United States treasury securities are generally thought of as the safest investment available.  The only problem with treasuries is that the yield is often low in comparison with the needs of those who need income or to accumulate money for retirement.  As of today, the yield on treasuries with a one year maturity is 1.68%, on a five year maturity, it is 2.81%, and on a ten year note the yield is 3.65%. Safe, but not very exciting.

Where else can you go?  What other options are there with a decent yield and good safety? Insured Certificates of Deposit are safe, because they are insured by FDIC up to $100,000 per account.  Current average rates on Certificates are 3.73% for a one year certificate, and 4.235 for a five year deposit.

There is another option, and it may well be more profitable. Single premium deferred annuities with top rated insurance carriers provide excellent rates of interest and a high degree of safety.  Most states have guarantee funds.  These are mandates that all insurance companies support the policies of any company that gets into financial difficulty. This safety net is generally $100,000 per contract.  In addition, insurance companies have significant reserve requirements, meaning that they must keep reserves of 90-100% of policy values on hand in the form of high quality bonds. No annuity owner has lost value due to the failure on an insurer.
 
Besides the significant benefit of tax deferral, annuities today are offering better rates than either of the safe options cited above.  Today, you can get rtes of 4.25% for one, two or three year annuities.  The rate for five year contracts is 5%. Since interest can be distributed on annuities, they can be a source of monthly income, or can be used for tax deferred accumulation.

For further information, or a list of the best quality fixed annuities, please contact us!