There really is such an account as a market-linked CD.

If you seek the safety of traditional CDs but desire the potential for better returns, the Market-Linked Certificates of Deposit (MLCD) may be for you.

These CDs are FDIC insured up to statutory limits and when held to maturity are 100% principal protected.  They offer a refreshing alternative at a time when the average yield nationally on a typical CD is 1.55%. 

The MLCD is normally 5-7 years in duration and many feel that they could fit well as a part of a buy and hold strategy.

Each year issuing banks distribute interest as earned at a variable rate based on an exposure to potential price appreciation of a basket of 10-12 publically traded stocks or a predetermined equity index.

Here's how they compare:

The Typical CD                                                    

1.  Bank on the corner                                               .

2.  Principal Protected                                     

3.  FDIC Insured                                              

4.  Five years                                                  

5.  Low rate of return but guaranteed 

Market Linked CD  

1.Major Global Banks

2.  Principal Protected  

3.  FDIC Insured   

4.  Six years

5.  Market linked return

Market – Linked CDs have been available in one form or another since in March of 1987.  For years the large multi-national banks from which they came primarily marketed to pension funds, large corporations, and wealthier families’ trusts and the like. 

In more recent times these accounts have become accessible to the general public. Typical customers are baby boomers, retirees, those approaching retirement and others saving for college expenses.  MLCDs may be held in both Roth and traditional IRAs as well as in non-retirement accounts.

To discuss the benefits for your self or someone you know about an account that is FDIC insured, principal protected, can generate annual income while concurrently pursuing growth opportunities, contact Jim Hallisey at jimhallisey@ozarktax.com. Jim Hallisey has served 11 years with Ozark Financial Services helping people prepare to live their hopes, dreams, and goals in retirement. Learn more at  www.jimhallisey.com  or follow him on Facebook.  This article provides general information and is not intended to provide legal or tax advice.