I assumed the point of this product was to buy it in a tax deferred account, then loan against it. You’d have zero risk of a margin call ever happening. Then after you’re dead it’s a guaranteed payoff of the loan. Would be a very very cheap way to convert your tax deferred accounts into tax free liquid cash now.
This is a nice alternative to an annuity. It's actually better since you will get your principle back. You can gift it to someone or use it as a way to finance you retirement and be sure of the regular income for a very long time. You can even put it in your Will.
There's a 10 year interest penalty for early withdrawal. and on the faq[1] it says:<p>> Note that in the case that you withdraw the CD before 10 years, the penalty would reduce the principal value of the CD.<p>Does that mean if they close within 10 years, the FDIC insurance would be below the principal?<p>[1] <a href="https://www.waldenmutual.com/posts/coming-soon-our-100-year-grow-local-cd-sustainable-banking" rel="nofollow noreferrer">https://www.waldenmutual.com/posts/coming-soon-our-100-year-...</a>
> Like most CDs, this one, which has a 4.75% interest rate<p>I am not familiar with CDs, but how can an establishment promise returns of 4.75% for 100 years? That seems exceedingly high. What if there is deflation in 2055 or a recession that sends the rates back to 1-2%?
They are not the only ones doing long term fixed income like this, I wonder what's with the sudden interest in everyone jumping on offering stuff like this.<p>The duration risk is ridiculously high though. Personally, I'd want 15-20% yield for that sort of risk.
Whom is this a good deal for? 1.045^40 is less than 6, so you'd get back a 6x return after like 40 years if you don't touch the money? Even with the full $150k you end up with $1M which hardly seems like anywhere near enough to sustain you in retirement in 2063.
With rates at 5%, duration of a 30y bond: 15y, 50y bond: 18y, 100y bond: 20y.<p>In other words you barely get any duration benefit for a 100y bond over a 50y bond because anything beyond 50y is so heavily discounted it doesn’t matter.<p>There isn’t really any reason to buy that beyond the cool factor.
They’re offering a 100 year CD because they’re betting that the fed rate will remain higher than their current level for…well basically forever (or longer than any of us will live). I think it’s actually a pretty safe bet.<p>If they’re right, this is a terrible way to save your money.
I'd be interested to know their math model expecting a certain percentage to not have a beneficiary exercise it once the original account holder passes away.
I have exactly 0% confidence banks or the United States will exist in 100 years. And I'm thinking there will be 3-7 territories run by trillionaire and/or religious feudal dictators.