Safety & Liquidity

These products are the financial building blocks of any good Financial Map! If you are going to accelerate the pay-off of debt in your portfolio, this is definitely the place you want to start. Savings is the catalyst to any good Financial Plan! Saving takes discipline and the ability to visualize the impact of future actions. When paying off our debt there is an important principle we should be apply; we should invest in things with similar risk to the things we are paying off. It makes no sense to accumulate money in a market correlated investment if we get close to the pay-off date only to find out we still have a few years to go due to the market losses we have recently sustained.


There is nothing "flashy" about the products and services found in this section. They are not likely to produce double digit returns, but predictable returns motivate us to consistently save. These habits can help us to balance our budget, establish an emergency savings, pay-off our debt, and to build a stable financial base. Learning to save and paying off our debt are critical skill sets we must have to become financially self-reliant!

Banking Basics:

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The FDIC: Know the Facts!

"The only real security a man can have in this world is a reserve of knowledge, experience, and ability."

Henry Ford

FDIC is Insolvent  (House FLoor/C-SPAN)

Washington Mutual Taken Over by Chase

Dan Burton asks House how FDIC can raise deposit insurance thresholds when they are telling the House they are insolvent.

​JP Morgan Chase buys WA Mutual at the last moment. FDIC claims the failure of WA Mutual alone would have bankrupted FDIC!

Compound Interest (Getting interest on your interest)

Albert Einstein said compound interest was the 8th wonder of the world! Compound interest is a very powerful but underutilized tool! In the model, you can see the dramatic difference between simple and compound interest, based on a 12% rate of return or savings rate.

The Rule of 72:

The Rule of 72 will approximate how long it takes your money to double at a given interest rate. Just divide the interest rate (8%) into 72, and it would take approximately 9 yrs. for your money to double!


Even when inflation is low it is generally higher than deposit and savings rates. In order to keep up with inflation we need to put our money to work. In order to outpace inflation, we need to start saving early and we need to systematically eliminate our debt, so add these payments to our retirement "nest egg."

Bank Products and Services:












Certificate of Deposit (CD):

Most checking accounts are non-interest bearing. These accounts help us use our earnings to pay our monthly bills on time.


Savings rates are extremely low currently and those who think we are in a low rate environment may be disappointed. As was stated before, savings rates are going to be flat for a very long time. These accounts can be used to save for Christmas, vacations, furniture, cars, etc...


These accounts usually pay a little higher rate of return than general savings of money market accounts. Most of these accounts require us to commit for a specific term or period of time. The longer the period of time, the higher the interest rate. In addition, if you terminate the CD early, there is an interest penalty based on the term you chose.



There are several different types of annuities! These savings instruments are offered by insurance companies and are sold by some banks! Annuities are a great way to increase your rate of return and improve liquidity, especially with lower interest rates. Annuities today are paying up to 15 times more than general savings accounts and several times what CD's are currently paying.

(SPIA) Single Premium

Immediate Annuity:

Fixed Annuities:

These annuities provide a steady income stream for someone who is looking to invest. a lump sum of money. SPIA's can pay income to one or more parties or a surviving spouse, and the income stream can even be paid out for a specific term 10 yrs, 20 yrs, or for life.

This annuity pays a fixed rate of interest for a specified period of time (5, 10, 20 or 30 yrs), and the interest is generally deferred until you start taking interest payments. Most of the time interest can be deferred until 70 1/2 when the IRS requires we take required minimum distributions during retirement.

Indexed Annuities:

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Variable Annuities

Life Insurance

This type of annuity is linked directly to the market and IS subject to market losses like stocks and mutual funds. These annuities are used sometimes in place of market correlated investments. However, at times, financial representatives may highlight the guaranteed income aspects of these annuities and this is often confused for a fixed interest rate guarantee. This is NOT the case, indexed annuities are subject to market losses and gains, and they DO NOT have guaranteed interest provisions! This type of an annuity is not safe and can be illiquid based on the current market value of the account. If you or someone you know is considering this type of annuity please talk to a professional you trust before signing a contract.


Life insurance can also be used as a solution for long-term savings. To compare different types of life insurance as a viable savings option please contact a trusted financial. professional. Should you have questions about how to best utilize life insurance as a "family bank" or savings option, click on the button below.