Why You Should Care About Interest Rates

The Federal Reserve recently announced that it has decided to keep interest rates low—in fact, they’re at an all-time low of 1.46 percent. And it doesn’t look like it will change any time soon, with Chairman Ben Bernanke mentioning that rates may stay low through 2014. This is great news for borrowers, but it means that savers will not only NOT gain interest, but they’ll lose purchasing power because of inflation.

Let me explain. Today, money funds yield on average about 0.03 percent. The best-case scenario for a one-year bank CD is a mere 1.1 percent. If inflation stays at 3 percent, well—it doesn’t take long to realize that money in a CD or in a savings account is losing its value faster than it can grow at these low rates.

In an article in USA Today, Ronald Fatoullah, a New York elder law attorney, said that he sees some seniors who have been pushed into riskier investments, such as stocks. He added, “”I’m personally fearful for older clients to invest in this market,” he says. “It could tank.”

So what do you do with your savings? How can you enable it to grow safely so that it is outgrowing inflation but isn’t in a risky place, such as stocks?

The proper type of annuity can be a vital tool, because it’s guaranteed and stable but still provides the growth necessary to surpass the rate of inflation. Annuities are similar to a company’s pension plan, but it’s an individual, not a company, that provides the initial funds to make future, lifelong payments possible.

There are many different annuities out there so it’s imperative that you select the one that’s right for you and your family. If you’d like more information, I’d be happy to guide you. I have more than 30 years in the industry and an A+ rating with the Better Business Bureau. Contact me at 877-476-5051 to see how your savings can safely and securely beat inflation and keep its purchasing power for your future well being.

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