Alternative: The Smart Investor’s Strategy for Extra Money in their Checking Account

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Alternative: The Smart Investor’s Strategy for Extra Money in their Checking Account

From helping many smart investor’s over the years, understanding how smart and successful investors make decisions is very clear. One of the many decisions they make is how they handle extra money in their checking accounts, and elsewhere. They don’t spend it and they don’t keep it in the checking account; they find a safe way to turn it into more money.  Our clients typically choose the Xceed Steady Growth Strategy, I’ll explain how it works. Well you’re all familiar with certificate of deposits (CD’s) right? This strategy uses a certificate of deposit that is tied to an index. The most attractive characteristic of this strategy is that it offers a chance to participate in gains while protecting your principal if the stock market goes down. This provides our investors with the peace of mind and safety of a CD while getting the growth of the index gains. You no longer have to worrying about making a mere $250 in your checking account for the year (with a $50,000 balance). You can now capture solid growth, with the safety and peace of mind of a CD.

If you have extra cash sitting around, most banks and financial institutions will tell you to put your money in a CD. The challenge is that CD rates are at or near their lows. Today’s 4-year CD rate is around 2%1.  The other problem is that the majority of financial advisors exclusively use mutual funds which do not guarantee safety and usually have excessive hidden fees.

What is the Xceed Steady Growth Strategy?

With the Xceed Steady Growth Strategy, your money is linked to the performance of an index. This index could be the S&P 500 Index, a bond index, or combination of these and several other investment vehicles. Because we’ve been successfully doing this for years, we’ve identified our favorites that have provided outstanding performance.

How does it work?

Basically, this strategy is a CD whose return is linked to an index. The CD comes with FDIC Insurance. Most CD’s offer a fixed rate that is typically low with a set term.  However, with our strategy, the return is based on how the index performs. The good news is that the strategy’s historical performance is between 6.37% and 8.60%. This is the kind of investment that protects your principle in down years (like the early 2000’s and 2008), while still allowing you to participate in gains during the up years. You can start to understand why Wall Street firms use this strategy with their money.   It’s no surprise that they typically make money regardless of the market’s return.

What’s the risk with this strategy?

Similar to standard CDs, this strategy comes with FDIC insurance and you are guaranteed to get your principal back at maturity. It is also possible that the index will earn zero interest, which is different than a standard CD. Lastly, the interest credits earned will be accrued and paid when the CD matures. With that being said, you might be required to include the accrued interest on your income taxes even if you were not paid the interest until the CD matures. However, this can be avoided in tax-deferred retirement accounts which is what most people do.

Is the Xceed Steady Growth Strategy Right for You?

It is likely an ideal fit for you if:

  • You are smart about risk – when the market goes down you don’t lose any money.
  • You want FDIC insurance – it has that.
  • You want the potential for very strong gains – when the index goes up, so does your investment.

Again, this strategy utilizes some of the same investment philosophies used by the largest institutional investors seeking positive returns in both good and bad market environments.

Want to find out if this investment is right for you?  Simply contact us for details.



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Disclaimer: This information is provided for educational purposes only. No statement contained herein shall constitute tax, legal or investment advice. This is not a solicitation for the purchase of any particular product. The information is not intended to be used as the sole basis for financial decisions, nor should it be construed as guidance designed to meet the particular needs of an individual’s situation. All individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation. Investing involves risk, including the potential loss of principal amount invested. Insurance product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company and are not FDIC insured. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives.

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