Top 5 Safe Money Places to Keep Your Money
Whether the market is up or down, retirees should realize they no longer have time on their side to recoup should their investment dollars be earning a low or negative return. But where can you park your dollars to keep from losing your principal?
Insured Deposits (Savings, Checking, Money Market)
Insured deposits are bank instruments that ideally credit more interest than any possible account maintenance fees charged. These types of accounts usually feature low yields that are fully taxable, but monies in these instruments are extremely liquid and are FDIC insured, up to a specified limit.
Government Securities (I and EE Bonds)
I and EE bonds are non-marketable securities issued by the U.S. Treasury Department and are purchased or sold by agents authorized by the Treasury Department. These bonds earn interest based on the given rates at the time of issue. Any interest earned is exempt from all state and local income taxes, but it will be taxed at federal income rates at maturity.
Certificate of Deposits (CD’s)
CD’s are bank savings instruments that have a specified maturity date and a given rate of return for that period of time. Interest is deferred until the CD is cashed in or matures. At maturity, any interest earned in a given year will be taxable. If you liquidate a CD prior to the maturity date, there will typically be a penalty for doing so based on the respective bank’s policy.
Fixed Rate Annuities
Similar to a CD, Fixed Rate Annuities have a given rate of return for a specified maturity date. Most fixed rate annuities provide liquidity with the ability to withdraw the interest earned each period without any penalties and without losing a good interest rate. They can also provide guaranteed income for a given period of time or the lifetime of the owner. There are no fees with a fixed rate annuity, but there could be a surrender charge penalty if you withdraw more than the allowable amount.
Fixed Indexed Annuities (FIA)
These are similar to the characteristics of the fixed rate annuities in terms of a minimum guarantee, liquidity options, and guaranteed income. The biggest difference is fixed indexed annuities allow you to link to external stock market indexes to provide the potential to earn higher interest. Basically, you have the opportunity to share in stock market index gains without experiencing index losses.
When comparing these safe money options, it is important to weigh your options. Choosing the right safe vehicle for you is a formula of liquidity versus yield.
For a free consultation to see if your money is safe, contact Integrity Advisory Group today at 813-639-4200
Brought to you by: Integrity Advisory Group; July 20th, 2011
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