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

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  • snafu
    replied
    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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  • Ima saver
    replied
    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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  • Relmiw
    replied
    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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  • Relmiw
    replied
    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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  • Ima saver
    replied
    No, there are plenty of no load funds out there that are really good. Check into the Vanguard Mutual Fund group.

    Leave a comment:


  • Relmiw
    replied
    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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  • snafu
    replied
    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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  • jIM_Ohio
    replied
    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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  • Relmiw
    replied
    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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  • EEinNJ
    replied
    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.

    Leave a comment:


  • feh
    replied
    At those rates, I wouldn't bother. You can find bank accounts with 2% interest.

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  • jpg7n16
    replied
    my mattress isn't FDIC insured

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  • 97guns
    replied
    my thought is that its not even worth it, i'd rather be sleeping on it under my matress.

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  • jpg7n16
    replied
    Just go back to the bank and ask what it would take to switch to the 3 year CD. They'll know what all their policies are in order to switch it over.

    Ask if they can waive the interest penalty as long as you open the new 3-yr CD.

    Might not be able to, but worth a shot to ask.

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  • Relmiw
    replied
    Originally posted by EconoMutt View Post
    I've never had any problems with cashing in a CD early. I've done it often.
    About a year and 1/2 ago I bought six CD's with a five year maturity date.
    They average 5% interest. My friends said I was crazy because I might have to cash one before the maturity date. I told them I don't care because I'm still way ahead in interest.
    that sounds very similar to what i am thinking of doing.
    suppose the interest rate goes up to 5% in a couple years, i wonder if the bank would deny my request to close the account and restart it because they want me at 2.5%

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