College Savings Bank Set to Launch New, Equity Based Certificate of Deposit
The InvestorSure CD is currently being considered by both the Montana Family Education Savings Program and the Arizona Family College Savings Program.
By the end of 2007, if approved by Montana and/or Arizona, College Savings Bank will introduce a variable rate certificate of deposit indexed to the Standard and Poors’ 500 Composite Stock Price Index® (S&P 500). The InvestorSure CD for college is being considered by both the Arizona Family College Savings Program (AFCSP) and the Montana Family Education Savings Program (MFESP)*. Both state 529 plans will continue to offer the CollegeSure CD, and may add the InvestorSure CD as another safe, yet competitively priced choice for families interested in saving for a future college education.
Much like the CollegeSure CD, the InvestorSure CD will be offered without fees,
and FDIC insured to at least $100,000. The InvestorSure CD, however, will be indexed
to the S&P 500 and pay a rate of return tied to the rise in this popular market based
index. Unlike an S&P indexed mutual fund, however, the InvestorSure CD from College
Savings Bank will offer a principal guarantee, so should the market decline, or the S&P 500 lose value, deposits in the InvestorSure CD will not suffer principal loss.
To the positive, investors for the introductory offering of the InvestorSure CD will receive up to 100% of the average increase in the S&P 500 from purchase date through maturity. The time to maturity will be 5 years with the option of rolling the money, at maturity, into another InvestorSure CD, CollegeSure CD, Accumulator Account or another 529 offering.
“College Savings Bank, through the CollegeSure CD has become synonymous with safety and responsibility when saving for a child’s college education,” said Bruce Marks, Director of the MFESP. “While the InvestorSure CD will provide another choice for families, it is a safe choice none the less and one that will protect their college savings nest egg.”
2007 is College Savings Bank’s twentieth year of business, and the InvestorSure
CD is only the second saving for college product offered by the Bank.
“We believe the CollegeSure CD, our flagship product over the last twenty years,
is an ideal saving for college vehicle. It is indexed to the year-over-year increase
in college costs, and in-as-such, serves as a pre-paid option for parents. It will
remain a viable offering from College Savings Bank that is unique in the market-
place,” explains Gilbert S. Johnson, president and CEO of College Savings Bank.
“The introduction of the InvestorSure CD is the Bank’s acknowledgement that
there are different types of investors. While some may want to keep pace with col-
lege costs through the principal protected CollegeSure CD, othetry and outpace college inflation with the InvestorSure CD.”
The CollegeSure CD will continue to offer an annual 2 percent floor rate, while
the InvestorSure CD will be sold with a 0 percent floor. While both products are
generally labeled conservative, experts agree that the InvestorSure CD may offer
more risk - and potentially more reward.
“The InvestorSure CD has an unlimited upside,” says Gilbert S. Johnson. “Investor fortunes are in lock step with the market. If the market reaches new highs, the product will generate a considerable return. Should the market decline, principal protection creates a nice alternative to a market based index fund that runs the risk of loss.”
“The CollegeSure CD is tried and true,” suggests Mary Marton, AVP and college savings adviser of College Savings Bank. “It has been around for twenty years, and will likely be around twenty more, offering a safe means to prepay college. The InvestorSure CD, on the other hand, has the potential to offer greater returns, but a zero percent return should the market decline. I will likely recommend that my clients balance their investments between the two products. All of their money will be safe, yet they will see good returns when the market is up (through the InvestorSure CD) and they are guaranteed a return from the CollegeSure CD.”
The Bank will accept funds for the InvestorSure CD every day, but CDs will be purchased quarterly. Prior to CDs being issued the Bank will hold funds in an InvestorSure Accumulator Account, which will earn a fixed rate of return annually. When an InvestorSure Accumulator Account balance reaches $1,000 or more, the Bank will automatically issue a CD to the customer on the next purchase date.
“The InvestorSure CD is the best of both worlds, our customers will have
a choice of college savings products,”says Dan Davenport, chief marketing officer of College Savings Bank. “And now be able to invest in a product that has the elements of the stock market, but with a safety net should the market not perform to the investor’s hopes.”
“College Savings Bank has been with the Arizona Family College Savings
Program since it originated in 1998,” explains Dr. April Osborn, Executive Director of the Arizona Commission for Postsecondary Education. “While they are remaining true to their core business by offering safety, followed by a competitive rate of return, the InvestorSure
CD represents another unique product in the 529 market - another characteristic of the Bank.”
College Savings Bank will begin accepting funds later this year, and the first CD is expected to be originated by mid January 2008. For more information, please call a College Savings Adviser at 1-800-888-2723 or stay tuned to our Web site, www.collegesavings.com. College Savings Bank customers will receive a letter later in the year with more details and the specific launch date.
“Current CollegeSure CD customers will be offered the option of moving a percentage of their investment into InvestorSure CDs,” adds Mary Marton. “We expect the new product to generate significant interest to our customers interested in diversifying their portfolio while not taking on any risk.”