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How Market-Linked CDs Can Reduce Frustration

How Market-Linked CDs Can Reduce Frustration

August 12, 2020

Have you ever thought to yourself:

I wish I could invest my money that is earning very little, sitting in the bank money market account, in the stock market to try and get a higher rate of return.

I am sure at one time or another that thought has crossed all of our minds.  We all want more growth with no risk to our investment principal. In low interest-rate environments of the past and that are currently here, it frustrates us all to try and answer the question. 

But if I could dream up a vehicle that addressed my wants and at the same time my fears, what would it look like?

First, it would look like my CD at my bank with my principal guaranteed against loss when it matures while being FDIC insured.

Second it would have the potential to grow based on a market index like the S&P 500. 

Does the prosperity of the markets from 2009 to 2019 excite you about investing more aggressively for potentially higher rates of return, or does the decline of 2020 make you to nervous to do anything other than to stay put in a very low interest bearing account.

Market-linked CDs could be an option. 

This type of instrument allows for the opportunity to invest in the market like 2009 to 2019, while also helping to protect against loss of principal if the market declines like early 2020 assuming you hold the CD to maturity. 

So if you are frustrated with little or no interest in your bank, ask The Financial Retirement Group if a market linked CD is right for you.

Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

Brokered CDs
-The Annual Percentage Yield (APY) represents the interest earned through maturity date. Rates are simple interest calculation over 365 day basis. Interest cannot remain on deposit.
-Early redemptions are subject to prevailing market conditions that could result in a loss of principal. Cetera Advisor Networks LLC does not guarantee the term of the CD.
-There are some unique differences between traditional bank CDs and brokered deposits. CDs purchased directly from the bank may face an interest penalty if redeemed prior to maturity.
-Brokered CDs cannot be redeemed back to the institution prior to maturity. Early redemption or liquidation prior to maturity may be an amount less than the original price.