Before you start investing, you should be aware of several key elements of the Worthy Bonds platform and the fixed-income products accessible on it.
Worthy Bonds
Worthy Bonds are securities that have been registered with the Securities and Exchange Commission (SEC) and are available for purchase in $10 increments by individual investors, with a minimum investment of $10. All bond proceeds are invested in asset-backed (secured) small-business loans by Worthy.
These loans are typically used by Worthy’s company customers to cover short-term investments such as inventory purchases, and they are repaid with interest over a 36-month period. Worthy does not reveal the rates paid to corporate borrowers, but all bonds earn Worthy’s peer investors a flat 5% annual return (coupon rate). Investors’ risk of loss on any individual bond is quite low because all bonds are backed by physical assets. Worthy cautions, however, that defaults do occur, and the lack of FDIC protection limits investors’ options.
There are no fees or hidden costs with Worthy Bonds. The differential between the (higher) interest rate charged to business borrowers and the (lower) rate paid out to individual bondholders is how Worthy makes money, just like all traditional lenders.
Worthy Bonds are issued by Worthy Peer Capital, Worthy Peer Capital II, and Worthy Community Bonds, among other companies. The prospectus for the bond contains information about the bond’s issuer.
Purchase Restrictions
Worthy Bonds maintains severe numerical limits on bond purchases: no more than $100,000 (10,000 bonds) for qualified investors, and no more than 10% of annual income or net worth for non-accredited investors.
- Individuals who earned at least $200,000 in the previous two tax years and can reasonably expect to earn the same or more in the coming year.
- Couples who earned at least $300,000 in the previous two tax years and predict comparable or higher incomes in the future
Account Types
Individuals, families, and their agents can choose from a variety of account kinds at Worthy Bonds:
- Nonprofit accounts are for investors who want to invest in non-profit organizations.
- Investors who want to invest through for-profit businesses should open a business account.
Manual and Scheduled Bond Purchases
You can manually acquire bonds in any amount after you’ve set up your Worthy Bonds account and linked an external funding account (a bank account, debit card, or credit card) (subject to total purchase limits). You can also arrange fixed-amount bond purchases on a weekly, bimonthly, or monthly basis.
Automatic Investments
If you prefer, you can automatically purchase Worthy Bonds with the spare change from rounded-up purchases in your associated funding account.
Round-ups are always to the nearest dollar, so a $3.50 transaction results in $0.50 in extra cash. Round-ups are transferred to your Worthy Bonds account using Dwolla, a financial transfer tool, and when your balance exceeds $10, a new bond is purchased.
Cash-Out and Interest Withdrawal
With no early withdrawal penalties, Worthy Bonds offers interest-only and principal cash-outs at any time during the 36-month period. Larger withdrawals can take weeks to process, but smaller interest-only withdrawals are usually processed promptly.
Worthy Causes
These bonds are subsequently transferred to the partnering charity organizations of your choice, giving them a 5% annualized rate of return and complete cash-out authority. If you itemize deductions and donate to a qualified tax-exempt nonprofit organization, your bond donations may be tax-deductible for state and federal income tax reasons.
Referral Program
Worthy Bonds pays both the referrer and the referred one bond with a face value of $10 for each successful referral. The total referral value for each partner is $10 + 36 months of interest at a 5% annualized rate when the donated bond is held to maturity.
Are there any really worthy bonds?
Worthy Bonds are a valid alternative investment that pays a fixed 5% interest rate on each $10 Worthy Bond you buy. Worthy Bonds provide support for small businesses without requiring you to invest in the stock market.
What are the five different forms of bonds?
- Treasury, savings, agency, municipal, and corporate bonds are the five basic types of bonds.
- Each bond has its unique set of sellers, purposes, buyers, and risk-to-reward ratios.
- You can acquire securities based on bonds, such as bond mutual funds, if you wish to take benefit of bonds. These are compilations of various bond types.
- Individual bonds are less hazardous than bond mutual funds, which is one of the contrasts between bonds and bond funds.
How does deserving generate revenue?
Worthy uses the proceeds from its bond sales to make loans to small businesses. These companies pay a good rate of interest on their loans. Worthy sells bonds to investors (you) at a 5% interest rate. Despite the fact that the bonds have a three-year maturity, they can be redeemed at any time.
To get started with Worthy, download the app for free on your iPhone or Android device and create an account. Then connect your account to your debit or credit card. The app will round up each item to the nearest dollar as you spend. This money is subsequently put into Worthy bonds. Within a few days following your purchase, interest begins to accrue.
If you buy a soft drink for $1.50, Worthy maintains track of the $0.50 as an example of how the round-up calculation works. You spend $7.80 for a drive-thru meal at a fast food restaurant a few days later. Worthy rounds up to the closest whole dollar, a difference of $0.20. The $0.20 is tracked by Worthy. Worthy will buy a $25.00 5 percent interest-earning bond if you reach $25.00 in rounded-up spare change.
If Worthy doesn’t charge any fees, you might be asking how it gets money. While Worthy offers a 5% interest rate to investors, it charges a higher rate to businesses. Worthy generates money through this spread.
“Well, I’m trying to help folks better their financial health outside of Wall Street,” Outlaw said in an interview with Authority Magazine.
Outlaw went on, “I exploited newly changed securities rules in a creative way to make money work for everyone (not just the top 1%). I built a proprietary financial product for the public using Regulation A+, which is part of the new JOBS ACTlaw.
It’s a 5% fixed-interest bond that costs only $10.00, allowing people to micro-invest and establish a nest egg more simply. The bonds are also completely liquid, which means they may be cashed in at any moment without incurring any fees or penalties, making them more like a savings account.”
Worthy’s website also has a section dedicated to borrowing. This part has nothing to do with its bond offering and directs visitors to the websites of other lenders.
Round up purchases
You can use a handy tool that lets you invest automatically once you’ve successfully set up for an account and made your first bond purchase. Monitoring accounts, such as debit or credit cards, can be linked.
Worthy Bonds pulls a list of your transactions from your account every day and rounds them up to the next dollar. Purchases with a dollar sign will be rounded up to the nearest dollar. Worthy Bonds will take $10 from your linked bank account and purchase a Worthy Bond once the rounded up amount reaches $10.
Because the funds do not originate from your monitoring account, you must ensure that you have sufficient funds in your connected bank account to cover the round-up transactions.
Withdraw at any time
Even if you purchased 36-month term bonds, you can withdraw your investment at any time with no penalty after you’ve made a Worthy Bonds investment.
Withdrawals of more than $50,000, however, may take up to 30 days to process.
Fees
Worthy Bonds, thankfully, does not impose any fees or penalties. There are no transfer fees, reinvestment fees, early withdrawal fees, or any other expenses that you could encounter with another sort of investment. Worthy Bonds, on the other hand, is still profitable.
You will, of course, be responsible for any state or federal income taxes due on the interest received on your Worthy Bonds investments.
Customer service
Worthy Bond’s customer support staff can assist you if you have any inquiries or encounter any difficulties while registering for an account.
While they appear to have a live chat feature, their typical response time is listed as a few hours, which is somewhat disappointing.
If you don’t mind picking up the phone, you can reach out to 1-833-967-8491 with any questions.
Are bonds a good investment?
Savings bonds are a fantastic way to diversify your retirement portfolio. However, due of government assurances, interest rates are often low. Over time, other assets, such as equities, outperform savings bonds.
Do bonds make monthly payments?
Bond funds often own a variety of separate bonds with varying maturities, reducing the impact of a single bond’s performance if the issuer fails to pay interest or principal. Broad market bond funds, for example, are diversified across bond sectors, giving investors exposure to corporate, US government, government agency, and mortgage-backed bonds. Most bond funds have modest investment minimums, so you may receive a lot more diversification for a lot less money than if you bought individual bonds.
Before making investment selections, professional portfolio managers and analysts have the expertise and technology to investigate bond issuers’ creditworthiness and analyze market data. Individual security analysis, sector allocation, and yield curve appraisal are used by fund managers to determine which stocks to buy and sell.
Bond funds allow you to acquire and sell fund shares on a daily basis. Bond funds also allow you to reinvest income dividends automatically and make additional investments at any time.
Most bond funds pay a monthly dividend, though the amount varies depending on market conditions. Bond funds may be a good choice for investors looking for a steady, consistent income stream because of this aspect. If you don’t want the monthly income, you can have your dividends automatically reinvested in one of several dividend choices.
Municipal bond funds are popular among investors who want to lower their tax burden. Although municipal bond yields are normally lower than taxable bond fund yields, some investors in higher tax brackets may find that a tax-free municipal bond fund investment, rather than a taxable bond fund investment, provides a better after-tax yield. In most cases, tax-free investments are not suited for tax-advantaged accounts like IRAs.