www.privateairny.com Private Air | Spring 2021
37
WEALTH MANAGEMENT
SAVERS CAN
EARN MORE,
SAFELY
By: Ken Nuss
Three alternatives to low-rate CDs,
Treasuries, and Money Market Accounts.
I
nterest rates on most safe
investments, such as savings
accounts, bank CDs, money
market accounts, and Treasury
bonds, are super low these days.
When you factor in even a tiny bit
of inflation, you're losing money in
them, even before you pay income
tax.
What are the best alternatives for
people who want to get a higher
guaranteed rate of interest?
It's a big issue for people in their
late 50s and older who don't want to
risk too much in the stock market
and for retirees who rely on savings
for income. Here are three good
alternatives, all classified as fixed
annuities but different from one
another.
Fixed-rate annuities pay higher
guaranteed rates.
Also called a multi-year guaranteed
annuity, a fixed-rate annuity acts a
lot like a bank CD. Both guarantee
a rate of interest for a set period. But
there are some key differences.
One is that fixed-rate annuities pay
much higher rates than comparable
CDs today. As of early February
2021, you can earn up to 3.00%
a year on a five-year fixed-rate
annuity and up to 2.40% on a
three-year contract, according to
AnnuityAdvantage's online rate
database. e top rate for a five-year
CD is 1.00% and 0.85% for a three-
year CD, according to Bankrate.
Annuity rates have held up
remarkably well so far but are
declining. If you're interested in a
fixed annuity, by acting now, you'll
probably get a better rate today than
next month or beyond.
Another difference is that with an
annuity, interest is tax-deferred until
you withdraw it. You can either
