Now there's a way to enjoy the rewards of investing in the stock market - without the risks.
Introducing the Market Index Certificate with an earnings rate tied to the Standard & Poor's 500 Composite Stock Price Index (S&P 500). If the S&P 500 goes up, your dividend rate goes up. If the S&P 500 goes down, you won't earn dividends - but your initial deposit is protected.
The Market Index Certificate is an IRA investment option for credit union members. With today's dividend rates, many investors are looking for higher-earning alternatives to fixed-rate share certificates. While stocks and mutual funds can offer larger returns, not everyone is comfortable with that level of risk. With our Market Index Certificate, you get the best of both: The safety and security of an insured credit union share certificate, and the potentially high returns of today's dynamic stock market.
Q:
What is the S&P 500?
A:
The Standard and Poor's 500 Composite Stock Price Index is an independent measure of 500 different stocks. It is not dependent on any person or organization to manage it. The S&P 500 is widely considered a representative indicator of overall stock market performance.
Q:
What will my dividends be on the Market Index Certificate?
A:
They will vary. You will earn dividends based on the change in the S&P 500 over the term of your investment. There is no limit to how much you can earn.
Q:
How exactly is the dividend calculated?
A:
When your Market Index Certificate is established, your credit union representative will note the current S&P 500. That figure will be compared with the S&P 500 when your certificate matures.
If the S&P 500 has gone up, you earn dividends equal to a percentage (called a "participation percentage") of the S&P 500 increase, no matter how high. If the S&P 500 has gone down or remained the same, you earn no dividends. But you won't lose
your initial deposit.
Q:
Will I lose money if the value of the S&P 500 Index goes down?
A:
You will not earn any dividends, but you will not lose your Deposit (the face value of the certificate).
Q:
Is the any risk?
A:
Yes, there is. You risk missing out on the guaranteed return of a fixed-rate share certificate; if the S&P 500 declines, you'll
earn no dividends on your deposit. But conversely, the Market
Index Certificate has the potential to earn a much greater return
on your investment than a fixed-rate share certificate.
Q:
Can I purchase a Market Index Certificate as part of my Retirement account?
A:
Yes, In fact, the Market Index Certificate is available only as an IRA investment at the credit union.
Q:
What are the terms?
A:
Market Index Certificates are available with terms of 2 or 4
years.
Q:
Is early withdrawal allowed?
A:
No. The Market Index Certificate is not intended to be a short
term, highly liquid investment.
Q: How can I track the performance of my Market Index Certificate?
A:
The value of the S&P 500 is reported in all major daily newspapers. While this allows you to follow the "ups and downs" of your investment, understand that your dividend rate will be based on the value of the S&P 500 on two dates only - when your certificate is established, and when your certificate matures.
Q:
Will I own stock as part of this certificate?
A:
No. the S&P 500 is used to track the activity of the stock market; but you don't actually purchase stock when your purchase this certificate. Instead, your deposit stays right in your credit union.
Q:
Is my IRA deposit insured?
A:
Absolutely. UCU has IRA deposit insurance up to $500,000 per member ($250,000 by the NCUA and an additional $250,000 by American Share Insurance [a private insurance company]).
Please call a UCU Member Services Representative for
complete details on the Market Index Certificate Account at (310) 477-6628.
The index is compiled and published by Standard & Poor's ("S&P500") and is based on the shares of common stock of 500 U.S. companies, most of which are listed on the New York Stock Exchange. "Standard & Poor's," "Standard & Poor's 500," "S&P500," "500" and "S&P" and service marks of McGraw-Hill, Inc. and have been licensed for use through Bankers Trust Company, by CUNA service Group for your credit union (the "Parties").
