Are Equity-Linked CDs Right for You?

Are Equity-Linked CDs Right for You?

Pretty much everyone knows what Certificates of Deposit – affectionately known as CDs – are, so let’s not bore ourselves with another description. However, I’d like to share my thoughts on equity-linked CDs which, although they have been around since the 1980s, seem to be generating a lot of renewed buzz, good or bad.

Let me be crystal clear, right off the bat, though. This discussion is not going to amount to any wholesale declaration of whether these CDs are “good” or “not good.” Such comments don’t fit my mold at all. In fact, my goal here is to expose the ridiculously unprofessional and, quite frankly, shameful spin that surrounds the discussion about these CDs.

Instead of plain vanilla fixed interest, equity-linked CDs tie your interest to the performance of a given stock market index, such as the S&P 500 or DOW, up to a certain predetermined cap. So in a generic sense, if the underlying index does well, you stand to earn a higher return, up to the cap.

Of course, like any normal person would and should expect, there are tons of caveats involved, from exactly how your interest will be calculated to penalties for early withdrawal to maturity periods to taxation and a whole host of others. It therefore makes sense to be sure that before you choose one of these – or any other investment under the sun – you comb the fine print and know for certain that it fits your intended situation. That is where an objective, thorough, thoughtful, and above all honest financial advisor comes in handy.

Now to the point I’m trying to get at. Be extremely skeptical of those so-called know-it-all “experts” who have issued blanket “good” or “bad” judgments on equity-linked CDs, for the simple reason that they haven’t reviewed every one of them. I’m also guessing they probably don’t know you personally, let alone what your investing goals and principles are.

For a classic case that makes this point, contrast an objective review by the Securities and Exchange Commission with Frank Armstrong III’s column in Forbes, where he basically branded every equity-linked CD as “garbage.” I’m hoping you take your investing decisions rather seriously – meaning you give it more thought than any columnist, TV expert, blogger, or other financial “expert” can give you in a five-minute overview.

___________________
It’s your financial future, no one else’s. Be sure to get the best professional advice for your situation. Call us today at   877.656.9111  or visit us on the Web to schedule your no-strings-attached consultation!

Are You Letting Your Financial Advisor Off the Hook?

Are You Letting Your Financial Advisor Off the Hook?

By and large, the way most of us prepare financially for our retirements or our kids’ college

tuition begins and ends with signing up for the “best” program we can find. As a result, we tend, for lack of a better term, to completely ignore what happens in between those years — which is a rather unfortunate mistake.

Of course you want to make sure that whatever you ultimately sign up for looks attractive enough. But it is no secret that, sadly, most financial professionals are experts at presenting powerful, rosy outlooks — either by using unrealistic assumptions, being naive, being genuinely clueless, and sometimes even being flat out disingenuous. And by the way, this is also the case with many so-called media money experts, marketing materials, and plans offered through your job.

So how do you keep from becoming a victim of the proverbial “it sounded really good — had I only known” syndrome? By making annual reviews a must, a without-fail part of your financial plan. I cannot reiterate this strongly enough. Ninety-nine percent of cases of disappointing financial outcomes I have helped folks deal with could have been salvaged if they’d done a simple, thorough review years ago. You see, only the rarest financial plan won’t need some sort of change or adjustment over time. But how are you supposed to know what needs to be changed or adjusted?

Besides knowing exactly where things are, a review will allow you to confirm the validity of your assumptions — and your advisor’s assumptions, too. In fact, if you ask me how you can tell if a financial professional is genuinely superior at his or her work, I’d say at the very top of the list of things is finding one who INSISTS on performing regular annual reviews, come what may, whether things are good or otherwise.

Sure, investing is a long-term venture. No question about that. But what, really, does “long-term” mean? Isn’t it simply an aggregation of what goes on over short-term periods? So, in a nutshell, it is essential that you hold your financial professionals’ feet to the fire — not literally, though — by demanding regular annual reviews.

 ___________________
It’s your financial future, no one else’s. Be sure to get the best professional advice for your situation. Call us today at   877.656.9111  or visit us on the Web to schedule your no-strings-attached consultation!

Why 401(k)s and IRAs Could be Toxic for Social Security Recipients

If you plan on reducing your tax bill during retirement, one of the things you must pay attention to today is where you are investing.  This 2-minute video explains something that most financial advisors either don't know about or don't think is important.

It’s your financial future, no one else’s. Be sure to get the best professional advice for your situation. Call us today at  877.656.9111 or visit us on the Web to schedule your no-strings-attached consultation!