Are CD Rates Too Low?
Are banks bringing you down? Are CD rates less than impressive?
Let’s talk about a great alternative Fixed Multi-Year Guaranteed Annuities.
A multi-year guaranteed annuity is just that. It’s an annuity that will provide a fixed rate of return for an agreed upon number of years. They generally have terms as short as 2 years and as long as 10. Generally, the fixed rates provided by these annuities are higher that fixed rates on bank CD’s.
Now it is important to remember that a bank CD is covered by FDIC guarantees. A fixed annuity is backed by the financial strength of the insurance company that issues the annuity. Always be sure to ask your insurance professional or financial advisor the rating of the insurance company providing your fixed annuity. Insurance companies are also backed by your states guarantee association which will protect your benefit or premium up to a certain amount.
Another advantage to a fixed annuity is tax deferral. With your CD you can expect to pay taxes every year. Fixed Annuities are tax-deferred, you will not have to pay taxes until you decide to withdrawal the money this means that your interest will compound on your full account value for as long as you keep the annuity in force