SAFE ALTERNATIVES TO BANK C.D. ACCOUNTS

I reported in the Gold River Community Newspaper earlier this year that:  "Yields for safe investments like c.d.s and treasury bills are down."  Smart investors that need safety, tax deferral, and probate avoidance are looking towards traditional fixed annuity savings accounts that feature higher before tax yields; and tax deferral until the money is spent or the owner dies. Current 5 year bank c.d. rates are under 3% with the interest taxed as earned. (Source:  Bank rate .com)
  The bottom line is that there are safe alternatives to traditional accounts that can offer higher yields even if your goal is to take immediate income.

5 year Guaranteed Annuities : These accounts feature a locked in rate for 5 years while the interest unlike a bank c.d. is tax deferred until received by the owner or a beneficiary.
The annuity owner can start spending the interest after 30 days; or defer taking the interest until retirement. Some companies allow a complete refund at any time. Consult your broker for a rate search comparison and advice. 

Indexed Annuities: These feature 2 different interest crediting methods within the same account:  1.) Interest is determined by yearly or monthly changes in an external index; such as the S&P 500.  Unlike a mutual fund; you cannot lose principal if the product is held until the end of a term; usually 7 to 10 years.
              2.) High Guaranteed interest crediting for income purposes only.  Some companies feature guaranteed crediting on a separate income account of as high as 7% compound interest with no fees on the income account at all.  that means a deposit would double for income purposes in as little as 10 years. These accounts charge around 1/2% fee annually on the first account if you surrender or re-invest the money. There is no fee against the income rider account which makes them ideal for IRA or other retirement monies.

Immediate Annuities:  These feature immediate guaranteed income that you cannot outlive; but on the downside are designed for income only and not as flexible as the other accounts above if you need emergency cash.  They often can be used as a vehicle for protection from creditors since you give up control of the principal in exchange for high guaranteed income.

In general, if you want safety, future income from existing assets, tax deferral, and probate avoidance; annuities of all types out perform most safe savings vehicles. This article is not meant to be taken as investment or tax advice and it is recommended that you always consult with an honest and capable planner, insurance broker, as well as your tax advisor or attorney while making financial decisions.