By SCOTT BURNS Guess where you can get a better yield than a bank CD? (Sorry, “almost anywhere” is not an acceptable answer.) Old-fashioned, fixed-income, tax-deferred annuities. I learned this while looking through a recent monthly issue of the Fisher Annuity Index, a monthly publication of Dallas-based Fisher Publishing Co. Although the average annuity was barely competitive with a five-year Treasury a few years ago, the average now sports an attractive premium. Better still, with a little research you can expand the premium from attractive to compelling. Here are the numbers: In February, when the average five-year bank CD was yielding about 4.4 percent and a five-year Treasury was yielding just under 5 percent, the average tax-deferred annuity was yielding 5.64 percent. Either way, it’s a nice premium. Nor is it a fluke. It’s the average. About one-third of the 964 contracts tracked by Fisher Publishing offered rates between 5.64 and 7.07 percent. Some offered still higher rates. Curious, I put a recently arrived CD-ROM in my bag and went off to visit Danny Fisher. Dubbed “Mr. Annuity” more than 10 years ago when I first became familiar with his database and associated statistics, Fisher started publishing his data as it became clear that he had the largest and most complete database on fixed annuity products in the country. (Morningstar has a corresponding position in variable annuity data.) Agents and individual investors can buy a monthly print edition of his database for $25 (call 800-833-1450). Which brings me to the CD-ROM. You can now buy a single copy of his data on CD-ROM for $50 and use it to search and screen through nearly 900 annuities. Grounded in a run-time license for Microsoft Access, the program has a simple query language that allows you to do very specific searches. I found, for instance, that some 528 contracts offered yields greater than the 5.17 percent yield on a five-year Treasury note. Of those, 108 were CD-type annuities with limited early withdrawal penalties. And of those, only 28 had five-year terms, and only 17 had a rating of “A” or better from A.M. Best and Co. The highest yield among those 17 was a Transamerica annuity, with a yield of 6.6 percent on a minimum investment of $5,000. Does 6.6 percent sound puny to you? It’s not. It’s rare and worth the search. To put it in perspective, only 26 of more than 1,400 mutual funds that invest in corporate or government securities offer an SEC yield of 6.6 percent or better. None are tax-deferred, and most involve substantially greater risk. “They’re getting more aggressive,” Fisher said when I asked what had caused the yield improvement. “This isn’t creative genius. This is watching Sam Walton take a smaller spread on more dollars. We’re seeing more companies follow a trend toward higher-quality, consumer-oriented annuities. “There are some nice selections you can make if you watch what you are doing. There are five- to six-year rates out there that are 6 percent or higher, not over 7 percent, and the money is safe. There’s also a lot of flexibility about when you take the money, when you pay the taxes, etc.” Could he give me an example of flexibility? “Sure. Not long ago my mother wanted to do something with $11,000 she had in an IRA. We annuitized it over four years so she could make payments on a new car. The monthly check goes into her checking account automatically. And the monthly car payment is withdrawn automatically. That’s flexibility. You can’t do that with Treasury bonds or CDs.” The caveat here is that you can’t just go out and buy the annuity with the highest yield. Indeed, Fisher says that really high yields are usually fluky contracts with draconian penalties for early withdrawal. Basically, they are designed for salesmen, not consumers. His advice? Look for or ask for a simple contract with a surrender penalty that isn’t punitive. Questions and answers Question: We just moved from Japan to San Antonio within the last year. As this crazy stock market goes on and on, I’ve been thinking that we are falling further behind with each passing day. I got into the market in 1993 and chose my blue chips well. My portfolio has done wonderfully beyond any dreams and expectations. And yet I still have this sense that in relation to our peers, we are falling further behind. The number of new Silicon Valley companies continues to proliferate and, with them, the number of employees endowed with 401(k) plans and stock-option plans. So, too, the number of investors now equipped with a sense of derring-do and access to market information has resulted in a ballooning of day traders. My questions: What is happening to “slow and steady” small investors (like me) in real terms, and how should we factor in this new reality? A.B., San Antonio Answer: Let me suggest some easy reading: “The Tortoise and the Hare.” It may be a children’s story, but the moral applies to investors. Over a period of time, “slow and steady” will do just fine. Most day traders will trade themselves into oblivion. There is an old saying that “genius is a rising market.” A rising market underwrites a lot of mistakes and transaction costs. It also creates the illusion of great insight. The problem we all have is that winners in the stock-options game tend to be highly publicized. Where we once read about long-term employees at Wal-Mart becoming millionaires, we now read about short-term employees at Microsoft or Dell becoming millionaires. Still, the numbers are small compared to the number of people with jobs. To join the “option rich,” you can’t work in the public or nonprofit sectors; you can’t work at numberless proprietorships and small corporations; you can’t work at any of the really huge companies. Beyond that, you have to be at the right option-granting company at the right time. While the odds are a big improvement on any state lottery, winners in the stock-option lottery are still rare and uncertain. My advice: Set your goals and forget about the imagined competition. Syndicated columnist Scott Burns can be reached by fax at (214) 977-8776 or by e-mail at firstname.lastname@example.org.