High Returns and Low Risk Investments: Consider This

Saving for anything can be difficult. It takes dedication, persistence, and consistency.

Looking Safety and Return?

Many savers have funds that for one reason or another, placing it in the markets would be unsuitable. Maybe they’re saving for a home, an emergency fund, or perhaps they don’t feel comfortable investing in the market at the moment.

Bamboozled by Bank Products

Lots of the Banks or Credit Unions that websites push may have you jump through hoops for their promotional interest rates. If you don’t make 33 debit card purchases each month, have a bunch of direct deposits, or your account balance falls below a certain threshold, not only could you lose the rate you could get dinged with a fee.

Stock Brokers and Financial Advisors

Bankers want you to believe the only place you can get safe products is with their savings checking, CDs, and more. The stockbrokers and financial advisors want you to understand the only place you can receive returns is with securities, which ironically are not secure.

Beating the Banks, Without Market Risk or Lack of Liquidity

What you don’t hear is financial gurus mentioning is something called a Modified Endowment Contract or a MEC. Essentially, a MEC is a life insurance policy that has been intentionally overfunded for using the fixed account as a savings vehicle.

A Chance for Higher Returns

The other option is to link the interest to an external index such as the S&P 500 or Dow, so if the index goes up for the year you may make money, and if the market goes down, you don’t lose money. Indexing is not to replace investing.

What Type of Interest Rate is Possible?

Economist Roger Ibbotson and his team at Zebra Capital management recently did a study on Fixed Indexed Annuities, utilizing similar interest-earning methods to Indexed Modified Endowment contracts and found that uncapped fixed annuities or FIAs would have performed better than bonds on an annualized basis if they had been around for the past 90 years.

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