If it sells, the modern bank and S&L will sell it. And what's hot today is tax deferral and real estate.
Consequently, some institutions have packaged those dreams into certificates of deposit, creating new-style CDs for a new generation of savers. Here's what's going on at a few inventive banks and S&Ls:
One-year, zero-coupon CDs: These instruments roll your tax liability forward into the following year. You receive no interest payments currently. Instead, you purchase the CD at a certain percentage less than face value and receive face value at maturity -- the difference in payment being your interest income.
At Community Federal Savings and Loan in Palm Beach, Fla., for example, you recently could buy a 364-day CD for $10,953.61 and redeem it at maturity for $12,000. That's an interest gain of $1,046.39, for an annual yield of 9.58 percent.
At Butterfield Savings and Loan in Brea, Calif., you put down $9,059 and get back $10,000, for a yield of 10.25 percent.
Interest is paid on each of these CDs at the end of the term. If you withdraw your funds before maturity, you receive no interest. The same tax-reporting rules apply as are used for Treasury bills maturing in a year or less, David Runkel, Community Federal's vice president, told my associate, Virginia Wilson. All the interest is treated as being paid when the CD matures. So if you bought a 364-day zero CD today, the interest income would be reportable on your 1986 return, due April 15, 1987.
Only a few institutions offer one-year zero-coupon CDs, but the concept is spreading. Note that the tax deferral applies only to zeros of this brief time period. On longer-term zeros, all the interest income is taxable currently.
Real-estate CDs: Several S&Ls offered these new CDs last year, at a minimum of $5,000 or more ($2,000 for IRAs). Although I am not aware of any new issues coming onto the market right now, a fresh supply is expected later this year.
Here, you invest your money for eight to 12 years. The insured and guaranteed rate of interest last summer was around 8 to 10 percent, compared with 12 percent then available on some regular, five-year CDs.
But buyers are offered a share in the profits on some of the S&Ls' commercial mortgages. If successful, they might get returns of 13 or 14 percent.
Malibu Savings and Loan in Fountain Valley, Calif., offered the first real-estate CD. Investors were offered a minimum of 8 percent, and an alternative of 85 percent of the S&L's profit on a portfolio of commercial mortgages, whichever gain was larger. Similar investments came from Western Savings and Loan in Salt Lake City and Franklin Savings Association in Austin, Tex.
Profits come from the interest payments on the mortgages plus a share in the gain (called an equity kicker) when the building is sold, less the S&L's costs.
These CDs were sold through stockbrokers at 6 to 8 percent sales commissions, which reduces your return on investment. There is no federal insurance on the speculative portion of the CD; only your principal and the minimum interest rate are guaranteed. If you want your money back before maturity, you must ask your broker to find a buyer at the CD's current market price. There is no guarantee you'd get back what you paid.
The guaranteed interest on a real-estate CD is taxable currently. Any additional profit is taxed at maturity -- and at ordinary-income rates, not as a capital gain.
Whether or not you'll make more than your minimum guarantee depends on the expertise of the S&L in commercial lending. You should read the prospectus with the CD for clues to the institution's proven ability to profit from equity-kicker loans.
Mike Wise of Silverado Savings and Loan in Denver -- which plans to offer real-estate CDs at the end of this year -- says they're not for the traditional CD saver: They're for sophisticated buyers "who have invested in real estate and have a knowledge of institutional underwriting."
Beware the CD look-alike called a "retail debenture." It's being sold by some S&Ls at high interest rates -- as much as 15 percent -- for terms of seven to eight years.
Savers, thrilled by the interest rate, might assume that, like other S&L products, these debentures are federally insured. But they're not. They are merely the unsecured debt of the issuing S&L. If the institution went broke, you would be just another creditor hoping to get back a few cents on the dollar.
There's nothing wrong with lending money to an S&L, as long as you understand that your funds are not federally guaranteed. If safety is important to you, don't take any high-interest bank or S&L instrument without asking whether your money is federally insured.