Patriot Federal Credit Union

Smart Investing Tips - Three Ways to Gain an Edge

Tip 1: Getting the Most Return with Certificate Investing
In a confusing economy, it is often difficult to make plans for investing your money. In a stagnant market, with low dividend or interest rates, there are few ways to make the best return on your "safe" savings investments.

One way to consider improving your return is to "ladder" the maturities of certificates that you open. The concept is to have different maturity terms to allow for taking advantage of higher rates (up the ladder for longer maturity terms). Another benefit is that you gain flexibility to reinvest the shorter term certificates if there are increases in the market.

Here is a simple example of how to ladder maturities to gain more return and flexibility. Rates shown are for demonstration purposes, so for current rates, please visit our rates page.

Investment Amount	Length of Maturity	APY*
$1,000	12 months	0.800%
$1,000	24 months	1.150%
$1,000	36 months	1.600%
$1,000	48 months	2.100%
$1,000	60 months	2.450%

$5,000	First 12 Months	1.640% (average)

Why ladder the maturities like the above example? Patriot provides a better return on longer maturities of certificates. To earn the stated percentage yield, you must leave the funds in the certificate for the entire term. If you wanted to use some of the money and pulled it out of a long-term certificate before maturity, you forfeit your earnings. Plus, if the market starts moving up, the shorter term certificates allow you to take advantage of the rising rates.

Tip 2: Take Advantage of "Step-Up" Certificates
Certificates are one of the safest investments for saving for the future. Yet rates have been low for some time that some members want a strategy to make the most return. The longer the term, the better the rate, but what if rates change?

Patriot offers a 48-Month Step-Up Certificate with a top-of-market rate. Selecting to invest in the 48 month Step-up Certificate gives you the option to step-up the dividend rate one time during the initial term of the certificate.

For example, when you opened your certificate the rate was 2.00% APY and a year later it's 3.00% APY, you can opt to "step-up" your rate to 3.00% APY. As in the example of laddering maturities, using a Step-Up Certificate as one of the rungs in your certificate "ladder" provides even more return when you can change up the rate once if rates move up!

Tip 3: Maximizing Your Individual Retirement Account Funds
For every adult, planning for retirement and saving for the future has a long-term horizon. Whatever age you start an Individual Retirement Account (IRA), the key is to maximize the return for as long as possible because the earnings are tax-free. What are some things to consider making the most of your IRA funds?

Consider laddering with longer terms if you are under the age when you can withdraw, age 59 1/2.
Use the benefit of Patriot's 48-Month Step-Up Certificate to allow you to move up a rate during the four-year term.
Revert to shorter term laddering after age 59½ to allow for withdrawals as needed in retirement.
Keep some funds in under 6 or 12-month terms after age 70 ½ to have funds for required distribution withdrawals.

For more about your options, call toll free 888-777-9982 or visit one of our branches.

Catch the spirit of better returns on savings and investments at Patriot!

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