It is a pretty high rate; but people who are excited to lock up $100k for 100 years probably have high incomes. Not everyone can structure all of their earnings and other income as capital gains.
For a single person in California, it's 24% + 9.3% at ~$89,000 per year, and 32% + 9.3% at ~$170k per year, and goes up from there.
So, here: 2.86% average inflation for past 100 years. (10^(log(16.785)/100) = 1.0286...). 4.75% APR. At ~89k/year, APR-after-marginal-taxes in California is 3.26%; or a real yield of 0.4%. You'll have 1.9x the principal after 100 years. At $170k-single-equivalent/year, there's an after-marginal-tax yield of 2.78%, or an after inflation real yield of -.007%. After 100 years, you'll have about half the principal in real money.
Presumably a 100 year cd would largely be used like an annuity, as a retirement vehicle. Which you’d expect to happen at low income tax levels.
I suppose if you are the beneficiary of the cd gift you could be taxed at that rate but at that point you have lots of options including donating it to a dag and it kicking off tax advantages to you for years and years.
Interest is taxed at income tax rates.
It is a pretty high rate; but people who are excited to lock up $100k for 100 years probably have high incomes. Not everyone can structure all of their earnings and other income as capital gains.
For a single person in California, it's 24% + 9.3% at ~$89,000 per year, and 32% + 9.3% at ~$170k per year, and goes up from there.
So, here: 2.86% average inflation for past 100 years. (10^(log(16.785)/100) = 1.0286...). 4.75% APR. At ~89k/year, APR-after-marginal-taxes in California is 3.26%; or a real yield of 0.4%. You'll have 1.9x the principal after 100 years. At $170k-single-equivalent/year, there's an after-marginal-tax yield of 2.78%, or an after inflation real yield of -.007%. After 100 years, you'll have about half the principal in real money.