-51970 [12/9/15]

Wise Decisions with Retirement in Mind

Wise Decisions with Retirement in Mind

Certain financial & lifestyle choices may lead you toward a better future.

 

Provided by Mike Fassi

  

Some retirees succeed at realizing the life they want, others don’t. Fate aside, it isn’t merely a matter of stock market performance or investment selection that makes the difference. There are certain dos and don’ts – some less apparent than others – that tend to encourage retirement happiness and comfort.

Retire financially literate. Some retirees don’t know how much they don’t know. They end their careers with inadequate financial knowledge, and yet feel that they can plan retirement on their own. They mistake retirement income planning for the whole of retirement planning, and gloss over longevity risk, risks to their estate, and potential health care expenses. The more you know, the more your retirement readiness improves.

Retire knowing that you’ll have to assume some risk. Growth investing is increasingly seen as a necessity for retirees who want to keep ahead of inflation.

According to data and research compiled by the Social Security Administration, the average 65-year-old man will live to be 84 and the average 65-year-old woman will live to be 86. So that’s a 20-year retirement. The SSA also notes that roughly a quarter of today’s 65-year-olds will live past 90, and about 10% of them will live beyond age 95.1

If these seniors rely on fixed-income investments for the balance of their lives, they may end up with reduced retirement income potential, and in turn a reduced standard of living. Look at the Rule of 72: if an investment is yielding 2%, it will take about 36 years to double your money. Yes, interest rates are rising – but inflation should rise with them.2

A generation ago, mature Americans were urged to gradually shift their portfolio assets out of stocks and into fixed-income investments. One old rule of thumb was to subtract your age from 100, with the resulting number being the percentage of your portfolio you should assign to equities.3

Today, retirees and retirement planners are reconsidering this thinking. As the Wall Street Journal reported recently, one study of retirement money and longevity risk concluded that retirement funds may last longer if a retiree gradually increases the stock allocation within a portfolio about 1% per year from an initial range of between 20-50% to between 40-80%. The concept here is that a retiree’s stock allocation should be lowest when their retirement nest egg is largest.3

Retire debt-free, or close to debt-free. Who wants to retire with 10 years of mortgage payments ahead or a couple of car loans to pay off? Even if your retirement savings are substantial, what will big debts do to your retirement morale and the possibilities on your retirement horizon? On that note, refrain from loaning money to family members and friends who seem quite capable of standing on their own two feet.

If the thought of using some of your retirement money to pay outstanding debts hits you, set that thought aside. You have dedicated that money to your future, not to bill paying. On second or third thought, other sources for the cash may be apparent.

Retire with purpose. There’s a difference between retiring and quitting. Some people can’t wait to quit their job at 62 or 65 – their work is “killing” them, or boring them senseless. If only they could escape and just relax and do nothing for a few years – wouldn’t that be a nice reward? Relaxation can lead to inertia, however – and inertia can lead to restlessness, even depression. You want to retire to a dream, not away from a problem.

A retirement dream can become even more captivating when it is shared. Spouses who retire with a shared dream or with utmost respect for each other’s dreams are in a good place.

The bottom line? Retirees who know what they want to do – and go out and do it – are contributing to their mental health and possibly their physical health. If they do something that is not only vital to them but important to others, their community can benefit as well.

    

Retire healthy. Smoking, drinking, overeating, a dearth of physical activity – all these can take a toll on your capacity to live fully and enjoy retirement. It is never “too late” to quit smoking, quit drinking or slim down.

Retire in a community where you feel at home. It could be where you live now; it could be a place hundreds or thousands of miles away where the scenery and people are uplifting. It could be the place where your children live. If you find yourself lonely in retirement, then “find your tribe” – look for ways to connect with people who share your experiences, interests and passions, and who encourage you and welcome you. This social interaction is one of the great intangible retirement benefits.

 

Mike Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or mike@fassifinancialnetwork.com.

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – ssa.gov/planners/lifeexpectancy.htm [2/6/14]

2 – investopedia.com/terms/r/ruleof72.asp [2/6/14]

3 – tinyurl.com/m8akefj [2/3/14]

Should You Always Withdraw from IRAs Last

SHOULD YOU ALWAYS WITHDRAW FROM IRAs LAST?

 

Conventional wisdom says yes, but there are exceptions.

 

Shouldn’t you delay IRA distributions for as long as you can? According to conventional retirement planning wisdom, you should structure your retirement withdrawals so that money comes out of your taxable accounts first, then your tax-deferred accounts, and then finally your tax-free accounts. Roughly speaking, that means withdrawing income from investment funds, CDs, money market accounts and bank accounts before taking a dime from your IRAs.

The wisdom behind this is easy to discern. By postponing withdrawals from a traditional IRA and/or Roth IRA for as long as possible, you give the assets in those tax-advantaged accounts even more time to grow. You have to take required minimum distributions from a traditional IRA after age 70½, of course; if you have a Roth IRA, RMD rules are inapplicable while you are alive.1

Or should you disregard that approach? Under certain circumstances, it may be a good idea to tap your IRA(s) in the early stages of retirement. While it may seem unconventional, making IRA withdrawals in your 60s might potentially help you enhance your wealth in the long term.

How, exactly? If you start drawing down the assets in your traditional IRA before age 70½, your RMDs could eventually be smaller than they would be otherwise. Smaller RMDs mean less taxable income. Not only that, a smaller RMD might keep you in a lower income tax bracket; welcome relief if you have a large traditional IRA.

Can exemptions & deductions shelter the income? A study from Rider University in New Jersey sees merit in this unconventional strategy. In the big picture, the researchers at Rider feel it may help seniors to level out annoying fluctuations in adjusted gross income and taxable income over the long run.2

The key: sheltering some or all of the early IRA withdrawals with IRS standard deductions and personal exemptions. As an example, take a married couple in which both spouses are at least age 65. The spouses have done their homework and determined that their IRS deductions and exemptions will add up to (at least) $21,800 for 2012. If their taxable income before any IRA withdrawal would fall below $21,800, they could use “withdrawals from tax-deferred IRAs to create tax-free income,” according to Alan Sumutka, one of the researchers behind the Rider study.2

The Rider study compared 15 model scenarios. Each one used a hypothetical married couple (both 65-year-olds) retiring in 2013 with $2 million in investable assets, $80,000 in current living expenses and $30,000 arriving from Social Security. Within the mock $2 million portfolio, 70% of the assets were held in traditional IRAs, 20% in taxable accounts and the rest in Roth IRAs. The portfolio returned a steady 6% annually (again, these were model scenarios).2

What was the most tax-efficient model scenario in the bunch? It played out as follows: from age 65 to age 70, the couple drew down their traditional IRAs right to the limit of their combined deductions and exemptions. Then, they reached into their taxable accounts for the balance of the money needed to meet that $80,000 in expenses, incurring taxes of up to 15% on long-term gains. They didn’t tap their Roth IRAs.2

After age 70½, they altered their approach: they took required distributions from their traditional IRAs, withdrew money from taxable accounts until those were exhausted, and then they turned to Roth accounts with the remaining balances on the traditional IRAs representing the last of their retirement savings.2

After all that, the hypothetical couple still had $1.61 million in their portfolio at age 95. The conventional withdrawal strategy (taxable accounts first, then tax-deferred accounts, then tax-free accounts) left them with just $1.17 million at that age, and it also led to them spending 23 years in the 25% tax bracket.2

The Rider study found that this approach was ill-suited to very large portfolios (ones with assets above $8 million) and portfolios with roughly 50% in taxable assets. It was also a bad fit for couples with sizable taxable pensions.2

It is worthwhile to review your retirement assumptions. As the American vision of retirement has changed in the last generation, so have retirement planning precepts. The recession and the financial pressures facing the baby boomers have upended some of the conventional thinking. A talk with a retirement planner may lead you toward some new financial options and some good ideas worth exploring.

 

Mike Fassi, CLU, CHFC  is a Representative with Centaurus Financial Inc. and may be reached at Fassi Financial, 970-416-0088 or mike@fassifinancialnetwork.com.

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. Marketing Library.Net Inc. is not affiliated with any broker or brokerage firm that may be providing this information to you. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is not a solicitation or a recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-Required-Minimum-Distributions#3 [8/2/12]

2 – money.msn.com/retirement-plan/when-should-you-tap-your-iras [11/16/12]

Step-Up CDs

Step-Up CDs

They allow you to take advantage of rising interest rates.

 

Provided by Mike Fassi

 

When interest rates start to climb, will these be the CDs to own? Step-up certificates of deposit (also called rising-rate CDs) are fixed-income investments with a bit of wiggle room. When you have a CD with a step-up provision, you have a chance to exchange the initial yield for a better one as interest rates rise. Given currently underwhelming long-term CD yields, what CD owner wouldn’t want that option in the future?

How does the step-up work? As an example, let’s say you buy a 48-month rising-rate CD today offering an initial yield of 0.6%. Let’s say that two years from now, the interest rate on that CD moves north to 1.6%. The step-up arrangement allows you to get the 1.6% yield.

This is different from a traditional laddered CD strategy, in which you buy multiple CDs of varying maturities in an attempt to get higher rates of return with liquidity. Interest rates are so low right now that CD laddering has all but disappeared, and that probably won’t change in the near future. Step-ups give you a chance at a better long-term return with the same CD.

You may have to notify the bank to get a step-up. On some of these CDs, the step-up kicks in at predetermined intervals or when interest rates move up. Other banks and credit unions allow you to voluntarily request the step-up; these variants are sometimes called bump-up CDs. In both cases, there is usually a restriction that you are only allowed so many step-ups during a specific interval or during the term of the CD.1

If you believe CD rates will rise frequently in the near future, then an automatic step-up may make a lot of sense to you. On the other hand, if you only get one automatic step-up per eight months or year, you may grow frustrated at not getting them frequently enough. If you only get one step-up per CD term and you can choose when you want it, it might be better to wait than to leap at the first opportunity.

A CD for inflationary times. Conservative investors who fear being stuck with subpar yields in the near future might want to take a close look at step-up CDs. They do offer the potential for CD investors to keep pace if inflation accelerates.

 

This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources; however we make no representation as to its completeness or accuracy. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

 

Citations.

1 – foxbusiness.com/personal-finance/2011/04/11/rising-rate-cds-flexibility-price/ [4/11/11]