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Economists thought inflation would pick up. Guess again.

Offered by T. Lloyd Worth

The Consumer Price Index has advanced less than 2% in a year. Mortgage rates are still near historic lows. Low inflation remains even in this economic recovery, which may make the Federal Reserve reconsider its near-term timeline for normalizing monetary policy.¹

Interest rates on certificates of deposit? They are rising, but hardly as fast as savers would like.

Currently, CD investors are paying an opportunity cost. Consider the recent performance of the S&P 500. During the first half of 2017, the equity benchmark advanced 8.2%, and may end 2017 with a sizable double-digit gain.²

The average annual percentage yield on a 2-year CD was slightly above 1.5% in mid-July; 12-month inflation was running at 1.6% in June. Interest rates on 3-year CDs are currently topping out around 2.00%, and the best rates on 5-year CDs are still under 2.5%. Conservative investors who feel uneasy about placing their money in stocks have little to celebrate given these low rates of return.¹ ³

CD investing is about more than the return. It can deliver liquidity, protect principal, add diversification to a portfolio, and it can be a welcome refuge for assets if stocks enter a bear market.⁴ In case of bank failure, the Federal Deposit Insurance Corporation can insure as much as $250,000 of the value of a CD (the $250,000 insurance limit is per depositor, not per investment or account type).
What is a CD investor looking for today? Downside protection? Principal protection? Liquidity? A CD investment is structured to offer all that in any stock market climate. Using a CD to invest for growth, however, looks like a highly questionable choice today. Talk to your financial advisor to determine the strategy that best fits your needs.

T. Lloyd Worth may be reached at:
(303) 558-0214
or by e-mail at:

The Standard & Poor’s 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. The Standard & Poor’s 500 Index is an unmanaged index which cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.Securities and Advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC ( /
¹ [7/14/17]
² [6/30/17]
³ [7/17/17]
⁴ [5/8/17]

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Worth Financial Partners