This past week the House authored a bill that would change the default TSP allocation for new Fed Hires.
The Smart Savings Act proposes that new hires have contributions automatically invested in an ‘Age Appropriate Target Date Asset Allocation Fund as chosen by the TSP Executive Director’. Translation: Continue reading →
With bond and bank CD rates near zero, investors have been scrounging everywhere they can to find respectable yields (Note, if you’re a Govvie the best place to park cash is the TSP’s G Fund– It gives you returns of long-term bonds with the liquidity of a Money Market Fund. You can’t find a product like this anywhere). Folks without a G Fund generating their current income may resort to chasing yields in complex products like Structured CDs.
A Structured CD allows you to purchase participation in an index (like S&P 500 or DJIA, but it could be any index) up to a participation ‘cap’. Your initial investment value is guaranteed by FDIC insurance (which, per Dodd-Frank, is up to $250,000 per bank/instutution). No downside with huge potential upside? Sounds too good to be true!
Here’s Ten Reasons Structured CDs and Structured Notes Suck: