Interest Rates?

[upnorth]

Anyone have any idea of where interest rates are going to go? I have 2 CDs coming due and the rates stink right now. Are they going up in the near future?

[IFallsRon]

I'd guess that the rates aren't going up too soon. Banks can still buy money cheap from the Fed so there's no point in offering high CD rates to customers.

If a bank's CD rates seem much higher than the competition, it may be an indication that the bank has had a big loan default and is looking for cash. I'd be leery if this were the case.

Over the past year I have been moving CDs into bonds.

[upnorth]

What kind of bonds? US savings bonds?

[lawman]

Interest rates on CD's won't be going up any time soon. They are less than 1% right now. The only way you can get a better rate is by locking in for a 24 month CD. Those are paying about 2.5%. But..... 18 months from now could be a very different story. Don't lock into anything long term right now.

[IFallsRon]

I and EE savings bonds.

[upnorth]

Thanks guys. My bank is offering 3% but you have to lock in for 39 months, like 1.7$ for 18 months

I have 1 due now and another at the end of the month coming due. The rates just keep dropping and I can't see continuing to do the same thing with such poor returns.

[Walleye Guy]

You can get 1.5% in an ING Orange Savings account. Their rates for savings accounts are some of the most competitive you will see. They will give you $25 for opening an account.

[CJH]

Right now, I would stick with an interest bearing account rather than a CD, or an alternative investment. There is no sense in locking up your capital, when you can get a comparable rate and still have access to your cash.

[delcecchi]

Right now, I would stick with an interest bearing account rather than a CD, or an alternative investment. There is no sense in locking up your capital, when you can get a comparable rate and still have access to your cash.

You can buy TIPS (treasury Inflation Protected Securities) either direct from Government or in mutual fund. They pay interest, plus the principal is indexed to inflation. Prices in the market for TIPS are not forecasting much inflation for the next few years.

[upnorth]

Right now, I would stick with an interest bearing account rather than a CD, or an alternative investment. There is no sense in locking up your capital, when you can get a comparable rate and still have access to your cash.

Savings account interest rates are close to non existent right now. I have already looked at that. And I really would like to make a few $$$ in coming months.

And I looked at ING as I have them for a 403.b and their rates to length of term are not so good either.

[Nutty Fisherman]

I realy don't think you are going to find anything that pays to much at this time. I would love to have the intrest rates my folks were getting on CDs in the late 70 and early 80's

They were in the 18% range.

[upnorth]

I would be happy with 4 - 5% right now.

[IFallsRon]

You pay for higher ING rates. They make you wait a few days to get your money after a withdrawal

[CJH]

I know the MMA's/savings/etc rates stink right now, but they aren't much worse than the rate you quoted above. 3% for over a 3 year tie up isn't worth it in my mind, thus keeping it liquid until the market turns around or find alternative investments (bonds, etc...) I don't think you are going to find 4-5% right now on any CD's or interest bearing accounts. If you do, let us know where!

[upnorth]

Quote:

I don't think you are going to find 4-5% right now on any CD's or interest bearing accounts. If you do, let us know where!

OK...I was fantasizing abit. Can't blame a guy for wanting.

I definetely agree that I don't want my money tied up for 39 months at 3%.

[MN Shutterbug]

You're better off spending your money. Actually, I have a savings acct. with HSBC direct. Their rates have also been dropping, but the latest rate was to 1.65%, where it was a couple days ago. There is no minimum for opening the account. However, 1.65% doesn't amount to a heck of a lot, so I'm going to spend a bunch. It's a lot more fun. Besides that, the feds will be after their share of even that meager amount.

[upnorth]

I would love to start spending, but do need a little cushion. Never know when you are gonna a few $$$

[Down Deep]

I had a couple of CD's come due in late Feb. I couldn't see getting 2 to 3% for approx. 3 years, so I bought stocks. There are some really good deals out there right now. GE would be one. Lots of others, but do your homework.

Another thing one might do is use the cash to update the house or vehicle. If you need a roof, windows, furnace, car or something like that there are some incentives that make these purchases a better value than getting the interest rate and still having to pay taxes on the gain.

[norm25]

How do you buy the stocks? do you have a broker or do you do it online by yourself?

[cbrooks]

You ever thought of putting that money into a municipal bond?

[upnorth]

This money is money that I want in something stable, dependable and insured. I don't want to put this in anything with any risk. I have enough in mutual funds and bonds now and have taken a huge beating Call me chicken, but this portion is going to be as safe as possible.

[Down Deep]

How do you buy the stocks? do you have a broker or do you do it online by yourself?

I have an Etrade and Schawb account. A good way to get started is to look at buying index funds. That way you live with the whole market and the fees are minimal. The book Investing for Dummies is a good book for some basic information on how markets work. Again, do your homework because there are no guarntees.

Up North makes a good point about being diversified. I still have a cash element in by portfolio, but the market is providing a good opportunity to buy. The reason the market has gained in the last two weeks is because those bargain stocks are being bought. Hopefully the buys will continue.

[upnorth]

I am putting money into 3 different 403.b account to the tune of $600 per month and my wife probably another $125. Not to mention 3 different IRAs based on Bonds and Mutual funds. Need some money in a safe place.

[nofishfisherman]

I would probably go with a money market or cash certificate account.

Your money will be safe however it will only earn 1-2%. But a small gain is usually the case when you are looking for something safe.

Having the MMA or CCA you'll know your money is safe during a turbulent time and it will be earning a little for you. You'll also have access to it if you lose a job or need quick cash for something.

As the market turns around you'll also have immediate access to this money to move into other investments that make sense as rates change.

I keep my "safe money" in a cash certificate account, not to long ago it was earning me 4% which isn't bad for a zero risk investment. Although now its earning me closer to 1%. But I still know that my fall back money is safe and sound if I need it. Its nice to know atleast one of my investments isn't taking a daily kick to the gut.

[upnorth]

I can get a 9 mon cd from my bank at 1.3% and I think that is what I am going to do with most of this cd and put a couple thousand in I series savings bonds.

[Walleye Guy]

There are savings accounts that pay more than 1.3% plus the funds remain liquid. I think there are better options for you than that CD. In this economic environment interest rates can fluctuate fairly quickly. Put the cash in a savings account paying more than 1.3% then move it into a CD if the rates improve.

The CD locks you into a very low rate that you cannot improve for 9 months.