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Earn 5% Fixed Returns (Worthy Bonds Review)

Note: This is not financial advice. I’m not an affiliate of Worthy Bonds, but have been using them for 2+ years. Since I’m a customer, I have a referral link which I’ll include throughout this post. My link gives both of us a free bond worth $10 if you sign up for a Worthy Financial account.

I’ve been using an alternative finance site called Worthy Bonds to earn a steady a fixed 5% interest.

If you’re like me, you probably want a higher interest rate than the measly 0.70% offered these days. Returns from using Worthy Bonds are effectively 7 times higher than even the most competitive savings accounts available:

This rate table from Bankrate makes me sad.

Here’s an illustration of how much more a 5% interest rate will net you

Values after 1 yearWorthy Bonds: 5%Savings accounts: 0.7%Difference
$1000$50$7$43
$10,000$500$70$430
$50,000$5000$700$4300

If you put $10k into Worthy bonds, after 1 year you’d make $430 more than a traditional savings account

After 2 years of use Worthy Bonds, I can confidently say that this is a legitimate site that lives up to its promise. Here’s an interest report from the number of days I’ve been invested in 2020:

Calculation: 1334 bonds * $10/bond * (232 days/365 days) * 5% interest

How to purchase Worthy Bonds

  1. Sign up for a Worthy Bond account. There are no hidden fees or penalties, it’s completely free to use the site.
  2. Connect your bank account to make deposits into your Worthy Bond account
  3. Buy Worthy bonds, which are $10 each. Have $100 to invest? You’ll get 10 bonds.
  4. Automatically start earning 5% interest on each bond. The interest compounds annually.
  5. Withdraw your money + interest to your connected bank account any time without fees or penalties.

Effectively, Worthy Bonds works like an online savings account, except you buy $10 “bonds” and earn much higher interest.

How do these “bonds” work?

Traditional bonds are typically grouped by how long they take to mature: short term bonds of one to five years, intermediate-term bonds of five to 12 years, and long term bonds of 12 to 30 years.

Worthy Bonds are Securities and Exchange Commission (SEC) registered, 36-month, 5% interest-bearing obligations of Worthy Peer Capital, Inc.

What’s interesting about Worthy Bonds is that they are technically 36 month term bonds, but you can cash them out any time without penalty.

This image is an illustration of how you can do this from the Worthy withdrawal screen. You can withdraw your entire principal and interest, just like as expected.

What’s Worthy Bond’s business model?

In a nutshell, Worthy Capital (the company) makes loans to businesses at a higher interest rate than the 5% they return to Worthy bondholders.

Specifically, Worthy Bonds offers U.S. businesses loans that are backed by assets or other inventory.

Worthy Bonds - How It Works

According to their FAQ, Worthy only lends to businesses that offer their inventory or assets as collateral, and only lend ~2/3 of the assets’ value. If a business defaults, Worthy sells the collateral to recover as much of the loan as possible. This is also known as inventory financing.

What does this mean for investors of Worthy Bonds?

The stock market or Fed interest rate has little, if no effect on Worthy Bonds. We have no plans to decrease the 5% interest rate we currently offer.

Summary: Worthy Bonds is a worthy alternative finance platform

Getting 5% guaranteed interest sounds almost too good to be true for this type of low-risk, straightforward investment.

There’s a lot of gimmicky teams and products in alternative finance. But after years of using Worthy Bonds, I feel confident in Worthy’s team. They’re a small team based in Baton Rouge, have a phone number you can call, and feel like a family business with their newsletter updates. Plus, Sally Outlaw is a pretty badass name for a CEO who’s shaking up traditional finance.

Here’s my summary breakdown of Worthy Capital:

ProsCons
Fixed 5% returns. Returns haven’t changed since Worthy Bonds launched, and there’s no plans to.Not FDIC insured. Worthy Bonds are recognized by the SEC but, like most investment products, do not have protection.
Low correlation to stock market or Fed rate changesLower average returns than the stock market or earning interest on crypto
Withdraw money (principal and interest) any time, compared to long maturity of traditional bonds. Transfers are sometimes a bit slow (5-7 business days) but they’ve always gone through.
No fees, completely free to use

5% return is not going to make anyone rich, but it’s a compelling option for anyone willing to take on more risk (no FDIC insurance) for 7 times the return of their savings account.

Ready to dip your toes in?

Like I mentioned at the top of the article, I’ve been using Worthy Bonds for over 2 years with no issues, including times in which I’ve withdrawn money & interest.

Since this is a new kind of product that’s different from traditional savings and checking accounts, so you’re right to tread lightly and have some concerns.

If you’re interested but cautious, I recommend taking a small bets approach. Put in a low amount of money in (and get a referral bonus), and see how comfortable you are with the Worthy Platform over time. Try depositing and withdrawing money, and get a sense of trust for the platform.

If you’re ready to kick around the tires, use my referral link to get started and grab your free $10 bonus.

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