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A 100-year CD for a good cause

Walden claims to be a climate-friendly, sustainability-focused bank that only loans money to businesses making a positive impact on the food ecosystem. The lender says it's seeking longer-term deposits because it often needs to write longer term loans with manageable payments.

Their new astonishing 100-year CD, which carries a 4.75% fixed APY for the entire term, is intended for people looking to pass on their wealth to a charity, trust or family member.

"The CD makes for a good addition to a Donor Advised Fund, part of a charitable giving strategy, or a trust intended to benefit a future generation, but it is also an attractive fixed income alternative for an individual or organization, even if not held to maturity. We ask holders to complete a beneficiary form at the time you open the CD," says the official website. "You may also withdraw your entire deposit at any time by request, subject to a penalty of 10 years' interest."

The bank says you could also setup a separate Grow Local account alongside your CD and automatically withdraw the interest penalty free on an ongoing basis.

Walden invokes none other than Ben Franklin — he of “a penny saved is a penny earned” fame — in kicking off its online pitch for the product. In 1790, Franklin bequeathed 1,000 pounds sterling (roughly $4,000 at the time) to the cities of Boston and Philadelphia but requested that 25% not be touched until the 200th anniversary of his death. “By 1994 these trust funds were worth some $6.5 million, demonstrating the power of compounding over a long period of time,” Walden states.

The soon-to-be-released product looks like a solid play as CDs go, regardless of its timeline. It carries a $1,000 minimum and $150,000 maximum, and is very safe as the FDIC insures it to the tune of $250,000. The rock-solid 4.75% fixed APY surpasses the current inflation rate of 3.4% and is among the higher 10-year APYs.

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Is a century-long CD right for you?

So why go the route of a century-long CD? It makes sense if you’re a mission-driven investor or embrace the values of ESG (environmental, social, and governance performance). Walden Mutual Bank’s intentions are clear, as the financial institution wants to give savers a direct line to funding sustainable businesses – many of them small and thus underserved by banks. You can see constructive results in real time and as time passes, the positive effects will continue well beyond the account holder’s lifespan.

Yet if you decide to fund worthy causes yourself, chances are strong that stocks will outperform by nearly double or more. As for the Oracle of Omaha – who may make it to 100 as he’s now 93 – he’s instructed his trustee how to invest for his wife when he passes away: “Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.”

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Lou Carlozo Freelance writer

Lou Carlozo is a freelance contributor to Moneywise.

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