For investors today, there are many alternatives when it comes to protecting and growing their wealth. FDIC-insured investments and asset-backed investing are some of the options. FDIC-insured investments provide security through government backing; whereas asset-backed ones have a chance to generate high returns due to tangible assets.
What is the FDIC?
Federal Deposit Insurance Corporation (FDIC) is a United States government agency that provides deposit insurance in US commercial banks and savings institutions.
Key Features of FDIC Insurance:
1. Coverage Limit: As of 2023, the standard insurance amount is $250,000 per depositor, per insured bank, for each account ownership category.
2. Scope of Coverage: FDIC insurance covers all types of deposits received at an insured bank, including savings accounts, checking accounts, money market deposit accounts, and certificates of deposit (CDs).
3. Security: In the event of a bank failure, the FDIC ensures that depositors receive their insured funds promptly, up to the coverage limit.
While FDIC insurance provides peace of mind by protecting depositor funds, it comes with certain limitations, as they offer lower interest rates compared to other investment options.
What is Asset-Backed Investing?
Asset-backed investing involves putting money into securities or investment vehicles that are backed by tangible assets. These assets can range from real estate properties and loans to receivables and other financial assets.
Types of Asset-Backed Investments:
1. Real Estate: Investing in physical properties or real estate investment trusts (REITs).
2. Asset-Backed Securities: Financial instruments backed by loans, leases, credit card debt, or receivables.
3. Bonds: High-yield bonds that are backed by physical assets such as real estate or other tangible properties.
Compound Real Estate Bonds: A High-Yield Asset-Backed Investment
Among the various asset-backed investment options, compound real estate bonds have emerged as an attractive choice for investors seeking high returns with a measure of security. These bonds are high-yield saving instruments backed by U.S. Treasuries and real assets, offering an impressive 8.5% APY.
Features of Compound Real Estate Bonds:
- Higher Returns: Investors can earn an impressive 8.5% APY on their funds and grow their money aggressively.
- Flexible Withdrawals: Investors can withdraw their funds at any time they want without any penalties or fees.
- Compound Interest: Investors can enjoy the power of compounding, which will create a snowball effect in their earnings or investments.
- Auto-investing: Investors have the option to enable auto-investing, ensuring that funds are automatically deposited into their accounts even if they forget to make a manual deposit.
- Round-ups: Investors can opt for round-ups so that their spare change can automatically be invested in their account and can help in making more money.
Why Choose Asset-Backed Investing Over FDIC Investments?
1. Diversification: Asset-backed investments offer an opportunity to diversify an investment portfolio. By including real estate or other tangible assets, investors can reduce their overall risk.
2. Higher Returns: One of the main attractions of asset-backed investing is the potential for higher returns as FDIC-insured accounts offer lower rates.
3. Inflation Protection: Asset-backed investments, particularly those tied to real estate, can provide a hedge against inflation.
4. Income Generation: Many asset-backed investments generate regular income in the form of rent or interest payments. This can provide a steady cash flow for investors.
Bottom line
An investor has two options whether they can invest in FDIC-insured investment platforms or they can invest in asset-backed investments. However, they can earn more interest in asset-backed investments like Compound real estate bonds, where they can earn a passive income with 8.5% APY and grow their funds exponentially.
