Certificats of Deposit

[ultrarunner]

Mine was at 4 and matured.

New CD is 5 and max savings at 2

I told the branch manager I was not ready to lock up and would not be happy with 2 as credit union offers 4 on checking.

He asked me to wait and the said I could still have 4 and not lock up... subject to change.

The next day he confirmed I was all set.

I never got 4 and only 2

So I made the 40 mile roundtrip and he apologized saying I would need to bring new money in to get 4 when nothing was ever said about new money...

So to keep from any further misunderstandings I closed the account...

 

[grsthegreat]

Been there done that. And the banks dont care if you close accounts.
i closed my wells fargo accts after nearly 20 years with them over some stupid policies they were doing.

My current credit unions up here are offering 6 month cd at 5 % , but i think ill stick with the 18 month. This is money i have no use for right now, and i dont want to invest in stock market with it. Its more of an emergency fund. I can still pull it out at any time and only lose 3 months interest as a fine.

i have lots invested in stocks and mut funds. But i cant touch those when market is so volatile. Ill leave those alone until they get back where they were. There getting close to where they were years ago. I am glad i didnt have to pull them out when market crashed, i would have lost the rebound money.

i just dont trust adding to them. The cd’s i have ….. 8 right now, are a fall back emergency backup plan. I dont plan on living on the streets as an old man.

 

[newbury]

<snip>

So I made the 40 mile roundtrip and he apologized saying I would need to bring new money in to get 4 when nothing was ever said about new money...

So to keep from any further misunderstandings I closed the account...

How does the bank tell it is "new money"??
I would have closed the account then opened a new one with the same $.
/edit
My late MIL kept a fair amount in bank CD's, enough so when she passed away every offspring (10 total) got $10K in CD's.
I had been bugging her for years to put it in better funds but she was "loyal to the bank". The same bank that changed hands 3 times in the last 4 years, paid a minimal interest, and had a constant personnel changeover.

 

[ultrarunner]

The older I am the more I like my credit union... just wish it was closer.

I had a not so good experience with another credit union years ago so I was cautious... but 19 with the current one and it's been all good... even got 10 family members signed up plus a few friends.

The commercial bank where I have business account said they cannot complete with credit unions... nuff said.

 

[CliffordK]

If you're doing a CD, then you need to guess what the future interest rate is going to be.

I think federal interest rate hikes have hit a plateau, and likely won't go much higher. They could go down slightly, or even significantly in the future.

So, you might put some of your money in short term investments, but also try some on the range of 5 years or so.

Also watch the stock market.

If you had bought Apple stocks 5 years ago, it would have been worth about $40 a share. Today it is about $190 a share, or just under a 5x increase.

This last year or two has been rough on the stock market, but some stocks are up somewhat.

The future is hard to predict, but it would be good to get at least a proportion invested. Growth often follows downturns.

 

[ultrarunner]

If you're doing a CD, then you need to guess what the future interest rate is going to be.

I think federal interest rate hikes have hit a plateau, and likely won't go much higher. They could go down slightly, or even significantly in the future.

So, you might put some of your money in short term investments, but also try some on the range of 5 years or so.

Also watch the stock market.

If you had bought Apple stocks 5 years ago, it would have been worth about $40 a share. Today it is about $190 a share, or just under a 5x increase.

This last year or two has been rough on the stock market, but some stocks are up somewhat.

The future is hard to predict, but it would be good to get at least a proportion invested. Growth often follows downturns.

I bought $1000 of Apple in 1981.

Needed money for school and sold and made $400 and was told I got lucky because IBM and HP could take out Apple in a heartbeat... so much for conventional wisdom.

I have no Idea what it would bring today...

 

[CliffordK]

I bought $1000 of Apple in 1981.

Needed money for school and sold and made $400 and was told I got lucky because IBM and HP could take out Apple in a heartbeat... so much for conventional wisdom.

I have no Idea what it would bring today...

With a bunch of stock splits, the stock value in 1981 would be about 10¢ a share. Today it is $191.24. So, about $1,900 for every dollar invested.

I you had kept your original $1000 investment for 40+ years, it would be worth about $1.9 Million today.

Of course, it may be difficult to just buy and hold forever.

And, not all stocks have gone through such tremendous growth. Microsoft has also done reasonably well since the mid 80's.

Some companies pay dividends. Others do a combination of stock splits and buy-backs putting company money into growth rather than dividends, so it isn't a straight forward comparison between different companies.

All the tech stocks took a beating around 2000, and to some extent in 2008.

So, if you had purchased Microsoft in December 1999 at $58.75, it would have fallen to $17.06 in March 2009. It is now back up to $374.51. So, good for a long term hold investment, but rough for periods of that time.

 

[ultrarunner]

With a bunch of stock splits, the stock value in 1981 would be about 10¢ a share. Today it is $191.24. So, about $1,900 for every dollar invested.

I you had kept your original $1000 investment for 40+ years, it would be worth about $1.9 Million today.

Of course, it may be difficult to just buy and hold forever.

And, not all stocks have gone through such tremendous growth. Microsoft has also done reasonably well since the mid 80's.

Some companies pay dividends. Others do a combination of stock splits and buy-backs putting company money into growth rather than dividends, so it isn't a straight forward comparison between different companies.

All the tech stocks took a beating around 2000, and to some extent in 2008.

So, if you had purchased Microsoft in December 1999 at $58.75, it would have fallen to $17.06 in March 2009. It is now back up to $374.51. So, good for a long term hold investment, but rough for periods of that time.

You just made my day...

Never did the math...

Dad was so happy to hear I made a little to pay for my course materials...

Still have my Apple //e with original box and packaging material... maybe it's my consolation prize?

 

[grsthegreat]

Hind site is always great. But no one takes into account that when theres a hugh, huge drop, most people dump the stock. So not too many people hang onto a stock for 40 years.

i still remember the GM STOCK that i held onto because, heck, GM will always rebound.


NOT

 

[Torvy]

CDs are largely a waste of money. Maybe if you get a good deal on a short term one and just have to hold cash for a future purchase. Anything more than 90 days is much better off in the market. The average is about 10%. Open up an account with an online broker and look for muni bonds or something similar if you are risk averse.

I just pulled all of my money out of Fidelity. Anyone stupid enough to hire my SIL to manage other people's money will not be managing mine. Mostly I don't trust him to keep his nose out of my business. I found a money manager I trust implicitly.

 

[Oaktree]

The commercial bank where I have business account said they cannot complete with credit unions... nuff said.

I guess that depends on where you are. A few years ago I looked into a couple local-ish CUs and didn't see that they offered anything my bank didn't, and were a lot less convenient.

This last year or two has been rough on the stock market, but some stocks are up somewhat.

The future is hard to predict, but it would be good to get at least a proportion invested. Growth often follows downturns.

I bought some Amazon stock earlier this year when it was ~$85, it's back up to 140-ish now. Long-term, stocks will generally out-perform any other investment but it can be a rough ride sometimes.

CDs are largely a waste of money. Maybe if you get a good deal on a short term one and just have to hold cash for a future purchase. Anything more than 90 days is much better off in the market.

That might have been true for most of the last 15 or so years when they paid little more than a savings account, but today's rates are pretty good and often as not they're FDIC insured. Would hardly call them a waste of money.
Stock market is good when it's good.

 

[RSKY]

Very odd. I have a sizable CD that matures next wednesday. Bank called me and they will roll it into another 18 month at 4.5%. I dont need the funds at this time.

their high interest acct is at 3%, but require 3 deposits and so many withdrawls per month. Not into games. With cd i dont have to do anything.

This morning JPMorgan has a CD paying 5.5% available on the Fidelity website. Also money market mutual funds paying slightly less than 5% (SPAXX) with no minimum and about 5.2% (FZDXX) if depositing over $100.000. When you need cash it takes two days maximum to get it deposited in your bank. I know I keep pushing Fidelity on here but of the three companies I have had experience with they have been the most helpful and easiest to deal with.

RSKY

 

[CliffordK]

Hind site is always great. But no one takes into account that when theres a hugh, huge drop, most people dump the stock. So not too many people hang onto a stock for 40 years.

i still remember the GM STOCK that i held onto because, heck, GM will always rebound.

NOT

Yep, one has to accept volatility. And some stocks that are smoking today could be burnt up by tomorrow.

There is a lot of talk about the incredible investment strategy, buy high, sell low. It may seem like the most stupid thing in the world, but it is a trap that is so very easy to fall into.

There are a many problems with buying when things seem to be growing, then selling out at the first sign of a crash. When is it too late to sell? Even if one is watching the news, it is hard to tell when an event is a short term drip, or a big plunge. Inevitably one sells at the bottom, the misses the early growth back.

And, if one has several years of growth, then capital gains may preclude selling due to short term market volatility.

I found the 2008 plunge to be rather annoying. GM, Chrysler, and Ford never stopped producing vehicles, but were off-peak somewhat. How can a century old company be living so close to the edge that they can't endure a short-term market downturn?

Likely they've distributed a lot of their wealth through dividends, and didn't maintain a rainy day account. If a person had purchased the GM stocks decades earlier, they likely would have realized their original investment with the dividends but not if their portfolio wasn't diversified, or always rolled dividends back into the same stocks.

Ford, Chrysler, and GM like their pickups and mid-size trucks. But it is sad to see them year after year making choices to discontinue, or not invest in one passenger vehicle after another.

Passenger cars are a tough market, but not an impossible market.

And, there are more passenger cars on the road than pickups. Just not made in the USA by Ford or GM.

I dislike the concept of hiring CEOs from outside the business. People that may be good with numbers, but not good with actually running the actual business they're hired to run. No ties to autos?

Anyway, choose a mix of investments. A few CDs, but also try some stocks. I'm partial to the tech stocks, but there are some good industrial stocks too. IPOs are unique. A lot of upside in some, but also downside.

Invest and hold the good stocks, long term, through the good and the bad, and don't bail as soon as stuff looks a little weak.

 

[Torvy]

That might have been true for most of the last 15 or so years when they paid little more than a savings account, but today's rates are pretty good and often as not they're FDIC insured. Would hardly call them a waste of money.
Stock market is good when it's good.

The rates are not good. It is the margin that matters not the rate. It's not like a financial institution is going to give higher rates on any savings instrument than they charge on debt instruments.

 

[Oaktree]

I use a high yield savings account instead of CD's

Don't most of those come with a lot of strings attached, like a certain number of debit card transactions per month and direct deposit?

The rates are not good. It is the margin that matters not the rate. It's not like a financial institution is going to give higher rates on any savings instrument than they charge on debt instruments.

When these banks are charging 8+% on mortgages and even more than that on most other loans, they shouldn't have any trouble paying 4 or 5% on deposits. It seems only the online banks pay anywhere close to that though.
Sure you can get better returns (sometimes) in the stock market, but you can also lose your shirt if the market tanks. Balance is the key, especially as you get older and may not have the time to wait for the market to recover.

I know I keep pushing Fidelity on here but of the three companies I have had experience with they have been the most helpful and easiest to deal with.

I've had good experiences with them myself, though their website isn't as easy to navigate as it could be.

 

[jyoutz]

The rates are not good. It is the margin that matters not the rate. It's not like a financial institution is going to give higher rates on any savings instrument than they charge on debt instruments.

My credit union is now doing auto loans at 5.99% and mega CDs at 5%. A much thinner margin than most banks.

 

[dfkrug]

Don't most of those come with a lot of strings attached, like a certain number of debit card transactions per month and direct deposit?

Not really.

Synchrony, Ally, Marcus, CapOne, Amex, etc. all offer insured savings accts that currently pay north of 4%. FDIC ins covers you up to $250K per named depositor. Same for their CDs. Great for those with low risk-tolerance.

Downsides? No living trusts. Max 6 withdrawls per month. No storefront, if you like those. Internet-based, but that's a feature, not a downside. Dunno if they work with ATMs, since I don't use ATMs.

Best to spread your nest egg around, if you have more than $250K ($500K if hitched).

My CU has some sub-mkt rate CDs, but still only pays a few tenths for savings or checking. I rarely go in there, but they do dispense cash, if requested.

 

[Torvy]

My credit union is now doing auto loans at 5.99% and mega CDs at 5%. A much thinner margin than most banks.

Credit unions are non profit, their margins have always been thin. This is not new.

5% is too little against inflation to tie up. I can do much better with investing and can easily move my money without penalty.

There are times for CDs, but not long term or high dollar.

 

[ultrarunner]

If FDIC insurance or similar isn’t a requirement there are easy ways to get 8 or 9 right now and higher.

First Deed of Trust secured by Real Estate.

Several I know do this and it’s worthwhile because they also charge origination.

Only one has ever had to foreclose and that was 2010 and he rented the place out for a few years and paid very well for his efforts.

5.25 is the current Bank CD today offered at one Bay Area Brick and Mortar with many offering 5%

 

[bigtiller]

Credit unions are non profit, their margins have always been thin. This is not new.

5% is too little against inflation to tie up. I can do much better with investing and can easily move my money without penalty.

There are times for CDs, but not long term or high dollar.

Especially my old CU. It's like walking into the Taj Mahal.

That's why I left.

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