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Janice France-Pettit: Some options for investors to explore

Union Bank

Posted: March 19, 2010 10:54 p.m.
Updated: March 20, 2010 4:55 a.m.
Diversifying your portfolio through other investments and savings vehicles, such as CDs or gold, may help guard your money against drastic economic changes such as a stock market drop.

Following are a few alternative investment and savings options you might consider when planning your portfolio.

Time deposit
A certificate of deposit is considered a time investment because the guaranteed interest rate you earn is based on a set amount of time. Essentially, you are agreeing to invest your funds for a specific period of time and in return the bank guarantees your interest rate and annual percentage yield upfront.

If you withdraw funds before the CD reaches maturity, then you will likely be subject to penalties or fees. There are several types of CDs from which to choose, so consult with your financial adviser to learn which one may be right for you.

Market-linked CD
Similar to traditional CDs, market-linked CDs (MLCDs) are FDIC-insured and principal protected when held to maturity.

Unlike a traditional CD, the return on an MLCD is based on the performance of a market measure rather than a fixed coupon. A MLCD generally allows the investor to participate in equity, commodity or currency market performance with the safety and security of a traditional CD when held to maturity.

Many MLCDs also have a minimum return at maturity that is paid regardless of the market performance. The minimum deposit for a MLCD is typically $4,000, and the investment length can range from one to 10 years.

"The market-linked CD enables investors to gain exposure to a variety of market measures, thereby diversifying their portfolios with a potential for higher returns than traditional CDs while protecting their initial investment when the MLCD is held to maturity," said Bradley Shairson, senior vice president and head of Union Bank's global foreign exchange and derivatives department.

Investing in gold may be a solid financial choice because it counters the inflation of the dollar. Gold prices usually move in the opposite direction of the value of the dollar, so when the value of the dollar goes down, the prices of gold rise, and vice versa.

People generally invest in gold in two ways, either directly by purchasing gold coins or jewelry or indirectly by either purchasing gold exchange-traded funds, or by purchasing stock in a gold producer.

If you are considering selling your gold items, you should consult with an appraiser to estimate the value of any heirloom pieces. Keep in mind that you may also invest in other metals such as silver and platinum.

Real estate
Real estate is one asset likely to keep pace with inflation. Although putting your funds into real estate may seem risky given the challenging economic environment, the timing may be right. With mortgage rates low and home prices continuing to drop, it may be a smart option to invest in real estate if you can keep it for the long term.

Even purchasing a second home may provide a solid source of additional rental income. Consider consulting a financial adviser before you invest in real estate.

Researching alternate investment choices may help you make smarter decisions when it comes to investing your money, and investing in different financial programs may help protect your funds and give you more financial freedom for the future.

The foregoing article is intended to provide general information about filing tax returns and is not considered financial or tax advice from Union Bank. Please consult your financial or tax adviser.

Janice France-Pettit is a senior vice president and regional manager for Union Bank, overseeing the Simi Valley, San Fernando Valley and Antelope Valley regions. Her column reflects her own opinion and not necessarily that of The Signal.


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