THE ULTIMATE  SAVINGS ACCOUNT!

      On almost a weekly basis, when I meet a new client, I'm seeing a common trend: Individuals and business owners, who keep their savings, reserve cash, and/or emergency  funds sitting in a (no good!) good old fashioned savings account.

     Don't get me wrong, the concept of saving your money is by no means defunct. However, there are many alternatives to the old school savings account. Many either do not have financial advisors, or their advisors have done a poor job of exposing them to the alternatives that are out there.

     Most people I ask, would tell me the best alternative place to safely accumulate their savings would be a Certificate of Deposit (CD), or Money Market Account. WRONG!

 Let's talk about these two savings vehicles for a moment.

Certificates of Deposit

      A certificate of deposit, otherwise known as a CD, offers a place to save money and is routinely offered by your local bank. A CD is a time deposit, which means the money you place on deposit must remain there for a specified period of time before you can withdraw it. CD's are FDIC Insured up to $100,000.00

     You can purchase a CD with a variety of deposit terms. Most will tie your money up for any where from one month to five years, but some for even longer. The longer term the CD, the more interest the bank will pay you. You are required to keep your money in the CD for the duration of the term you select. This creates an obvious liquidity issue.

     Most CD's offer investment rates in the High 3% to Low 4% range, and all returns are taxable during the year earned. Combine this with low liquidity, and I'm sure you'll agree a CD makes a rather dull investment (savings) choice.

Money Market Accounts

      There are two different types of money market accounts: money market bank accounts, and money market mutual funds.

      Money market bank accounts are much like savings accounts, only with higher yields. Because the money is invested by the bank more aggressively than money held in a savings account, there are usually higher balance requirements, and a limited number of withdrawals per month or quarter. Money market bank accounts are FDIC Insured up to $100,000.00

      Money market mutual funds are available through investment companies. If you do not have an existing brokerage account, you would need to open one first. Usually you would need to open the account with the fund company issuing the particular fund that is of interest to you. Money market mutual funds are not FDIC Insured.

      Both bank account and mutual fund money markets offer investment returns in the Mid to High 4% range. Returns are taxable during the year earned, with the exception of some mutual fund money market accounts which are tax free, but yield investment returns in the Low 3% range.

There's got to be a better alternative to the CD and money market accounts right? Good news....... There is!

The Ultimate Savings Account!

     The ultimate savings account actually deals with two important issues surrounding sound financial planning: Adequate amounts of savings (emergency cash), and adequate amounts of life insurance. PLEASE, don't stop reading! Many want to run for the hills when they hear the word life insurance. The fact is, it is the only form of insurance you are GUARANTEED will one day pay off (think about it!).

     Did you know there is a form of life insurance called Equity Indexed Universal Life (EIUL)? Did you know there are EIUL policies that return 9% to 10% annualy, with ZERO risk to your investment? Did you know that depending on how a EIUL policy is funded it's earnings are ALWAYS tax deferred, and could even be tax free?

     Who among us has enough life insurance? I can count on one hand the number of clients I've consulted who had adequate levels of life insurance. Most people have savings, and emergency funds in bank accounts, CD's, or money market accounts earning somewhere near 4%, and paying annual income tax on the earnings (effectively 3%)! Those savings can be used to purchase badly needed life insurance, and at the same time earn MORE interest, TAX DEFFERED, with no risk to their capital and no liquidity issues.

      You might be asking yourself, " How much life insurance should I have"? If you're like most people who still work, you have dependents that rely on your income. Your goal should be to purchase enough life insurance that should you die, your loved ones can place the paid death benefit  into a guaranteed investment and replace your income on the earned interest. This strategy requires a policy of fifteen to twenty times your income.  Although this may not always be possible, it should definitely be a standing goal.

      My company, Jayco Financial & Insurance Services has researched and back-tested the returns of thousands of Equity Indexed Universal Life (EIUL) policies, and spent countless hours studying and comparing EIUL's  to historical CD, savings, and money market returns. Based on pure earnings and savings qualities alone, the EIUL beats all others, hands down. The life insurance is just an added bonus, and no monthly or annual payments are required!

     Deposits in insurance accounts are insured to $100,000.00, and death benefits are guaranteed up to $250,000.00.  This feature, along with their tax deferred characteristics, much higher returns, and the added bonus life insurance, makes EIUL policies the premier solution for effective cash accumulation. This is where the "Smart Money" keeps their savings.

     If you've never seen a comparison over a ten year period of income taxed savings returns -vs - tax deferred savings returns (even at equivalent rates), or you're not sure if you have enough life insurance, or lastly, you have funds wasting away in an old school savings, CD, or money market account, you owe it to yourself to speak to a financial professional regarding the matter.