There’s
an advertising campaign being run on television by a credit union in the
Maryland area. The essence of the message they’re trying to get across is that
by investing in this institution’s certificates of deposit (CDs), you’d get to
earn interest rates that exceed the national average without any risk – the
ad specifically uses the words risk free,
which I believe is totally preposterous. Why so?
You
might be thinking there’s nothing inaccurate here. CDs are known to be safe,
and therefore have no risk. I can understand that train of thought. However, it’s
not an accurate portrayal of the real situation, because when it comes to
saving/investing your money, risk comes in various forms. So that I don’t get
overly technical, let’s consider risk from just two perspectives.
First of
all, there’s the risk that is associated with the stock market’s movements that
could drop the value of your account at any particular time. You could even end
up losing everything. For most of us, this is what we think about when we hear
the word risk as it relates to our money. That is correct and a very real risk,
I might add. It’s why many people choose to go with CDs in the first place. But
there is more to the risk than that.
The
second type of risk I want to bring to your attention involves a situation
where you could end up losing your money due to impropriety or bad management
of a company that could result in it going out of business. This is also very
real and happens all the time (especially with banks and credit unions), doesn’t
it?
Now
here’s the million dollar question. While it’s true that the first type of risk
associated with fluctuations in the market is avoided when you buy a CD at a
bank or credit union, isn’t the second type of risk still present? While you
are thinking about it, have you ever wondered why in the world banks like to
proudly remind us of the fact that our deposits are insured by the FDIC? Would we
need FDIC protection on something that is “risk free”? Of course not.
As I
have always maintained, people are smart and know exactly what they want for
themselves and their loved ones. The financial industry as a whole owes it to
the hard-working folks who depend on us to make sound decisions to give them
pure, straightforward, factual information without any semantics. Is this too
much to ask?
______________
Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the right questions to help you make a plan that will get you where you want to go. You’ll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If you’re ready, we’re here to help.
Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the right questions to help you make a plan that will get you where you want to go. You’ll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If you’re ready, we’re here to help.