Earn a better interest savings rate: Invest in a Providence Annuity at 5.00%.

Reduce risk and still earn significant income.

Moving some or all of your IRA, retirement or longer-term savings monies to a money market or a CD will earn you enough money to buy, if you are lucky, a tank of gasoline for your car, but not much more than that.

Bank and money market accounts are acceptable tools for reducing risk in your portfolio. However, if you want some real income or are looking simply to stash some cash away for the future, you are better off elsewhere.

Providence Association Annuity and IRA Savings Certificates, for instance, are currently earning 5.00%. During my three years at Providence, our clients have not earned an interest rate less than 4.50%. Indeed, Providence certificates have a minimum guaranteed rate of interest of 3.00%.

What is more, Annuity Certificate and IRA savings are tax-deferred thereby significantly increasing growth. Every penny in vested in Providence accounts works for the client.

By contrast, USA Today (September 4, 2009) reports that the average taxable money market fund yields 0.06%. That is only $6 a year. Even the highest taxable money market rate will not earn you more than $80 per year. At these rates, it will take you over a century to double your money.

CD’s are not much better: The best reported one year CD rate is only 2.05%, while the best reported two year rate is 2.50% (Tennessee Commerce Bank).

So what should you do? Well, let us look at the reasons for using an interest bearing account and see where logic takes us.

Asset Allocation. The well-known losses that many investors have suffered in the stock and most bond markets establishes that some portion of everyone’s investment should be in interest-bearing instruments. Providence members invested in the accumulation phases of our annuities have earned between 4.50% and 5.0% annually. Providence guarantees both their principal and interest. Rarely, during this time period, could one have found an investment that would have outperformed Providence annuities. So-called fixed annuities provide an excellent hedge against stock market risks and volatility.

Income. Bank interest rates over the last three years blush before Providence’s rates of return, especially when one considers that providence annuities offer tax-deferral.