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Hey guys. I wanted your opinion on this product. A representative from BBVA Compass informed me about this product but I wanted to do more research on it.
He told me that the term is 10 years but they usually call the note anywhere from 18-24 months. I never heard of this note before but I was wondering if someone can give me insight on this. If I did take my money out before the 10 year term is up, how much of a penalty would I be looking at? Ideally, I would want access to my money within two or three years but the interest rate is higher than a CD but is a BBB+ rating something I should be concerned about?
Did you look at the prospectus? Right at the beginning it answers your question. This is not a deposit CD where there's a stated (and very modest) penalty for early withdrawal. The prospectus says that Goldman is ultimately not under any obligation to even make a market in the notes. In other words, if they are not interested in buying it back you could be stuck with it until maturity.
Probably what is happening is if the market is climbing they just call them back, then re-issue new notes with a higher level on the stock index. If the market were to drop and cause a suspension of the interest payments, it seems doubtful they would call in the notes... free money to them.
Probably what is happening is if the market is climbing they just call them back, then re-issue new notes with a higher level on the stock index. If the market were to drop and cause a suspension of the interest payments, it seems doubtful they would call in the notes... free money to them.
So true.
Keep in mind you can get nearly 3% on a 10 year T-Bill, you can SELL it whenever you want, and it has a much higher credit rating. It can't be called back like this, well maybe it could in theory but it's highly unlikely.
Keep in mind you can get nearly 3% on a 10 year T-Bill, you can SELL it whenever you want, and it has a much higher credit rating. It can't be called back like this, well maybe it could in theory but it's highly unlikely.
Yes, you can easily buy Treasuries. There's very little difference between the 5-year and 10-year (Treasury) yield today, so if you want something to hold for only a few years, the 5-year will have less interest rate risk.
Then there are all manner of ETFs that trade on the exchanges (the "E" in ETF). One example is Vanguard's intermediate corporate bond, with duration of about 6 years and SEC yield of roughly 4%. Symbol is VCIT.
With a need for the money in 2-3 years all the above recommendations leave you exposed to interest rate risk which could result in you receiving less than the principal investment. Stay with a cd or a 3 year MYGA which pays 3.1%.
With a need for the money in 2-3 years all the above recommendations leave you exposed to interest rate risk which could result in you receiving less than the principal investment. Stay with a cd or a 3 year MYGA which pays 3.1%.
A 5-year Treasury is not terribly risky. To my knowledge there's only been one calendar year (1994) when its total return was negative.
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So true. 
