General Question

elbanditoroso's avatar

Is anyone here knowledgeable about Variable Rate Demand Notes? (Floating Rate Demand Notes) - they seem to pay attractive interest, but are not regulated or insured.

Asked by elbanditoroso (22776points) December 25th, 2011

From my research, they pay substantially higher interest than a MMF or savings account, but there is no insurance or regulation or other type of oversight. These are issued, apparently, by large companies (Ford, Duke Power, etc.) and are backed only by reputation and faith.

Has anyone used these as an investment/growth vehicle? What have your experiences been?

Comparison: Duke Power’s demand notes are paying 1.25 while my credit union is only paying .45 on a money fund. I’m OK with some risk, but is this foolish?

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1 Answer

plethora's avatar

If you are comfortable with the company, it is probably a good investment. Depends on how much money you are talking about. Is it long term money or short term money. If long term, you might want to check out fixed annuities. (NOT VARIABLE ANNUITIES). Despite the similarity in name, they are very very different products.

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