What are the best ways to earn a safe, solid return on money (say, 4%) since interest rates seem destined to stay very low for a while.
Answers | 2
The amount of money you are looking to save would be a big factor here. If the amount is greater than $25,000, then there are 2 really good options.
1. Cash value life insurance with a return of premium rider. Use the right company and you'll get 4% minimum on your cash PLUS dividends. Purchased as a modified endowment contract, you can put in as much as you want but only buy a very small amount of life insurance (i.e. $10,000) to minimize cost. Thus, you earn 4% minus the cost, which is typically $500 or $600 per year. The cost doesn't really matter though because they guarantee that you'll never get less back than what you put in.
NOTE: I'm describing a VERY specific product. There's only 6 agents in the country that can currently offer it. If your advisor says I'm nuts, it's because they can't offer this contract.
2. Fixed Indexed Annuities: Long term, you'll see 3 to 7 % return on FIA's. These work just like a CD, with a few differences. The difference is that you're not stated an interest rate up front. The interest rate would be dependent on an underlying index, hence the name. They're issued by insurance companies instead of banks and the terms are typically 6 years or more. Oh, and if you're not 59.5 years old, you're penalized for removing your funds for annuities. They're primarily used in retirement accounts but can also be used for non-qualified savings in some scenarios.
I hope this helps.