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about to start a 5 separate 1k 3 year CDs.

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    #16
    At those rates, I wouldn't bother. You can find bank accounts with 2% interest.
    seek knowledge, not answers
    personal finance

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      #17
      I give you credit for trying to figure this out, and ladders are a good strategy.

      But considering how low rates are, and you're only working with 5K, the spread amounts to chump change. Is it worth setting up all these accounts, keeping track of it all, then reporting & paying tax on the interest for an extra 50 or 100 bucks a year?

      If your time frame could be longer, laddering I bonds might be a better way to go.

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        #18
        Originally posted by EEinNJ View Post
        I give you credit for trying to figure this out, and ladders are a good strategy.

        But considering how low rates are, and you're only working with 5K, the spread amounts to chump change. Is it worth setting up all these accounts, keeping track of it all, then reporting & paying tax on the interest for an extra 50 or 100 bucks a year?

        If your time frame could be longer, laddering I bonds might be a better way to go.
        what do you mean by "laddering I bonds"?

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          #19
          Originally posted by Relmiw View Post
          what do you mean by "laddering I bonds"?
          Laddering bonds is what I and some other poster suggested with CDs

          A ladder is a group of bonds with similar maturities which mature at different times

          I suggested a 90 day CD ladder. Which is 3 90 day CDs, each CD opened 30 days apart. This means you have 3 CDs in the ladder and every 30 days one of them is maturing.

          An I-bond ladder would be get 5 $1000 I bonds which are 5 years in duration (for example)
          buy 1 bond this year, then a second next year, then the third in 2012 and 4th in 2013 and 5th in 2014. In 2015 the first I-bond matures.

          It will be easier to ladder CDs than bonds, and easier than I-bonds for sure. I bonds have sales restrictions, and you must buy in certain denominations (read treasury direct.gov for details on sales and purchases).

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            #20
            Laddered CDs is a soft way to ease into the investing stream and helps to teach you to read the 'small print' and know the details. Do some research, find the best rates, verify your investment is insured

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              #21
              i have a quick question.

              i was thinking of putting 1.3k into a mutual fund account i already have (american funds)

              they want to charge me a 5.75& service charge on any amount i lend them. is this pretty standard? i'd be giving up about $60, but i don't plan on touching the money i have in there for a long time.

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                #22
                No, there are plenty of no load funds out there that are really good. Check into the Vanguard Mutual Fund group.

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                  #23
                  Originally posted by Ima saver View Post
                  No, there are plenty of no load funds out there that are really good. Check into the Vanguard Mutual Fund group.
                  I am sort of a sucker for having (or at least starting with) an even amount of money in accounts. right now i've got $3,700 in the american funds account and would feel better if it were brought to $5000 and then left there. This would be a bad move in the long run, investing more there?

                  If both funds are equal, why do they even charge the 5.75%?

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                    #24
                    Originally posted by Ima saver View Post
                    No, there are plenty of no load funds out there that are really good. Check into the Vanguard Mutual Fund group.
                    i looked into your advice Ima and i've learned a lot. i am thinking of canceling my american funds account of 3.3k and putting 5k into a vangaurd fund. i am not sure whether i want a mutual or index fund at this point though.

                    i see how vangaurd has no front load on most all of their funds, and the expense ratio was much lower (around .18% instead of american fund's .7%)

                    can you think of any reason i should not close my american funds account? it almost seems like i should leave it there since i already payed the front load, but in my head that seems like a dumb reason

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                      #25
                      I think I would close the account at American and move it to Vanguard. I have most of my money there in the Index 500 fund and I have been happy with it.

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                        #26
                        I noticed the 'talking heads' on the investment channel hold my view that you are losing purchasing power with laddered CDs. With the possibility of deflation Real Return Bonds and Corporate Bonds have higher risk. They suggest holding off until you can get a minimum 5% ROI.

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