Q. I have about $50K that I don't need for about 5 years. I don't want to put it in stock market or bond market as both are very risky. However, I am not happy with the CD rate offered by the bank. Is there any other option?
A. For money that you know for sure you will need access to in a few years, safety is #1 concern. So you are prudent not to gamble the money in the stock and bond markets.
While CD or Money Market funds are good candidates, since your time horizon is a little longer than 2-3 years, I think MYGA (multi-year guaranteed annuity) is a potential consideration. Its name includes "annuity", but it is just like a CD, except instead of putting your money into a commercial bank's CD account, you are putting the money into an insurance company's account. As a return, the insurance company gives you the guaranteed rate for that period, and the rate is usually higher than CD rate. Plus, you don't have to pay tax on the interest until you take out the entire principle plus interest over the entire period.
A. For money that you know for sure you will need access to in a few years, safety is #1 concern. So you are prudent not to gamble the money in the stock and bond markets.
While CD or Money Market funds are good candidates, since your time horizon is a little longer than 2-3 years, I think MYGA (multi-year guaranteed annuity) is a potential consideration. Its name includes "annuity", but it is just like a CD, except instead of putting your money into a commercial bank's CD account, you are putting the money into an insurance company's account. As a return, the insurance company gives you the guaranteed rate for that period, and the rate is usually higher than CD rate. Plus, you don't have to pay tax on the interest until you take out the entire principle plus interest over the entire period.
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