Q. What is the return I could expect from Obama's MyRA?
A. Based on what Mr. Obama outlined, the myRA will be backed by a security that is just like a savings bond, with variable (and better) returns just like the G Fund - a government securities investment fund in the Federal employees' Thrift Savings Plan.
You will never lose money, and you pay no fee on the account.
But don't expect spectacular returns, risk and return usually go together.
For example, in 2012, the G Fund's return (the latest year with its numbers available) was 1.47%. Its annualized return from 2003 to 2012 was 3.6%. If you factor in inflation rate which was 2.08% in 2012, you actually lose purchasing power.
Nevertheless, given myRA's limit is only $15,000, it appears to be a good place for people to put emergency fund, giving bank's checking or saving accounts' interest rates are negligible.
A. Based on what Mr. Obama outlined, the myRA will be backed by a security that is just like a savings bond, with variable (and better) returns just like the G Fund - a government securities investment fund in the Federal employees' Thrift Savings Plan.
You will never lose money, and you pay no fee on the account.
But don't expect spectacular returns, risk and return usually go together.
For example, in 2012, the G Fund's return (the latest year with its numbers available) was 1.47%. Its annualized return from 2003 to 2012 was 3.6%. If you factor in inflation rate which was 2.08% in 2012, you actually lose purchasing power.
Nevertheless, given myRA's limit is only $15,000, it appears to be a good place for people to put emergency fund, giving bank's checking or saving accounts' interest rates are negligible.
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