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Worthy Bonds, 3 Year 5% APY

TheBombingRange   |     |   91 posts since 2017

Link 1 (Worthy Financial):

Link 2 (Worthy Peer Capital):

They are still pending in my state so I can't do anything yet. The main site for Worthy Financial (link 1) has an "About" page that indicates that they are 12 month 5% bonds, but their bond-specific site (link 2) shows them as 36 month 5% bonds, along with the FAQ on their main page (1). Simple interest. The updated site's (2) FAQ says "It’s a 36-month term but can be cashed out at any time without penalty" but they also say in another FAQ (1) "The 5% interest earning bonds are 36 month bonds however they can be cashed in at any time. If withdrawn before the first 12 months, you’ll pay 1% of the amount withdrawn as an early withdrawal fee, but never more than the interest you earned thus far. (Meaning you can always withdraw exactly how much you invested, but you’ll give up some of the interest)." I will be confirming the terms and early withdrawal details with them tomorrow.

Besides lack of FDIC insurance, are these bonds a good deal? You don't have to utilize their roundup system, you can just buy bonds in $10 increments as you wish. These seem to beat the yield of Fidelity's table of 3 year bonds, though I honestly am not that well versed in this topic.

TheBombingRange   |     |   91 posts since 2017
Surprised to see that when I sent them a message, the co-founder and CEO Sally Outlaw ( responded, or at least whoever runs her account for the messaging service they provide:

"Hi. Yes sorry for that confusion. Although we originally were going to charge a 1% early withdrawal fee, we decided against it and have not updated that site as we moved bond sales to The terms on that site are correct. 36 months, 5% and no penalty. Thanks for reaching out and let me know if you have any further questions! Thanks for your interest in Worthy!"

She continued:

"Yes bonds can be turned in anytime. No penalty. You have a choice of buying bonds directly whenever you like or via the round ups or both :-). Currently we are only doing direct bond purchases, the round up function will be launched in the spring."
CTM   |     |   97 posts since 2010
Have you read the full Offering disclosure filed with the SEC?

Look here:

When you see an offering for "Accredited Investors" (although Worthy has both Accredited and non-Accredited offerings) they are placing the risk of the investment squarely in your hands.

This offering is aimed at microscopic retail investors, as bonds normally trade in $ 1000, or larger, increments. These bonds are unrated.

There are many rated / traded securities with 5% or greater coupons, with A or better ratings available through your broker.

While Worthy may become a winner, I'd sit back and see what happens.
Kaight   |     |   341 posts since 2011
Spot on, CTM. I am very supportive of what you wrote. As an old bond guy I did well and never lost a cent with my bond investments, of many kinds, over the years. In all that time I NEVER bought an unrated bond. This was because I'm not crazy, and neither do I have the smarts to know on my own whether a bond will be dollar good.
Soutlaw   |     |   1 posts since 2018
@TheBombingRange...yes, that was really me responding to you, not someone running my account. I am a big believer in treating our customers right so I often jump on and answer inquires.Thanks for posting about us. @CTM and @Kaight - just wanted to explain why our bonds are not rated. In our case it is the simple fact that we are not a large industry player such as a Goldman Sachs or JP Morgan so we did not go through the extensive and expensive process of getting rated. We are a smaller, private issuer - most ventures our size do not go through the rating process. Our value proposition is pretty straightforward though - we use secured loans as the investment vehicle for our bond proceeds allowing all classes of investors to access the higher yielding private lending market. As mentioned above in an earlier comment, although the bonds have a 36 month term, they can be cashed in at any time for those with imminent liquidity needs, thereby serving more as an alternative to traditional money market products. Thanks for discussing what we do - it helps us learn what concerns purchasers may have and how we can better address them.
TheBombingRange   |     |   91 posts since 2017
Where would I be able to find those brokerages and bonds, for example? Again, very new to bonds.
ConfedrcyDunces   |     |   111 posts since 2016
A discount broker such as Ameritrade lists many corporate, cd, and municipal issues.

For the record, single A 20+ years corporates show a high current yield offered at 4.25%.
Cooldude   |     |   1 posts since 2018
Sorry, I realize I'm a few months behind on this.

While those online brokers are great for their low fees, I'm a fan of sitting down with a financial adviser you can trust. A 20 year corporate bond may look great at the 4.25%, but if interest rates rise, the value of that bond will drop, meaning that if you need to sell out of it before the 20 years is up, you're more than likely to do so at a loss.

Especially being new to bonds, there are all sorts of different ways that bonds work that you'd need to do a lot of research on in order to know that whatever bond you're looking for is the right fit. You could possibly run into trouble if you only look at a rating.
ConfedrcyDunces   |     |   111 posts since 2016
Cooldude, thanks for the obvious.

My response was to CTM, who commented "There are many rated / traded securities with 5% or greater coupons, with A or better ratings available through your broker. "

To let people know that was factually incorrect.
CTM   |     |   97 posts since 2010
CDunces, could you tell me and the rest of the readers, in detail, which part(s) of my original post were "factually incorrect"?
ConfedrcyDunces   |     |   111 posts since 2016
Obviously, you were wrong when you wrote "There are many rated / traded securities with 5% or greater coupons, with A or better ratings available through your broker."

Because "For the record, single A 20+ years corporates show a high current yield offered at 4.25%."

Not complicated, in any way.
alan1   |     |   211 posts since 2015
CTM was correct in writing there are many securities with 5% or greater _coupons_ that have A or better ratings. CTM did not make any claims concerning current yields.
CTM was not "wrong". The coupon rate might not be terribly important, but CTM did not make a factual error, as has been erroneously claimed.
ConfedrcyDunces   |     |   111 posts since 2016
Thank you Alan, a good friend indeed. CTM's comment was irrelevant, not wrong.

CTM, you may not have any experience with fixed income securities. I did not find "a" bond yielding 4.25%, I stated that is the maximum yield for a rated 20 year bond.

Alan is correct. If you had bought these bonds 15 years ago, instead of this decade, you might have earned a 5% yield.
CTM   |     |   97 posts since 2010
Thanks alan1! 
My question is who are the three people who gave CDunces' post a vote?

CDunces, as I suspected ...

In the manner of your reply to RJM on 04/14:

My dense friend. I did not suggest a corporate bond of any type.  Please carefully read the post. 
You decided to create that piece of misinformation and continue to use it. 
That you found an "A" rated 4.25% 20 year corporate on TD Ameritrade is meaningless.

In the manner of your reply to stcharles on 03/26:

Do you understand the full range of securities?  Google "types of securities".

For the other readers / posters, at the end of this post is a list of 81 securities - preferred stocks, ETNs (Exchange Traded Notes), ETD (Exchange Traded Debt) and possibly a few others. The symbols are in a format usable with Google Sheets and the =GoogleFinance("SYMBOL","PRICE") function.
With the exception of TVC and TVE, I believe all have (and had at the time of my original post) a "coupon" (face interest rate) or yield of at least 5% and all are rated at least "A" (A3/A-) by Moody’s or S&P. I culled these from a list of about 300 similar investment grade (Baa3/BBB-) securities that I monitor.

When TheBombingRange and Cooldude asked the question, these were the securities I was referencing.

The are available in small, retail investor sized denominations, typically $ 25, $ 50 and $ 100. They are listed and quoted on the major stock exchanges, although liquidity is limited in some issues.

For the record, I own a number of these issues, although not nearly enough to influence the market! ;-)

I have a fondness for the Gabelli preferred issues. These are preferreds issued by their closed-end funds. In these event of a true disaster, the holders of the closed-end fund shares are responsible for the dividends and liquidation value of the preferred shares.

Should you have any questions ...

List of security symbols in Google Sheets =GoogleFinance() function format:

TheBombingRange   |     |   91 posts since 2017
Thank you for this information. I didn't end up putting much into Worthy, though that may change. Haven't tested their liquidity so far, but that is important to me right now.
ConfedrcyDunces   |     |   111 posts since 2016
ELC - common stock Estee Lauder, yielding 1.1%

TVE - TVA bonds yielding 3.7%

Comparing preferred stock to CDs is an interesting way to waste time.
CTM   |     |   97 posts since 2010
CDunces ...

You were, in fact, able to find a typo in my last post.
ELC is a typo and a duplicate of ELJ.

Why you ignored the phrase "With the exception of TVC and TVE, " when describing the yield of the TVA PARRS securities is less clear.

Finally, no one on this thread, other than you, has attempted to make a comparison between CDs and any other type of security. This is another example of you creating a piece of misinformation and trying to pass it off as fact.
ConfedrcyDunces   |     |   111 posts since 2016
CTM, I think it would not be useful to actually read your verbose post.

Now you are talking about "coupon OR yield" nice switch but your original comment was about coupon and remains irrelevant.

The name of this site is Deposit Accounts and it focuses almost exclusively on CDs and a few zero duration alternatives. So by mentioning preferreds as an alternative, by definition you are comparing them to CDs or these Worthy things which have zero duration. Neither comparison is literate.
enduser   |     |   29 posts since 2015
It seems that they have lots of fine print. They used a light gray color to show it way at the bottom of the page. Buyer beware!

The bonds are 36 month term but you can withdraw your money at any time*.

*For withdrawals of more than $50,000, we may take up to 30 days to process the payment and remit the funds to your bank account.

Worthy is not a bank and investments in Worthy bonds are not bank deposits. They are not insured by the FDIC. Investing in Worthy bonds involves risk of loss. You should always carefully consider investments in any security and you should be comfortable with your understanding of the investment and its risks.

Worthy Peer Capital is not an investment adviser. This information is for educational purposes only and does not constitute investment or tax advice.
TheBombingRange   |     |   91 posts since 2017
For amounts less than $50k and without any sort of early withdrawal penalty, can't these bonds be used almost like a high-yield savings product? I understand that this doesn't seem to be in good faith for the purpose of bonds or this company, but what are the limitations of this? If a withdrawal has to be made for some amount of the money in these or other bonds, isn't that fully within the capabilities of this type of investment, while still keeping interest earned?
adyus   |     |   1 posts since 2018
Hi there. CTO of Worthy here.

Thank you for pointing out the fine print is hard to read. The light gray color was not malicious, just an aesthetic decision.

I'll make sure to make the color more readable today. If you have any additional questions, I'd be happy to answer.

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