Ever heard of those special investments that only certain investors can get in on? You know the mysterious ones that make the rich get richer leaving out the little guy. What if I told you there was a way to get the highest guaranteed rate of return, something as high as 12% or more? What’s more exciting is that most of those super wealthy people can’t take advantage of this opportunity. Well I have one of those for you here, and most likely it is exclusive of the wealthy people. I know, sounds too good to be true right? Well you are right, this particular strategy might not be for everyone, but I can assure you that it does apply to most average people. This particular investment is designed for the average American and you are guaranteed the stated rate as your return. Do you want to know what it is? Read on….
Average Americans, are you one of them?
First let’s take a look at the profile of the average American. After all this is who I said this rate of return is available for, right? If you fall into this category you probably have a 401K or some other type of retirement account from their place of employment. You might have a savings account and maybe a certificate of deposit or two. The average American may even have a personal investment account. Most Americans will probably have some debts too. They tend to have some type of mortgage, a car loan, maybe some student loans and unfortunately a few credit cards as well.
Guaranteed rate of return on CDs… Not enough!
So if you are the average American where could you put your money and get a guaranteed rate of return? Most people think of certificates of deposit. These sound great from the guaranteed rate of return side of things. They are usually guaranteed by the bank and backed, which is backed or protected by the government. If you are looking only for the guarantee then it works, but if you are looking for the highest rate guarantee, bad idea. The rates for CD’s are so low you will probably end up losing money because the rate of inflation will can sometimes exceed the rate on your CD leaving you with a decrease in purchasing power. Basically, when your CD matures you can buy less with that dollar than you could before you socked it away. Ouch! Probably not what you were planning.
Guaranteed rate of return on bonds… Not enough!
The second place most people look is at a bond. It’s a better idea, but in a lot of cases you have to have a large sum of cash to get started. Unfortunately, here the rates are not much better, and there is a risk factor. Sure, most likely you will earn the rate stated on the bond, but it’s not a guarantee. You could buy all kinds of different bonds and with that you could to expect to earn a variety of different interest rates. But is it worth the risk. Government bonds are said to be the most secure because they are backed by the federal government. Pretty safe, right? The rates on government bonds tend to be lower than other corporate bonds.
Maybe this is something to look into, but it’s still not the best and certainly not guaranteed. Corporations lose money and go bankrupt all of the time. Guess who loses when that happens? That’s right, the bondholder could lose everything just to get another percent in interest. So where do you put your money then?
Guaranteed rate of return… What’s in your wallet?
Here you go. The average American has over $15,000 in credit card debt according to Nerdwallet.com. Do you know how much this costs you every month? Typically you are paying 12 to 15% on that debt and some are even way higher than that. On a $15,000 total balance at 12 to 15 percent you can expect to pay between $150 and $190 a month in interest, and it just goes up from there. Let’s say you had a thousand dollars to invest. If you put it in a CD you might get 1 or 2% annually, that’s $10-$20 a year. If you invested in a bond you might make 4% (good luck you’ll have to go long term with some risk) and earn $40 a year. If you took that same $1,000 and paid down the balance of your credit card that charges you 12% you would have an extra $120 a year that you would have had to pay otherwise. That’s 10 times the amount of what you could get from a CD.
Sure, you do need to make sure you have a savings for emergency funds, but if you are deciding where to invest some extra money, first look at the rate you are paying on your debts. If the rate on your debts is higher than the rate you feel you could earn on an investment maybe you should consider paying off those debts first guaranteeing you are getting that savings on interest. It has the same effect as a guaranteed rate of return if compared to an investment. If you have some extra savings maybe you should consider the return on your investments, set some SMART goals and get our of debt.
You are probably saying to yourself, “this isn’t an investment!” I know I think that way some times, but when I look at the numbers sometimes it makes way more sense to invest in reducing my debt than it does to put the money somewhere else. We are talking about getting a guaranteed rate here, not a speculative investment. You are guaranteed to save the same percentage you are paying and that adds up. Sure you could invest in the latest hot stock and maybe double your money, but the opposite could happen as well. Just as easily you could cut your investment in half and then you still have that looming debt. Why not start today?