You work hard for your money. Isn’t it annoying that you save what you can and you only earn peanuts on your money?
Wouldn’t it be nice if there were a way that offered you a higher return and still be fairly safe?
Thanks to Worthy Bonds, there is an option. Worthy Bonds offers you 5% return on your money when you invest with them.
How are they able to offer this rate of return and how can you get started earning 5% on your money?
In this guide, I’ll tell you everything you need to know about Worthy Financial, the bonds they offer, how the investment works, and how you can effortlessly save money with the Worthy Financial app.
I even included a question and answer section with Sally Outlaw, the CEO and Founder of Worthy.
Let’s get started learning all about Worthy Bonds!
My Worthy Bonds Review
Worthy Financial Background
Worthy Financial started in 2016 as a way for main street investors to earn a higher return than what traditional banks offered and less risk than the stock market.
For many years, only high net worth investors have had access to alternative investments like what Worthy offers, but now Worthy Financial allows any investor to earn a higher return with little risk by investing in the bonds they offer.
How The Investment Works
Now that you know a little more about the company, let’s look in detail how Worthy Bonds work and how they are able to pay you 5% on your money.
Worthy offers loans to small businesses to help them with their inventory and purchase order financing.
When you invest your money with Worthy, you are supporting American businesses to grow and thrive.
Here is an example as to how the process works:
#1. You invest $100 with Worthy and they pay you 5% interest.
#2. Worthy turns around and funds a fully secured loan to a small business for a higher interest rate.
As the small business makes payments on the loan, Worthy takes a cut of the money they earn and pays it to you.
When the loan is paid back in full, your initial investment is used to fund another loan to a small business.
Again, here is a great visual to understand the process.
The great thing about Worthy Bonds is that at any time you can withdraw your money. You are not locked into having your money invested in a bond for any amount of time.
How To Get Started Investing In Worthy Bonds
How do you get started with Worthy? Simply click on this link and open your account with as little as $10. They made the bonds with a small face value of $10 so almost anyone can start investing.
You can add more money whenever you like and continue to earn 5% on your money. And you can withdraw your money at any time. There are no early withdraw fees or penalties.
The only catch is you have to be a US citizen and be 18 years or older.
Using The Worthy Financial App
As great as it is to invest as little as $10 at a time, Worthy Financial offers another way for you to invest your money and earn 5%. It’s call the Worthy Financial app.
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When you use the free app, you have the option to link your debit and credit cards. Then when you spend money using your linked cards, Worthy will round up the spare change from your purchases to the nearest dollar.
When your round ups total $10, your money is invested in a bond and you start earning interest.
For example, let’s say you eat lunch out and spend $12.40. Worthy will round this purchase up to $13 and will earmark the $0.60 to buy another Worthy Bond. Note you won’t buy a bond until you have $10 in round ups.
Questions And Answers With Sally Outlaw
Why did you start Worthy Financial?
I started Worthy as I wanted to do what I could to help increase financial security for the “98%” – to offer a way we could benefit from the higher returns that are generated in the world of “alternative finance” (basically anything outside the stock market and traditional “Wall Street” products).
I am also a big believer in community capital – that we can all become stakeholders in our communities and support each other – while growing our wealth. So we designed Worthy to be a win-win. Bond buyers earn a robust 5% on their money but the money from bond sales is lent out to help American companies grow.
If we want a different future than the big banks ruling the world, we have to create it!
Why should the average person invest their money in Worthy Bonds?
For several reasons:
#1. Because they deserve a better return than they can currently get on most investments open to them.
#2. We are an investment not tied to the volatility of the stock market – no matter what happens in the stock market, they are getting a stable 5% return from us.
#3. We designed Worthy to be a painless way to tuck money away via the round-up so even those who think they can’t save or invest are able to do it.
#4. If they care at all about helping community businesses thrive, then they can benefit from making this positive social impact along with benefiting from the positive financial return they are getting.
What is the biggest misconception of Worthy Bonds?
I worry that when people hear the word “bond” they will think their money is tied up for months or years as bonds traditionally have a multi-year maturation period. But we designed our bond without those restrictions so ours can be cashed in at any time with no fees or penalties with the click of the “withdraw” button so it operates more like a savings account does.
We hope people will not do that and will keep their money in their account to grow at 5% a year but if they need their money they can get it!
Also, I think people may worry about loaning to businesses, but we primarily lend against inventory and we have the security interest in that collateral so, in the unlikely event of a borrower default, we are able to sell that inventory to recover our loan proceeds.
What does the future of Worthy Bonds look like? Can you share any features that you would like to see be implemented?
It looks bright! We are growing fast and putting our bond sale money to work helping American companies get the support they deserve while helping thousands of people build their nest eggs. A few features on the horizon include integrating a way for people to open a retirement account so they can save in a tax-advantaged way and we plan to build in a retail cash back feature where the places our customer’s shop will provide cash back into their Worthy investment account.
On a more personal level, can you share your greatest financial mistake and your greatest financial achievement?
My greatest financial mistake was not saving and investing earlier in my life – that’s the sort of mistake that’s hard to recover from as you can’t rewind the clock and make up for years of missing out on the growth that happens when your investments build over time with compound interest.
If only I could go back to my 20’s and 30’s and tuck even a little money away!
My greatest financial achievement really is Worthy. It took me almost an entire year of working with the Securities and Exchange Commission to get this product qualified by them as I used some recently updated securities laws to create a bond “for the masses” and it was something they were not used to seeing so it was a bit of a challenge.
Advantages And Drawbacks
Here is a quick summary of the advantages and drawbacks of investing your money in Worthy Bonds.
No Fees: No early withdrawal fees, no transfer fees, no reinvestment fees, no penalty or fee of any kind.
Stable Income: Unlike with bank accounts and certificates of deposit, as interest rates change, the interest you earn on your money also changes. With Worthy Bonds, you earn 5% regardless if rates are falling or rising.
Higher income: You can rely on a 5% return on your money all the time whereas if you put your money into a savings account, you are lucky to earn 2%.
Effortless saving: By taking advantage of round ups, you can save without lifting a finger.
Interest reinvestment: currently this option is not fully available, but it is in beta testing. So when your interest grows to $10, you automatically will buy another bond and start earning interest on this as well.
Not FDIC Insured: The bonds are not a bank product, so you could lose your money. However, because of the asset backed nature of the bonds, the odds of losing your money are slim. Additionally, Worthy Financial keeps a reserve fund to cover any loan defaults, further reducing your risk.
To show you how secure the bonds are, here is the scale of debt that Worthy Bonds fund:
Limited Investment Amount: Investors with an annual income of $200,000 or more for the past two years (or a net worth of $1,000,000 or more) can buy up to $100,000 in Worthy Bonds. All other investors are limited to 10% of their annual income or net worth in bond purchases.
Alternatives To Worthy Bonds
Worthy Financial is on the leading edge of offering this type of investment to all investors. As a result, there aren’t any direct competitors to Worthy Bonds.
Nonetheless, I will offer names of some closely related ways for you to invest your money.
Capital One 360
Capital One 360 an online bank that offers higher than average interest to savers. The main difference between them and Worthy Bonds is that since this is a bank account, your money is FDIC insured.
You also earn a lower interest rate, and this rate is tied to what the Federal Reserve does with interest rates. The rate at the time of this writing is 1.85%.
Acorns is a true investing app, where you are investing your money into a portfolio of exchange traded funds. Like Worthy Bonds, your money isn’t FDIC insured, but with Acorns, you are taking on much more risk as you are putting your money into the stock market.
The result is you could earn more than 5%, but you can also lose money. Historically, you can expect to earn 8% annually over the long term when you invest in the stock market.
One thing that Acorns does offer that is similar to Worthy Bonds is the round up feature. As you spend money, Acorns will round up your purchases and invest this money when it totals $5 or more.
However, Acorns does charge $1 a month to invest your money, whereas Worthy Bonds are 100% free.
At the end of the day, if you are looking to earn a higher return than traditional savings accounts, you cannot go wrong with Worthy Bonds.
While your money isn’t insured like a bank account, the odds of you losing money are slim thanks to the security of the loans that are funded and the reserve pool that Worthy Financial keeps.
So if you want to start earning more on your money, click here to open your free account.