Save Market Trust Account 2023 Review
Save--the company offering a high-yield, market-linked savings product--also provides the Market Trust program to people who seek a big boost to their retirement savings. Market Trust is a principal guaranteed investment program--based on a five-year term--whose returns are linked to an investment portfolio, which is typically the S&P 500 Risk Controlled Portfolio. Regardless of market performance, the original deposit amount is guaranteed if the program is held to term.
The Save Market Trust program works much like a 5-year market-linked certificate of deposit (CD) without limits to potential returns. At its core, it is actually a blend of an annuity (to guarantee your original principal) and a brokerage account (to provide investment returns). You get to choose from six portfolios curated by Save, which will ultimately influence your returns.
Given the regulations surrounding annuities and the risk-averse nature of the program, Save Market Trust is best suited for individuals of at least age 55 or older. It’s especially beneficial for those aiming to close the gap in their retirement savings after maximizing traditional retirement vehicles such as IRAs and 401(k) plans.
Save Market Trust Account Pros & Cons
Big Upside Potential
Save showcases a variable APY to give customers a glimpse of potential returns from their investment. As of this writing, they are showing a variable APY of 14.45% using the S&P 500 Risk-Controlled Portfolio historical performance. While most customers select their S&P 500 portfolio, you can choose from one of Save’s other investment portfolios, which cover a range of options.
Save Investment Portfolios
|S&P 500 Risk Controlled Portfolio||Follows the S&P 500 Index, which tracks the largest companies in the United States.|
|Save Global Diversified Markets Portfolios||Designed by Save with a list of diversified investments that include stocks, bonds, commodities, and other assets. Three risk profiles are available: Conservative, Moderate, and Growth.|
|Save ESG Portfolio||Similar to the Save Global Diversified Markets portfolios but it prioritizes investments that consider environmental, social, and governance issues.|
|Save Global Multi-Strategy Portfolio||Uses hedge fund strategies to manage its holdings, which may include long and short positions.|
|Save US Macro Portfolio||Uses macroeconomic indicators (e.g., interest rates, currency values, and inflation) to manage its holdings, which may include long and short positions|
The S&P Risk Controlled Portfolio, Save Global Diversified Market Portfolios, and Save ESG Portfolio resemble conventional mutual funds or ETFs that provide broad diversification.
In contrast, the Save Global Multi-Strategy Portfolio and Save US Macro Portfolio adopt more aggressive approaches like shorting stocks, which isn’t a common investment strategy for the average investor. Due to the high-risk, high-reward nature of these portfolios, some investors may avoid them. But, because Save Market Trust guarantees principal, all of that downside risk is mitigated.
The Save Market Trust Program guarantees your initial deposit by putting a portion of your funds in an annuity contract. This portion is calculated by Save so that it will earn enough interest over the 5-year term such that the total amount at maturity will be equal to your original deposit.
The remaining portion of your funds is invested through the Save portfolios (with a little bit also held in cash). This is the portion of your funds that provides the returns over the course of the 5-year term.
The Save Market Trust program has two main fees:
- Annual administration fee: A fee of 0.25% is collected at the beginning of each term year. This fee is collected regardless of the program’s performance.
- Annual advisory management fee: A fee of 0.54% is collected at the end of each term year, only if the investment portfolio performance is greater than 0.79%. Additionally, if the cumulative 5-year return at maturity is greater than 3.95%, this fee will be collected retroactively for any term year in which it did not get collected previously.
Like a CD, the Save Market Trust program is not designed for routine withdrawals.
Still, you can withdraw funds at any time–from the investment allocation of your funds.
Because the Save Market Trust program works through a mixture of an annuity contract and an investment portfolio, it is not FDIC-insured like a bank account.
Rather, your investment account is protected by SIPC insurance.
The Securities Investor Protection Corporation (SIPC) is a non-profit organization that steps in when a brokerage firm closes due to bankruptcy or other financial troubles. It protects the securities and cash in your brokerage account up to $500,000, including a $250,000 limit for cash. Note: SIPC insurance doesn’t cover against the decline in value of your investments.
Is Save Market Trust considered a retirement account?
No, Save Market Trust is not a retirement account. It does not offer the same tax benefits that you might find with traditional retirement accounts such as an IRA or 401(k) plan. However, the annuity and any investment returns grow tax-deferred until the end of the five-year program.
Does Save Market Trust renew?
Yes, once the program reaches maturity after the initial 5-year term, you can opt to renew for an additional 5-year term (if available at the time of renewal). Otherwise, you can choose to have your returns paid out in cash.
How are the returns taxed?
Returns from the Save Market Trust are taxed as long-term gains at the end of the five-year period. Meanwhile, the annuity’s gains are taxed as ordinary income at the end of the five-year period.