My personal experience with Everbank MarketSafe CD

First of all, I stick to my gun that I strongly believe there will be a huge relief rally in the next few days. Since I'm so convinced about it, I would like to make a speculative trade. I opened some positions last night for SSO (2 times S&P 500 index) to bet for this rally. Looks like my positions got filled today. We will see the results in days. Now back to my today's topic.

Exactly 5 years ago, I bought a CD called Marketsafe issued by Everbank. There are many types of Marketsafe CDs from Everbank. The one I bought was about gold. I assume you know what a CD means. Generally with CDs from other banks, you get a fixed interest for a fixed period of time. At its maturity, you get all your principal  back. Of course, the interest is usually not very competitive due to its principal guarantee.  Everbank is very creative. It issues new kinds of CDs, which will guarantee your principal but without a fixed interest. The one I had was to return all my principal at its maturity in 5 years but I did not know how much interest I would get, if any. This is because its interest was tied to a gold index. I would get more if the gold index went high but I could get nothing if the index was flat or even went down on the CD’s maturity date. In other words, the only risk I had was the opportunity cost (missing the interest money).

Five years ago, I was not as savvy as I’m today in terms of investment in general and gold in particular. But I still figured that gold should be doing fine and would likely go up 5 years later. So I took the opportunity risk (did I sound like an economist?). My CD matured on Jul 25 and I just checked the result: I got close to 60% of interest payment in addition to my principal. So in average my annual yield was about 12% in the past 5 years with this CD. Not something really exciting but I can say you cannot expect much more and it is a fantastic profit margin for a boring CD regardless how you compare it with others.

I wanted to share this with you since I mentioned Everbank and its CDs previously but I hadn’t got actual first hand experience yet. So here it is. I know Everbank has many similar innovative CD products there. If you are interested, you can check yourself in their homepage. Will I buy new CDs now? Not likely. I’m confident I can do much better now than 5 years ago. If you have a lot of cash which is only sitting in your bank and you cannot stomach any volatility via other investment or trading, you should check Everbank’s CDs. I think you will be rewarded much better than other CDs. It is especially attractive nowadays given the near zero interest from the bank. The opportunity risk is much less now and I don’t expect this will change any time soon.