InSpades said:
no. the more frequently it compounds, the more you will get (assuming both stated rates are the same on the 2 & 3 year c/ds). however, the difference is not significant.
i would hold off on the 3-year because you will be about to get a better rate in june when the fed is done tightening.
Here is a GREAT, GREAT site for the financial savvy individual........especially CD investors.
Bankrate.com
One can plug in their state/city in the BANK CD section and get the best rates/APR's in their area on most any length CD..... at all the banks in that particular city/state.
Love this site!!
Bankrate.com
One can plug in their state/city in the BANK CD section and get the best rates/APR's in their area on most any length CD..... at all the banks in that particular city/state.
Love this site!!
Fishhead said:
i know, that's why i asked. actually apy stands for annual percentage yield.
you are correct however that if the apy is the same then the interest will be the same. i missed that on my first response.
i will still recommend holding off on a 3-year c/d at this point. you will be able to get a better 3 year rate in a few months as the fed will raise the rate at least another 25 b.p....probably 50, then stop in june.
I would look at some closed end funds that are trading at discounts and yielding over 7% and some tax frees yielding close to 5.50% before ever looking at CD's. Try FCM or PYM especially on pullbacks. Or buy some GMAC or GM bonds yielding 8% plus for 2 years. My other motto, buy the bank stocks not the CD's. Healthy yields and only taxed at 15% on qualified dividends.
Illini said:
No, suckers are those that buy long term care insurance policies in their 30's; pay hefty commissions to scam salesmen for benefits they will probably never use, and when they do try to use them, the carrier looks for loopholes to deny coverage, with the hope of outlasting/outligitating the insured (ie the insured croaks before they see a penny). :think2:
There is no doubt CD's are not for a wise investment anymore. Maybe in the 80's when you could get 15-18 % rate. Unless you are extremley old and the CD is 500,000k You should not tie your money up in a CD. There are unlimited other options out there more appealing then a CD. It depends on the amount you are investing and your risk tolerance.
Wow I am nothing shot of stunned at this thread and how reckless the advice is in here. We as a site are great at sports info, but this one is just full of inaccuracies.
First I have a suggestion. If higher rates on a 3-year investment are an absolute LOCK, then you should be playing interest rate futures and become a billionaire. Otherwise people really ought to be questioning when you see all these people say you are sure to get better rates on a 3-year timeframe in the near future. Prime rate will be going up almost certainly, but there is no guarantee 3-year rates will follow along with it. In the meantime if you wanted to gamble on a higher rate existing in say 3 months, the market has already priced that in.
Right now 3-year t-bills are yielding 4.83%. Bankrate.com says 5-year CDs are yielding 4.62%. Here the guy says 5.6%. I am guessing he was mistaken and meant 4.6%. No legitimate bank with FDIC insurance on the full principle is going to be giving out 5.6% right now unless there is some other very lucrative business you have with them. Only way you can get a 5.6% CD with FDIC insurance right now is to have it denominated in a foreign currency. If any institution made it a practice to be this far out from the market rate banking regulators would be working on shutting them down.
In any case I want someone to find me a tax free money market account with a rate over 5%. In fact I'll make it easy, just find one over 4%. Considering you'd be lucky to get one at 3% right now you chances of doing that with a true money market fund are between slim and none. Taxable bond funds don't even pay 5% and they carry principal risk.
CDs are a decent investment if you have a specific need for the money and you need assurance of safety. If you have a kid starting college in 3 years, you don't want to be risking your principal in hopes of gaining some yield do you? I am not saying CDs are a must have in a portfolio, nor can I say this particular poster should put the money in a CD, but without knowing his financial situation and needs no one can honestly say whether it makes sense. I will say though if he truly could get 5.6% on a 3-year CD with FDIC insurance then he would have gotten the equivalent of a very strong "rogue" line in his favor.
First I have a suggestion. If higher rates on a 3-year investment are an absolute LOCK, then you should be playing interest rate futures and become a billionaire. Otherwise people really ought to be questioning when you see all these people say you are sure to get better rates on a 3-year timeframe in the near future. Prime rate will be going up almost certainly, but there is no guarantee 3-year rates will follow along with it. In the meantime if you wanted to gamble on a higher rate existing in say 3 months, the market has already priced that in.
Right now 3-year t-bills are yielding 4.83%. Bankrate.com says 5-year CDs are yielding 4.62%. Here the guy says 5.6%. I am guessing he was mistaken and meant 4.6%. No legitimate bank with FDIC insurance on the full principle is going to be giving out 5.6% right now unless there is some other very lucrative business you have with them. Only way you can get a 5.6% CD with FDIC insurance right now is to have it denominated in a foreign currency. If any institution made it a practice to be this far out from the market rate banking regulators would be working on shutting them down.
In any case I want someone to find me a tax free money market account with a rate over 5%. In fact I'll make it easy, just find one over 4%. Considering you'd be lucky to get one at 3% right now you chances of doing that with a true money market fund are between slim and none. Taxable bond funds don't even pay 5% and they carry principal risk.
CDs are a decent investment if you have a specific need for the money and you need assurance of safety. If you have a kid starting college in 3 years, you don't want to be risking your principal in hopes of gaining some yield do you? I am not saying CDs are a must have in a portfolio, nor can I say this particular poster should put the money in a CD, but without knowing his financial situation and needs no one can honestly say whether it makes sense. I will say though if he truly could get 5.6% on a 3-year CD with FDIC insurance then he would have gotten the equivalent of a very strong "rogue" line in his favor.
blue edwards said:
Blue. This is a gambling site. I gamble. I love junk bonds. Where else can you get a decent yield? Of course it's a junk bond but GMAC should be spun off soon and will be investment grade. Even if not, I don't imagine GM would have problems paying over the next few years. 7.82% on an 11 month GMAC, now that's a nice yield. Last November I bought some going out 4 months yielding over 7% apy, those paid off mid March.
Definitely important to get good advice unless the money is just "play" so to speak where you don't mind taking some risks. If you are willing to tolerate risks and don't necessarily need to get the full investment amount back in 3 years then CDs probably aren't the way to go. A good advisor will look over your whole picture, from home equity to savings to timeframe for financial needs and put it into basic terms of what sorts of investments work for your situation. Find someone who will do it for a flat hourly fee unless you really want a long-term advisor.
