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Well who doesn't want some of this?

An investment where your principal is guaranteed, the interest rate is 1.25% above the Fed Funds rate (subject to a 4.91% minimum), with the ability to obtain the full balance of your certificate on 15 days notice without penalty? The same business is offering "secure" certificates that initially pay 6.75% interest, with interest rates increasing each year by 1/4% over the next 4 years up to 7.75%.

What's the story?

Every deal has to have a story. Sherbourne offers a story for each of these investments:

Maybe it's those savings on administrative costs!

Sherbourne points out that it isn't required to file 1099 notices on income the revenue from it's Prime Certificates, thereby enabling it to pay higher returns by avoiding the "heavy administrative costs" involved. Even if the annual cost for filing 1099's were $50 per account, that would only account for 0.5% on the minimum $10,000 investment.

Prudent investment? Or yet another Madoff?

Sherbourne suggests that you can be "comfortable in the knowledge that your principal will be there for you when you need it." I don't think so.

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Revision r1.1 - 30 Mar 2009 - 03:20 by EliMantel web search for EliMantel
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