Wednesday, December 23, 2009

Here's a Free Lunch, No Really.....

“There is no such thing as a free lunch”.

I can’t tell you how many times over the last 25 years I have used this as a response to a member asking me about some investment scheme that really was too good to be true. It’s truly sound advice; to get a greater return on your investment, you usually need to take greater risk. The trick is recognizing the risk and making sure it is right for you. Now I am going to contradict myself: here’s a free lunch and then some. Last Thursday night, your Board of Directors declared another Patronage Rebate to be paid at the close of business on December 31st. I’m really not supposed to say anything about this until it is actually paid but not that many people having been reading this blog so I figure I’m pretty safe.

I’m breaking the news early because I am really excited about this, for two reasons. First, the $200,000 in rebates for 2009, puts the total for the program at over $2 million. You know the old joke about government spending, “a million here and a million there and pretty soon you’re talking real money”. Two million dollars given back to our members is definitely real money and the Credit Union is darn proud of it.

Second, during this year we have experienced the worst recession in most of our lifetimes. Many financial institutions lost money or went insolvent. Not only did NSFCU continue its strong financial performance, we did so at a level that allows us to continue our streak of Patronage Rebates issued (its somewhere around 12-14 consecutive years, I can’t remember and I am not looking it up). If there was ever a year when members could use the free money, this is the year.

Now to the free lunch part: at a bank, this rebate money would be going to the owner of the bank, who probably doesn’t need it. So, part of this is your reward for being smart and being a member of NSFCU. To make it even better, we automatically deposit the money into a special savings account called a Patronage Rebate Share (its #99999 on your statement) and that account earns a 10% annual percentage yield! This rate is fixed for 2009 and 2010 and the funds are guaranteed just like all your money at the Credit Union. The idea is to provide an incentive for members to let these rebates build in this special account as it is a great investment (no, you can’t add to this account – nice try). Over the years, it will really add up. Now I understand if you want or need to take the money, especially this year. However, if you can, let it build – it has to be the best investment you will ever make.