Investing on a Fixed Income
By Andrea Martell
For some people, it is not until the moment that they lose their way of earning their keep that they realize just how far ahead they were of those who by circumstance (lost job, disability, or retirement) live on a fixed income.
A lot of the same rules to investing apply to those on a fixed income, as it does to those who don’t except that in order to be successful we must work smarter, and harder to make our pennies work for us. Continue reading
Observations from a Certificate of Deposit (CD) Investor
All of us have money that we cannot afford to lose. The rest of our cash goes into the stock market. How much goes into each category is a personal choice. This article addresses the ‘cannot afford to lose’ money and offers some tips on how to invest it in CDs.
We all should keep some money in an emergency fund. Consider the recommendation to have three to six months living expenses on hand. If CDs are a part of your emergency fund, have enough cash to last until that next CD matures. The interest earned here might lose ground to inflation; just consider that as an ‘insurance premium’ that allows you to have instant access to cash when you really need it. Shop around for a Money Market Account for the emergency fund when checking CD rates.
The Internet is a great help when tracking current rates. Everyone from national banks to the local credit unions have web sites. Most list the rates on their site. I have noticed some patterns in my years of investing in CDs. Perhaps they will help you too.
The largest banks offer the worst rates. They have stockholders to pay and their rates reflect the additional cost. Recent failures of big banks indicate that ‘big’ does not always mean ‘safe’.
- Internet banks offer higher rates. There is a bit of hassle transferring funds to and from the bank; decide if the rate is worth it.
- Credit Unions offer the best rates. Check your local area. Many credit unions offer membership to people who live in a certain area or attend a certain church. Your employer may already provide a membership opportunity.
- Don’t overlook local savings banks or thrifts. A savings bank in my area is 110 years old and offers CD rates that match the credit unions.
Of these options, I have the best results with credit unions. They might not tell you this, but if you find a higher rate at another financial institution, most credit unions will match or exceed that rate. I maintain a spreadsheet with all the local rates and bring it with me when it is time to renew a CD. Show the higher rate to them and they will adjust theirs. After all, at a credit union YOU are the stockholder.
The CD term (length) requires a bit of thought. Many people use the CD ladder concept where each time a CD matures, it is replaced with a five year CD. When rates are low, I do not buy five year CDs. Currently, I can get 3.3 percent for five years or a 3.5 percent special rate for one year. So I’ll keep buying these specials until rates exceed five percent again. That’s the time to go long.
If someone says you won’t get rich this way, they are right. But remember- this is money you can’t afford to lose.
James Eubanks is a 54 year old retired computer systems administrator. He retired at 48 due to a disability. He receives a defined benefit pension and Social Security Disability so his goal is to make it grow as much as possible without loss. His wife is still working, her 401-K dropped “only” 20% during the 2008 debacle – not bad compared to others. Proving to Jim the value of some safe money. He says, “It should be anywhere except the market. With this safe money hidden away, we can invest other cash in the market and not worry about the short term losses”.
Guaranteed Easy Ways To Gaining Financial Freedom
By Cornelus Postell
Does not having to worry about monthly bills seem like just a fantasy to you? Do you ever wonder what it would be like, if money matters didn’t matter? Wouldn’t it be great if at this very moment your financial situation were in order? The answers to all these questions, my friends, are closer to reality than you think. Stepping forward by using simple strategies will make a major difference in your personal finances just as it has for me. Financial success is an easy and simple process once you decide mentally that you must take immediate action! Continue reading
The absolute best place to invest!
By Todd Williams
If you ever thought for a moment that the stock market is a confusing place, you are absolutely correct! Understanding the market is like trying to predict which way the wind will blow two days from today on the planet Pluto!
The reason why it is difficult to predict which way the market will go at any one time is because the stock market is like raindrops on a car window. You have no idea why the rain moves the way it does on a car window, and you have no way of predicting what millions of people are thinking at any one time! Continue reading
How to Invest Safely (and Profitably)
A low-yield environment like today will produce lots of crazy ideas. Like this one from The Wall Street Journal…
In his article, “Putting Your Emergency Money in Blue Chips,” Brent Arends recommends buying blue chip stocks with the money you should have set aside for unexpected car repairs and living expenses in the event you lose your job.
Brent has obviously never had to deliver the news to someone’s grandmother that he lost 30% of her emergency fund when the market dropped unexpectedly. If he had, his idea would not look so rosy. Continue reading
