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nirvinerealtor_IHB

New member
<p>I opened a CD account last week and was surprised to see the rate options as follow,</p>

<p>1-3 month - 1.09%</p>

<p>8 month - 4.89%</p>

<p>9 -17 month - 3.12%</p>

<p>60-120 mont - 3.2%</p>

<p>I know many of you are financial expert. Would you please explain the upside down rate for the 8-month term. The long term 60-120 month at 3.2%? I take it that the 5/1 ARM and 10/1 ARM products are heading south?</p>

<p>Thank you in advance for you time.</p>
 
<p>It's a mistake. It should read 2.89%. </p>

<p>I think you can get about 6% in an e*trade savings account with no time contract.</p>

<p>Fremont General preferred is paying about 9%.</p>

<p>A paypal account will pay over 5% with no time contract.</p>
 
<p>awgee,</p>

<p>Thank you,</p>

<p>I did open the account, 8-month term at 4.89% at a local bank. I realized e-trade and Fremont pay higher, I am not just comfortable with the higher rates as I had seen how they went bad overnight in the past. Maybe you can explain otherwise.</p>
 
awgee, are those others you mentioned FDIC insured ? Anything with the word Fremont on it might have me nervous....
 
Trooper - I wasn't recommending FG preferred. I was just giving info. I have no idea if any are FDIC insured. I would expect anyone to do their own DD. BTW, I do consider FDIC insurance to be a joke. I don't remember the numbers, but FDIC is reserve underfunded enough to be criminal to refer to themselves as an insurance corporation.<p>



nir - I can understand how you would not be comfortable with FG preferred. I had a ton of it in my daughter's college account, and sold it all about a year ago. I am merely giving info and not giving advice. I don't mind giving advice, but no one asked.
 
<p>Everyone,</p>

<p>Thank you for your inputs. I learn more where to get a little more money.</p>

<p>I am still trying to understand why long term holding interest is signigficantly less than shorterm's. Thanks.</p>
 
awgee: okay, I'm officially asking! My two CDs will be maturing soon; how would you suggest I invest the money? I will be using it as down payment for my house in 2009/2010. Thanks!
 
Vanguard California Tax Exempt Money Market (VCTXX) is at 3.45% and Vanguard Prime Money Market (VMMXX) at 4.85% after expense ratios. I have much more faith in Vanguard than Countrywide Bank or Fremont Savings and Loan at the moment.
 
Make sure you ask the manager for a rate exception. Find the highest in the paper for proof. Maybe they can't match but they will try to get it close if they want your business. I think over 5% is pretty good if you can lock it in for over a year. I have not seen 6% since about 98.
 
<p>Irvinesinglemom - A combination and the percentages depending on your personal comfort level.</p>

<p>For immediate liquidity; a combination of 3 month and 7 day CDs at Farmers and Merchant Bank, but not more than $100,000. F&M does not pay as much as other CDs, but F&M has the most reserves as any local bank. I think that preservation of value is way more important than ROI at this point.</p>

<p>Some in short term, (less than six month), treasuries.</p>

<p>And some in precious metals, preferably the actual physical metals, in a safe deposit box, or someplace you consider safer than a safe deposit box. The metals are extremely volatile, and may depreciate during a cash crunch or derivatives melt down, but ultimately, over the next three years, precious metals will outperform most other asset classes.</p>

<p>If your liquid net worth was more than $750,000, my recommendations would change a bit, but from reading your posts over the last couple months, I assume your liquid net worth is less than $750,000.</p>
 
<p>Can one of you financial guru's tell me if this is a good deal?</p>

<p><a href="http://www.capitalone.com/directbanking/offers/costco/index.php?linkid=WWW_Z_Z_Z_COMMR_R1_01_T_COMM">http://www.capitalone.com/directbanking/offers/costco/index.php?linkid=WWW_Z_Z_Z_COMMR_R1_01_T_COMM</a></p>

<p> </p>
 
The offer itself isn't bad, but I would not put my moola in Capital One Finance. Their reported receivables are a black hole.

They are restructuring, possibly to hide accounting irregularities. And lastly, how can they pay 5% plus 1% without a contract term?
 
awgee says it's a mistake, but it may not. You said that you did get the 4.89% at the local bank.





The reason that it *may* be is due to the inverted yield curve. In normal times, shorter terms are less risky for the bank because there is less time for things to change. As time lines extend, the possibility of inflation, unemployment, terrorist attack, etc. increase. The rates that are offered typically reflect the "more time equals higher rate" deal. Recently, the yield curve was inverted. That is to say, long term rates were *below* short term rates. The reason I say "may" is partly to do with the definition of short and long term and the current status of the yield curve. Just as the prognosticators were examing their tea leaves and skeleton bones, the yield curve returned to normal. The short term (2 year debt) pays less than the long term (10 year debt).





On a sidenote, an inverted yield curve is a pretty good (not perfect) predictor of a recession.
 
I'm pretty much on top of everything personal finance related, but there is one question that still lingers:





If I open a CD today and it doesn't mature until 2008, will the interest-income be counted towards my 2007 or 2008 returns?
 
raymond - For Fed income tax purposes it will be included in income in the year it is received, and you will get a 1099-int in the year it is received.
 
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