What do you think about this CD deal?
JP Morgan has a 15-year CD with a rate that is tied to the LIBOR.
The first 5 years, it pays 5.25%.
The second 5 years, it pays 7.5%.
The third 5 years, it pays 10%.
It is callable after one year.
It is FDIC-insured.
Here's the catch. If the LIBOR rises above 6.0%, interest stops until the LIBOR drops back below 6.0%. That is evaluated on a daily basis. Currently, the LIBOR is somewhere around 0.4%. I think it topped 6% last in 2008 and before that in 2000.
For someone looking for higher income from a conservative investment, like a retiree for example, what do you think about this? Principal is safe as it is FDIC-insured. Even if the LIBOR tops 6% temporarily, the interest earned the rest of the time is far above current market rates. The CD could be called in 1 year, but it will earn 5.25% until then.
Only big downside is if rates shoot up and stay there for an extended period.
__________________
Steve
* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.
|