When interest rates rapidly declined due to the COVID-19 pandemic, investors were left with few options when it came to earning interest in a checking or savings account. Today, interest rates are near all-time lows, making bank CDs an unappealing choice. CDs offer little return while being illiquid and locking up your money. So, what are your alternatives?
Paying Down High Interest Debt
The first step is figuring out what the goal is for your money. If your goal is to be debt-free then perhaps paying off a portion of your mortgage, refinancing, or paying off other high interest debt is best.
Fixed Insurance Products
If you are looking for a longer term investment, a fixed insurance product may work for you. These products can closely resemble a bank CD, but can have a higher return than a CD. These products are not FDIC insured, but are backed by the insurance company.
Short-Term & Municipal Bond Funds
Municipal bond funds can be thought of as loans that investors make to local governments, and are used for public works projects. The public entity then pays the investor interest. Municipal bonds can be a great alternative, as the interest paid is often tax-free.
Dividend Paying Stocks
Dividend paying stocks can be an alternative if you are wanting a longer term investment. However, this can be a more risky alternative.
With a slew of options for investors we want to make sure we find the option that is best for you.. With many alternatives to choose from, please schedule a meeting to review what may be most suitable for you by calling 320.222.4236.