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2012年9月19日 星期三

Certificates of Deposits For Retired Workers


After retirement sets in the investment years are mostly over.

We saw a glowing example of a retiree losing a huge amount of

his retirement money in the Enron debacle. He was profiled on television

testifying in the Enron investigation that he lost $4 million dollars with the fall

of Enron.

He retired years ago, yet he kept his money in their company

stock, which was the stock of his past company. This goes against the conventional

wisdom of not putting all of your eggs in one basket.

What are some of the alternatives he could have investigated to place his

money in less risky venues. He could have taken it out, rolled it over, and

placed it in a number of venues to increase it's safety.

One much less risky venue would have been a CD or certificate of deposit.

A certificate of deposit is a fixed income savings account issued by a

bank with a better interest rate than a savings account.

A CD has a maturity date of from 1 month to 5 years. Money you may need

in the very short term could be place in a 1 month, then some in the 1 year,

and so on. The CD has a fixed interest rate and is insured by the bank. It

is structured so you don't get your money at any time, but you can get it

before the maturity date, but you will usually loose some or all of your interest.

You can think of the CD as a short term, low-risk, interest-paying savings

account.

This is how it works. If you put $10,000 into a CD at an interest rate of 6%,

you will have (10,000 x 1.06), or $10,600 at the end of one year.

If the Enron retiree had (4,000,000 x 1.06) in a CD account, he would have

had $4,240,000 at the end of one year, instead of zero (0), after the one

Enron stock he invested in collapsed.

Before you invest in a CD at your bank there are a few questions you should ask.

1. When does the CD mature.

You should only keep the money in for the period of time you absolutely will not

need it, if there is any chance you will need the money before 2 years, don't

get a CD that matures in in two years.

2. What is the interest rate?

3. What is the CD insured for?

4. What is your exact interest rate for the holding period?

5. How much would you loose if you took your money out before the maturity date?

Read all of the literature you are given and know what you are

investing in before you put your money into your chosen CD

account. Remember, all investments come with some risk.

~~~~~~~~~~~~~~~~~




Lois Center-Shabazz is the founder of the personal finance website, Msfinancialsavvy.com and the author of the award- winning book, Let's Get Financial Savvy! http://www.msfinancialsavvy.com





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Simple Facts About Saving With Certificates of Deposit Accounts


A certificate of deposit, more generally referred to as a CD, is categorized as a time deposit. It is a promissory note provided by financial institutions in exchange for depositing funds during a specified term the course of which they cannot be accessed. CDs accrue interest during this term, generally at a higher rate than an average savings account, and are paid upon maturity. Money withdrawn from a CD before its maturity date usually incurs a penalty. The fixed terms offered vary from 3 months, 6 months, 12 months, up to 5 years.

Certificates of deposit are considered a relatively risk free investment as they are FDIC insured,

Currently the higher 1 year CD rates (one year CD rates) are averaging 1.55%, however these numbers vary based on different factors, including location and the amount of deposit. Generally these fluctuations have a bigger effect on CDs with longer maturity dates versus those that are considered short term, which tend to be less disposed to shifts in interest rates. CD interest rates are calculated based on the term of the CD and the current interest rate environment. The rate is usually higher the longer the term or the larger the sum deposited. However, once the CD is purchased and the money deposited, the return is not subject to stock market fluctuations, the earnings on the funds are guaranteed.

Withdrawals made before a CD reaches maturity generally incur a substantial penalty. For example, a five year CD might suffer a loss of 6 months worth of interest. The penalties are in place to ensure the investor keeps the funds in deposit until maturity. The penalties may or may not affect the principal deposit, if for example it is withdrawn after three months of opening with an established six month penalty. Sometimes withdrawal of the principal may require that the entire CD be closed.

Deposit brokers also offer certificates of deposit, often these brokerage firms can negotiate higher 1 year CD rates (one year CD rates) by promising to bring a certain amount of deposits to the financial institution it represents. These CDs are usually issued in large denominations and are then split up in to smaller values and resold to customers. For this reason, brokered CDs are often advertised as having no prepayment penalty associated. In the event an investor wishes to redeem the CD before maturity, the broker can attempt to resell the CD, at times even for a profit. These certificates of deposit are also insured by the FDIC however in the event the bank fails, brokered claims take a little longer to pay than the traditional direct deposit CD.




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2012年9月18日 星期二

A Comparison of Annuities and Certificates of Deposit (CDs)


Similarities:

Fixed Annuities and CDs are low risk investments with guaranteed rate of returns based on interest rates, both are issued by financial institutions, CDs by banks, Annuities are offered by insurance companies. CDs have FDIC protection to guard against Bank failures. Annuities also have safety measures put in place by each State to ensure Insurance companies have reserve pools in place. The guarantee for annuities is based on the claims paying ability of the issuer. Investors can compare the financial strength of Insurance companies using the ratings from firms such as Standard & Poor's, Moody's, A.M. Best, etc.

Differences:

Annuities carry several benefits.


Generally higher returns
Tax-Deferral of earnings
Potential liquidity

Higher Returns:

Fixed Annuities, like CDs, are hinged to interest rates. But when rates are low so are CD returns, but annuities have a minimum guarantee in place, usually 3% or 4%. Your investment will never dip below the guaranteed minimum interest rate during times of falling or low interest rates.

Tax-Deferral:

You pay annual taxes on CD interest earned without being able to withdraw funds until your investment term is over. With Fixed Annuities, there is also a set term, but the earnings are tax-deferred. You only pay taxes on interest earned when money is withdrawn. So with Fixed Annuities the deferred tax on your interest remains in the investment potentially earning you more money, instead of being paid out to state and federal tax agencies on a yearly basis.

Potential Liquidity:

CDs do not allow you to withdraw any monies during term. Some annuities have provisions that allow you to withdraw money, generally 10% of your account value annually. Plus many contracts allow you to remove the earned interest on a monthly basis, of course if you do, it becomes taxable income. Several other contract provisions allow you access to all of your funds such as in the event you are hospitalized, undergoing a life-threatening illness, subjected to a permanent or extended stay in a nursing home, or other major calamities that affect you economically. In addition, annuities can be structured to pay-out for the life of the owner and/ or his or her spouse, or over a fixed term such as five or ten years, thereby spreading out your tax-burden and providing enhanced income security.




Russell Hill writes articles on a variety of subjects including fixed annuities, variable annuities, indexed annuities and other retirement investment vehicles. More information on annuities can be found at: http://www.annuity-strategies.com





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2012年9月17日 星期一

Do You Like the Certificates of Deposit Rate


Certificates of deposit is really the investment choice of the majority. It is popularly known as CDs. Many people purchase them without any knowledge of certificates of deposit rate and how it might affect them. When you know a little bit more about the rates or what affects the rates, you can maximize the potential of this type of investment and really make it work well for you.

You need to be aware of the fact that certificates of deposits are very similar to savings account and they also have functions like one. One major difference is that certificates of deposit carries a fixed term like three months, six months, one year or even multiple years and most do also have fixed interest rate. The main idea is to leave the money in the CD or certificate of deposit for the chosen term, after which you can withdraw the money with the accrued interest.

Actually, the benefit of certificate of deposit accounts is that because of the fixed term, your interest rate is usually higher than savings account that allows withdrawal anytime. Most certificates of deposits do come with fixed rates, but some banks and credit unions also offer variable interest rates. Some CD's are tied to the stock market or even the bond market. This can be risky as far as the interest rate you get, but the payoff can be huge, depending on how the associated market does during the duration of the certificate of deposits.

Keep this options in mind if you are considering certificates of deposit:

Just so true, the larger your deposit, the higher the interest rate you can expect. Also, the longer terms will get you the highest rate. You should also know that, smaller banks and credit unions generally offer higher interest rates. Your personal CD accounts generally do get higher interest rate than business CD accounts. Some financial institution that are not insured by NCUA or the FDIC often offer higher interest rate because of the risk involved.

As you can see, when you are considering the certificates of deposit rate there is a lot that goes into it. The above rules will apply to about 99% od CD's accounts, you might find some instances where they will not. Remember, financial institutions are able to set up their own rates, so be sure to ask for better terms if you are depositing a very large sum. In some instances it makes more sense to have several CD's for smaller amounts while other times it makes sense to have larger principal amounts. Shop around and choose the certificate of deposit rate that best fits your need and is associated with a term that also fits your needs.




Looking to find the best deal on high interest rate cds, then visit my site to find the best advice on high rate certificate of deposit [http://certificatesofdepositrate.com] for you.





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2012年9月16日 星期日

Tax Lien Certificates, 25 Most Commonly Asked Questions


1. Who can buy a tax lien certificate?

Anyone who has the cash to pay the auctioneer.

2. Will I be evicting someone from their house?

No, you are only paying that property owner's delinquent taxes. You are not foreclosing on them.

3. Will I own the property at some future date?

Possibly, all though it is rare that a property owner will forfeit their real estate. In Arizona, for example, 99% of all property owners pay (redeem) the taxes due to the county. The county in turn pays you interest plus a high rate of return. Nationwide, 95% of all tax lien certificates sold are paid (redeemed) by the property owner.

4. Why don't people pay their taxes?

1) People die and no one pays the tax, though heirs may pay the taxes later.

2) People run out of money or they become unemployed and have money problems.

3) Some people won't part with their money until the last minute. They believe they are making more by investing elsewhere.

5. Isn't the county or municipality required or obligated to find the property owner?

Not exactly. They send multiple notices via mail, and put announcements in the public records and the newspapers. That's all they are required to do.

6. What if the property owner dies?

The county will forward tax notices to the last-known address. Additionally they will advertise the tax sale. Often, heirs or family members step forward to pay the taxes.

7. How many tax liens can I acquire?

There's no restriction. You can bid and purchase as many as your finances will allow.

8. Whom do I pay?

You will give your money to a government agency - there are no brokers or intermediaries to pay.

9. Who will pay me my return?

Ultimately the property owner pays you when they pay their delinquent taxes. The government agency (the county or municipality that collected money from you) will contact you and ask you to return your tax lien certificate. Upon receipt they will send you a government check.

10. Will I have to contact the homeowners at any time?

No! You only do business with the government agency.

11. Will I have to foreclose on the property?

Statistically there is less than a 5% chance that you'll ever go through the foreclosure process. An attorney or government employee would do this service for a small fee as it is all controlled by the statutes of the state involved.

12. When do I get paid?

When the county or municipality collects from the property owner, they will notify you. Upon receipt of your certificate they will pay you.

13. How will I know what I'm buying?

First, you are not buying real estate. You are purchasing a lien on the real estate. Should you ultimately foreclose and get the property, then you own real estate.

14. What if I end up with the real estate? What do I own?

Here is how the process works. The county will publish a tax lien sale in the newspaper and public records. Buyer/bidders should research the public records (plot maps, assessment parcel and subdivision maps). The buyer/bidder should also purchase local maps and drive by the subject properties. The drive-by inspection would provide additional appraisal data. Title companies and appraisers, and real estate agents will provide more in-depth information.

15. What happens to the certificate when I buy it? (Do I take it home?)

Yes, you can put it in your safety deposit box or other place for safekeeping.

16. Are the certificates transferable?

Yes, you can assign or transfer the certificates to anyone you want.

17. Are the properties always improved?

No. The properties could be vacant land or improved property. Often large commercial properties are available in the tax lien sale.

18. Is it better to buy improved property or vacant land?

Improved property has the advantage of quick re-sale in many cases. Additionally, improved property will often have mortgage liens. Mortgage holders rarely let properties go to tax sale. Properties with mortgage liens almost always assure you of re-payment of your investment.

19. I want to get a property for sure, not just a tax lien certificate.

That's possible - but highly unlikely. Specialists find that certificate holders get the property in only 1% to 5% of all tax lien sales. We will cover this process in a later chapter in this book.

20. Is the process of purchasing tax lien certificates the same in all states and counties?

No, each state and county uses its own rules. The state legislatures write the statutes. However, they are subject to local (county and municipal) interpretation. Tax lien buyers should research each county before purchasing their tax lien certificate, and should become aware of the local rules.

21. What happens if the property owner does not pay next year's taxes when they are due?

You, the previous year's certificate holder, can buy the subsequent year if the property owner does not. This is like buying another safe high yielding C.D.

22. What if I don't want to buy more than a one-year certificate?

You aren't required to pay more than one year's taxes. However, it would probably be wise to note when the next payment is due and pay those taxes also. You'll get your money back when the certificate is redeemed, plus an exceptional rate of return. If you can't pay the subsequent tax lien, the county will issue a new certificate that they will sell at auction.

23. Is there any way to forecast when a certificate will be paid (redeemed)?

No! That's why you should buy more than one lien certificate. Different certificates will pay off at different times.

24. Can I buy before the auction-sale?

In some counties, prior certificates left un-sold will be available before the auction-sale.

25. Can I lose money buying tax lien certificates? It's possible to lose money in any investment anywhere and at any time. All investments have some risk, even certificates of deposit. However, as a rule, tax lien certificates are considered very safe investments.

The local government issues tax lien certificates and they are the senior liens on the property. The county and municipality have the responsibility to conduct the sale fairly, and they have the authority to award you the right to foreclose on the property if the taxes aren't ultimately redeemed (paid). At that time, you'll own real estate for the taxes you paid plus any foreclosure costs. But remember: When you purchase a Tax Lien Certificate, you are buying delinquent taxes, not real estate.




For more information on Tax Lien Certificates and how you can make money investing in them, please visit us online at [http://www.ultimatetaxlienguide.com] or http://www.tedthomas.com

Ted Thomas Bio:

Ted Thomas is a Florida based publisher and author of numerous money making Home Study Courses. Ted is the guy people go to when they want to improve their business marketing and sales results. Ted's Marketing Master Mind sessions are attended by the important people that make up the Information Marketing Industry. Ted is a recognized expert and in-demand speaker in the United States and in Canada on the subjects of Government Secured and Guaranteed certificates. His title "The Foreclosure Authority" generates many consulting requests. More than 100,000 students have success -fully completed Ted Thomas' Home Study Courses. Ted Thomas





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How to Get More Than Safety With Certificates of Deposit


This may come as a surprise, but Certificates of Deposit, like those you see on that chalkboard at the bank every week, actually have the potential to yield higher than the advertised rate.

What you may already know: Certificates of Deposit come in all shapes and sizes.

You can buy CDs for as little as $1,000, all the way up to $100,000, in multiples of $1,000, and still be insured by the FDIC. This makes them one of the safest investments you could possibly find. They also have different expiration periods, such as 1 month, 6 months, 1 year, all the way up to 5 years. Naturally, the more time your money is invested, the better the certificates of deposit rate you can expect.

Traditionally, the difference in Certificates of Deposit rates between a 6-month CD and a 5 year CD was around 1.0 whole percent, but nowadays the margin is much closer, with interest rates on the rise as they are in 2006. At the time of this writing, the highest CD rate for both a 6-month and a 5-year CD is almost the same, around 5.50% APR each.

There is one other major factor that sets CDs apart. Some CDs are labeled "equity-linked," which means that they are tied to a portfolio that the issuing bank put together. Doing this offers the possibility of an even higher-yield return than advertised, but it also increases the risk in the case that the bank's portfolio goes down.

In my experience, this is almost always the case, even in growth markets. For much the same reason that I don't let brokers pick my stocks, I refuse to buy equity-linked CDs and do not encourage you to purchase one, despite the possibility of higher returns.

So how do I use non equity-linked CDs to get higher-than-advertised returns?

I build what is referred to as a laddered portfolio. This is where you can purchase a few different CDs with different expiry periods, traditionally one year apart, to combine and pay me the best rate of the day, every year. A major bonus is that you'll have access to a portion of your cash while you enjoy the longer-term rates.

That in itself was a major reason to ladder your CDs when the rates were structured the typical way. But now, as federal interest rates are going up, the tactics are a bit different.

There may not appear to be anything to gain at first by the fact that we're achieving a long-term rate while receiving cash out in shorter intervals, since the long-term and short-term rates are now so similar.

The twist is using the ladder at smaller intervals, to approximate a 1-month CD!

A closer look at laddered CDs in 2006

A couple of years ago, when Greenspan was busy and interest rates were still declining, anyone speaking about a laddered CD portfolio was describing 5 or more FIVE year CDs, bought with expiry periods one year apart. (Example: the first CD expired in October '02, the second in October 03, etc...)

This gave the traditional investor the ability to obtain the five-year rate but still have access to his money, at least a fifth of it, every October.

Today, however, you can simply buy 1-year CDs to achieve the same effect, because there is no difference in the 1-year and 5-year rate of return. (So I doubt anyone is even buying 5 year CDs right now.)

Therefore, the game has to be played differently, and it still works great on the monthly, instead of yearly cycle. Now you can walk into your bank and buy 4-month & 6-month CDs, although you may need to purchase once every other month to keep the cycle seamless. Doing so will give you access to a portion of your cash as often as monthly, but you'll be getting the 4 or 6 month rate of return instead!

I highly encourage you to read all you can about Certificates of Deposit and draw your own conclusion before making any investment in these, or any other, form of investment. In keeping with that tradition, I would like to invite you to drop by my free website for Certificate of Deposit resources. It offers a large volume of facts and figures on CDs that isn't published anywhere else on the web at all.

When was the last time someone showed you a way to beat the bank with 100% safety on your money?




Dennis Gregory is a full-time investor with growing portfolios composed of every major type of financial asset. Learn from his experience at his free Certificates of Deposit rates and resources [http://www.certificates-of-deposit.info/Highest_CD_Rate.html] website; [http://www.certificates-of-deposit.info]





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張貼者： 於 清晨6:48 0 意見
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2012年9月13日 星期四

Best Rates For Certificates of Deposit


As we have written quite often, finding best certificate of deposit rates is no small task. Our goal is to save you some time and point you in the right direction. The FOMC (ie Ben Bernanke) are still promising to hold rates down for an extended period of time. So here are some rates that may soften the blow a bit.

Nordstrom fsb's interest rates are not the highest, but their customer service excels. I've heard nothing but good comments from those that have opened up CDs. For customer service I would give them a 15 out of 10.:O) In addition, they have excellent bank financials. The bank basically supports the credit card business of the Nordstrom department store and given their clientele, they don't seem to be having too much trouble with loan losses. Their current profit is a whopping 15% of assets. You won't see that very often.

FDIC# 33497 -- Star Rating: 5 (*****). They are located in Arizona, but will take a CD from anywhere in the Us with proper documentation, including trusts.

Nordstrom fsb has a competitive 1-year term and okay 5-year. One of the big draw backs is their large early withdrawal penalty. Also, I'm sure the above URL looks strange, but believe me it will save you a lot of time trying to track down the right section for the CDs. That is another potential frustration. The website is designed to feature the store and credit cards. The CD and checking account info is kind of tucked away.

Current CD Rates -- Minimum: $100,000

1-Year: 1.30%

3-Year: 1.80%

5-Year: 2.30%

Current CD Rates -- Minimum: $50,000

1-Year: 1.05%

3-Year: 1.55%

5-Year: 2.05%

Flushing Savings Bank, FSB comes out with good deposit rate specials often and their recent offering will not disappoint. They have a 4-star rating and tied with their offering makes it look quite enticing. It is an online only application, but they will take funds from anywhere in the US.

FDIC# 16049, Star Rating: 4 (****). Penalty: 6-Month loss of interest (5-year CD)

They use their online identity for the CDs: igobanking [dot] com.

Flushing Savings Bank has a very strong 2-year and 3-year rate. There are some good and bad reviews out there. Some noted an easy time at the beginning and then subsequent CDs were more difficult. Primary frustration was a rate drop during the time it took to get the CD set-up and the bank not honoring the higher rate. Of course in a falling rate environment that is frustrating, but what if the rate had increased would they still complain?!?.

1-Year: 0.50%

18-Months: 1.50%

2-Year: 2.25%

3-Year: 2.25%

4-Year: 1.00%

5-Year: 2.50%

North American Savings Bank is another strong player in CD Rate late. Their financial health also looks really good, so your CD is more than likely going to last the term. It is an online only application and they will take regular personal funds from anywhere in the US. They use to take IRAs and trust accounts, but it was too much hassle for them.

FDIC# 9708. Star Rating: 5 (*****). Penalty: 6-Month loss of interest (5-year CD)

North American Savings Bank has a strong 14-month rate, but that is about it. There are other higher interest rates out there on the other terms.

14-Months: 1.51%

30-Months: 1.50%

3-Year: 1.70%

4-Year: 1.70%

5-Year: 2.05%




Chris Duncan is a FINRA Registered Representative. He works for Jumbo CD Investments, Inc., a leading CD research and placement firm. He specializes in helping clients find the highest CD rates nationwide. His clients include individuals, financial institutions, corporations, and public agencies. Visit us for Credit Union CD Rates

Also check out our new section of Featured Banks





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Compare Money Markets to Certificates of Deposit


If you have cash that you would like to put away, you might as well make it work for you. This means that you should be able to earn interest on it while it sits in an account. One of the best ways to do this is to use a money market. Of course, there are a few methods of making interest from your money, with another type being a certificate of deposit. Compare these two techniques before deciding which is best for your situation.

You should first learn the pros and cons of money markets. This kind of account is basically a mutual fund that tends to have a share price of $1 most of the time. Those in charge of the account are responsible for investing the money in certificates of deposit, savings bonds, and other tactics of investment that are generally considered safe. Thus, it is usually thought of as a sure bet that you will get more than your original investment back. Another benefit of money markets is that they are similar to checking accounts, as you typically get a checkbook for it when you open one. This allows you access to your money when you need it, so it is like simply putting it under your mattress, except you stand to make a profit from it. Additionally, money markets are easy to open since most banks offer this feature.

Even though money markets usually allow access to the cash, many banks do have a limit on the amount of money that can be taken out by check every month. Thus, if you need constant access to the account, consider other ways to save. A money market account should be accessed during emergencies only. In addition, you will find that you make a higher rate of interest when you have a lot of money in the account, while you make less when you do not have much. This is unlike some ways of saving cash, as certain investment methods pay more for mature accounts than simply large ones.

If you are interested in an account that pays a higher interest rate for a mature account, you should consider a certificate of deposit. This is also called a CD, and boasts the attractive feature of increasing the interest rate for accounts that have been around longer rather than large accounts. Thus, the longer you keep your money in the account, the more you will make. While you can choose to have access to the cash during this time, you will get a lower interest rate than if you choose a longer maturity period. If you do not anticipate needing to use the money in the account, as you have another savings account, a CD is a good way to make some profit over a long period of time.

There are several ways to make money from your investment, but money markets and certificates of deposit are among the most popular. Compare their pros and cons before choosing one. Also consider speaking to a banker about your options.




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Certificates of Deposit (CDs) - How Do They Compare to Other Investments?


CDs have good potential, IRA or 401k plans have better opportunities, but there is one investment that far out-weighs them all. After reading this article, you should have some understanding of the benefits each of these plans provide, and why CDs-though a solid investment strategy-could be the least in potential to all the others available.

As for the 401k options, there are 2 benefits to this plan:

1) You can commit your money to an interest bearing account before the taxes are taken from it. (This is the most beneficial to those who are in a high tax-bracket. But if you are in a low tax-bracket this feature might not be that good of an incentive.)

2) Your company may match your contributions, in most cases, up to 3%.

An IRA is similar to a 401k program except for the fact that your contributions will be after-tax only. And you will receive no company match. These plans are usually for those who do not have a 401k account available.

The benefit to this options is that once you start withdrawing the money when you retire, it is tax free because you already paid it. (If you are in a high tax bracket now, it would probably be better for you to pay the tax when you retire and you are in a lower tax bracket.)

CDs have their value in the security that they provide. But with interest rates as low as they are these days, a CD is just about the same as only not spending your money. Though the interest is better than what you could get with your regular savings account.

The best investment available can be for those who own a home or can buy a home and already have some equity in it. Why this is the best investment is for several reasons.

1) You do not need a large lump-sum of money up front, as you would with a CD to earn a significant amount of interest.

2) It is the only way you can some day-without moving back home with your parents or something similar-have a home to live in without having a mortgage or rent payment.

3) It is the only investment where you can quickly turn a liability into a saving deposit.

4) For those who do not make a large amount of money and do have a 401k plan available, owning a home can probably generate a much better retirement position than your 401k plan.




I hope you find this information helpful.





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2012年9月12日 星期三

The Truth About FDIC and Certificates of Deposit (CDs)


When you are told by a banker or receive a promotional letter from a financial institution regarding a special Certificate of Deposit (CD) rate, please think before you act. Most bankers love CD's simply because it will lock your money into a product that will charge a substantial fee if withdrawn prior to maturity. In addition most bankers get a commission for new money deposited into a CD. When I was a banker, I had always been one of the few that disliked CD's for many reasons. I find them only useful for very few things. Since I am no longer a banker I want to give you the dirty truth behind CD's that most do not know and what is your REAL rate of return from those "promotional" CD's you find online or in your current bank.

First off, CD's are a fixed income vehicle that is backed by the FDIC. Many people trust the FDIC for its insurance and the deposit is in fact guaranteed (up to $250,000 per DEPOSITOR until 12/31/2013). What you most likely did not know is how you get paid and when. You are covered up to this a certain amount but the time it takes to pay you however is never documented. From my research and what I was taught years ago as a banker is the following: The FDIC can take up to 99 years to pay (not a typo)! There is no public documentation of how long it takes to pay however based on the fact that if ANYTHING catastrophic was to occur financially, the FDIC will have time to pay. So if you expect immediate payment with a simple claim of lost funds from an FDIC insured product, you are sadly mistaken. The FDIC is also an INDEPENDENT AGENCY of the federal government. They receive no congressional appropriations (money) and it's fully funded by the premiums (payments) from banks and thrift institutions pay per deposit coverage as well as earnings from U.S. Treasuries. Most people do not have to worry however since most major banks are more than willing to buyout smaller/failing financial institutions in order to acquire more clients and show positive PR (public relations) to the masses. This has shown more than enough evidence with what has happened in 2008-2009.

FDIC products are fully taxed. If you purchase a CD, the growth will be fully taxes (state, federal, local) just as if you have earned this income from working. This is based on your tax bracket which is as follows (2010):

Bracket / Single / Married:

10% Bracket / $0 - $8,375 / $0 - $16,750

15% Bracket / $8,375 - $34,000 / $16,750 - $68,000

25% Bracket / $34,000 - $82,400 / $68,000 - $137,300

28% Bracket / $82,400 - $171,850 / $137,300 - $209,250

33% Bracket / $171,850 - $373,650 / $209,250 - $373,650

35% Bracket / $373,650+ / $373,650+

Now, most of you that purchase CD's are aware of this. However, what most fail to realize that CD's do NOT catch up with the rate of inflation. The rate of inflation is measured by the CPI (Consumer Price Index, I have described what this details on a previous article which can be found in my previous post). For whatever investment, income, or interest you earn to not match or exceed the CPI, you are losing money long term. This is a volatile index but long term averages around 2.5%. This means you must earn either 2.5% or more AFTER TAXES long term in order to maintain your cost of living life style.

For example: You are in a 25% bracket and have purchased a 12 month CD at 2% APY for $50,000. You earned $1,010 from the interest which equals 51,010 but you have to pay taxes on the growth (your tax bracket) which will equal to $253. You have earned after FEDERAL taxes $757 (some state and local taxes may occur that will lower your return even further!). Now here is where most people do not pay attention to, the CPI for the year. Let's be fair and say it is 1.6% for the year (less than the average, just to make a point). You would need to earn $800 AFTER TAXES from that 50,000 in order to keep up with the rate of inflation. Your real rate of return is negative $43. In order to keep up with this rate of inflation you would need to find a CD with the rate of (approximately) 2.8% or higher depending on what state you live in. Please remember that we are talking about a tax payer in the 25% bracket which is considered the national average. These rates become considerably higher if you're considered "High-Net-Worth".

Not all CD's are bad. If you are one of many that cannot withstand volatility what-so-ever than it is best to purchase CD's within a IRA this way taxes are deferred or Roth IRA which no taxes are paid after withdrawal (please see my article on IRA's for details). Also, CD's are probably the best product to purchase if you are planning on using the money short-term and cannot risk ANY volatility. Short-term can be considered 2 years or less. I highly recommend CD's for home buyers (in 2 years or less) since the deposit in your home are tax deductable therefore the taxes on interests earned on a CD will be taken care of.

There are many considerably safe products that have low maturity dates and have considerably better returns than a CD. In the end, before you purchase the CD, know what your intentions are and when do you think you're going to need it. If it's for educational purposes, there are products that can be a better option for you and your child (529 plans, UGMA/UTMA for example). If it's for medical bills, there are products out there for that as well (Health saving plans). The point is to use a CD only for short term purchases that can be tax deductable or within tax favor accounts. Many people use CDs to prepare for a birthday or holiday in that year and that is OK as well! The key is "short-term". If it is for emergency funds, your best bet is to simply put it in a money market where there won't be any implications or charges for early withdrawal.

I hope I was able to educate you on CDs and now more aware of what you are getting into. If you have any questions or concerns please feel free to contact me!

Resources:

FDIC: http://www.fdic.gov/about/learn/symbol/index.html

SIFMA Calculators: http://www.investinginbonds.com/story.asp?id=207




Financial Consultant, Risk Manager, Insurance Agent, and Retirement Planner here to give honest opinions on the current financial trends. (*Please note: If you have ANY questions, please feel free to contact me. I will be more than happy to chat with you!). [http://www.MichaelAponte.Biz]





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2012年9月11日 星期二

Internet Bank Certificates of Deposit


Online banking or Internet banking is a very convenient way of managing money, especially if you need to make transfers, check your balance or pay your bills after banking hours. You can print your billing statement in the comfort of your own home. You can access your account anytime and anywhere you may be. Nowadays, you can do almost all your banking transactions online with ease. You can even take advantage of online certificates of deposit.

What is an Internet bank certificate of deposit?

A certificate of deposit (CD) is similar to a time deposit account. With a CD, you acquire a fixed rate over a certain period of time - usually either three months, six months, or one to five years. A CD is designed to be kept in the bank until maturity, which means that the money can only be withdrawn when the time agreed upon has lapsed. There is a substantial penalty if you withdraw before maturity.

Because CDs are kept longer with the financial institutions, you can acquire higher interest rates, especially if you withdraw the money only after maturity. The larger the principal, the higher the interest rate. The longer the term or the smaller the bank, the higher the interest rates, too.

An Internet bank typically informs you of your CD balance periodically. You can instruct the bank to mail you the interest, deposit it directly to another account or add it to your CD account. You can opt to withdraw the whole amount including the interest once maturity is reached, or you can choose to deposit it into another CD account. It is a common practice for financial institutions to automatically continue the CD if there were no prior instructions for the amount to be withdrawn.

The edge the Internet bank CDs have over traditional CDs is accessibility. You can typically view your CD?s performance online anytime you wish, which is not the case with CDs from traditional banks.




Internet Banks provides detailed information on Internet Banks, Internet Bank Accounts, Best Internet Banks, Offshore Internet Banks and more. Internet Banks is affiliated with Internet Business Banking.





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Jumbo Certificates of Deposit Rates - Benefits of High CD Rates For Maximum Returns


Jumbo certificates of deposits are extremely useful if you who want MAXIMUM RETURNS by investing a considerable sum of money into a CD account. This kind of account is particularly useful if you are looking for HIGH RETURNS i.e. some millions of dollars with low risks. Jumbo Certificates of deposit rates vary widely for investments based on the amount that is invested as well as the time frame for which it is invested

The jumbo cd rates are generally compounded and deposited to the investors account on a monthly basis. Some financial companies deposit the rates on a quarterly basis. The most effective way to get more cd rates is to compound the interest more frequently. If you compound the interest more frequently, you will be paid more at the end which ultimately results in high returns for your investments.

Promising Benefits Of Jumbo CD Accounts


It would possibly become most easiest way for you to earn good interest and get much higher cd rates for your investment.
The Jumbo certificate of deposit rates are guaranteed for your investments for every dollar more than just $ 1,00,000. This minimum balance requirement is considerably lower when compared to other high risk investments.
These deposits are insured by FDIC and hence extremely safe.
These certificates are negotiable. Banks are willing to customize the plans so as they don't lose any valuable customer like you.

Your Next Step:

If you have huge amount of money and looking for a safe investment option and get good returns for the same, then follow the steps.


Find the list of banks that offers Jumbo Certificates of Deposit Accounts.
Get the details of the rates offered by the banks.
Make a comparison of the same with other banks.
Spot the best interest rates offered by the bank and invest your money.
The details and further steps with case studies are available in the websites.




Get Started by COMPARING and FINDING >> jumbo CD rates > http://www.bestsavingsaccountrates.net/high-interest-cd-rates Balajee Kannan





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2012年9月10日 星期一

Certificates of Deposit (CDs) - How to Protect Your Financial Wealth


Certificates of Deposit (CDs) are a popular form of financial investments these days because they are considered to be more safe than many other types of savings and investments. It's important to have a good understanding of this type of investment to protect your financial safety and wealth. It's also important for you to ask questions of the bank. Disclaimer: This info and the tips are not intended to be comprehensive...that would take a book.

What You Want to Understand

1. Certificates of Deposit at banks are insured up to $250,000 by the FDIC government agency. Know that the government has a very small percentage placed in reserve to fund these losses. The government reserve fund was only 1 to 2% of the total dollars invested in CDs, last time I checked. And it's likely no more than that these days. Other agencies like brokerage houses, may be insured in other ways, like SIPC.

Policy: Make sure you limit your investment in each bank to maximum of $250,000, to have the best protection. Verify if the $250,000 is per person or per family or corporate entity.

2. CDs offer many choices for your investment dollars:

Varying lengths of time (3 months to 5 years) until maturity, each term with a different interest rate.

Each bank will have different CD choices, so you likely need to contact them to see where you get the best rates, terms and other factors to meet your needs.

These days banks (and also other investment entities like credit unions) offer special deals to attract investment capital for their coffers, hopefully to lend to businesses, home owners and others. These specials yield the best results many times in interest rates and terms.

3. Find out about potential penalties and fees.

Are there any penalties and fees or fines, if you need to withdraw some of the money from the CD before it matures? This is very important because you want the money earning interest every day, however an emergency can arise that requires you to make a partial withdrawal of the principal of the CD and you want to know what that would cost you in real dollars.

What are the penalties and fees? Here's what I found, I'll use an example of $20,000 CD. Each bank varies, so I called banks for the information. The 2 scenarios illustrate

Bank 1: Any partial withdrawal before the maturity date of the CD results in a 3 month, 6-month or 1 year penalty, depending upon the term of the CD (12 month to 5-years). The penalty: your interest earnings on the entire $20k CD for the 3, 6, or 12 months penalty period are taken away, for taking out any principal amount, even $1,000 or whatever small amount. That's a huge loss.

Bank 2: Partial withdrawals (may be a limit to 1 or 2) are allowed, with a penalty for the early withdrawal. Penalty: of 3 or 6 months only on the partial amount withdrawn. The rest continues to earn interest until the CD matures, and at the rate in the original CD document. Nice.

Most banks will automatically roll over the CD to another like-term CD if you do not redeem it within 10 days or so after it matures. You should get a notice in the mail a week or two before the maturity date, but don't rely on that. Keep track of maturity dates yourself to insure you know what's going on.

4. Ask questions and make requests of the bank in situations where errors or misunderstandings occur with CDs or other bank transactions.

When a CD has automatically rolled over in error or even if you just forgot, but you don't want it rolled over with the original terms and the new current interest rate. Ask the bank to make a special exception to reverse the rollover. Also request they include the interest earned on the new CD. A courteous and respectful, occasional request for a valid reason works. I've done this a couple times over many years.

There are other examples. The point is this: take an active role in your finances, manage them, ask questions until you understand situations. The bank and all financial agencies are there to serve you - within ethical, honest, and legal parameters.

5. CD Investments on the Internet.

Be cautious with investing on the internet in CDs or any other investments. During this economic downturn people can feel desperate, so they turn to places they may see higher interest rates. The scams and frauds are higher during these times. My recommendation is to stay away from the internet for your investments now, unless you are very familiar with the source, have used them previously, and believe you can trust them.

Protect your wealth, manage your wealth wisely. Your future is in your hands!




Barbara Filla, Successful Entrepreneur and Financial Expert, helps many become the next success story. Whether you're looking to develop and build a successful business, be an ex-corporate CEO of your own home-based business, the next millionaire Mom or Dad, Barbara can assist you to reach those goals and experience more happiness, success and wealth.

[http://www.netwebmarketer.com/barbarafilla/wordpress]

http://www.BraveheartWomen.com/barbarafilla





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2012年9月7日 星期五

What Are the Pluses and Minuses of Investing in Tax Lien Certificates?


Tax lien certificate investing is something that all investors in real property ought to consider. There are lots of benefits to buying tax liens, however there are some dangers that it's good to bear in mind.

States use either or both a "tax deed" system or a "tax lien" system. Most states in the USA and provinces in Canada have a system for gathering unpaid real estate property taxes. If a house owner or commercial real estate proprietor fails to pay property taxes, the county will issue a tax lien or tax deed on that property. The local authorities could then sell a tax certificate at public sale to acquire the necessary overdue tax revenue. Other states have what are called tax deeds where the taxing authority sells the property to recoup the late taxes.

Tax Liens versus Tax Deeds

1. In tax deed states, delinquent property taxes are recovered by the county through the selling of ownership of the property to the highest bidder at public auction. County governments will sell total possession and ownership rights to the winning bidder. In some cases, the rights to the real estate are assigned at some predetermined time period within the future. Normally, the property is sold for late taxes, interest, charges, penalties and court docket costs. Many states give real estate homeowners an opportunity to regain control of their property after the public sale by paying the late property taxes, interest and other costs within a specific redemption time frame.

2. In tax lien states, after real estate property taxes go unpaid for a particular time period, the delinquent taxes are put up for sale at an auction, or tax sale. It is only the amount of the tax claim on the real estate property that is sold. The sale is held by the county (in some instances cities). The successful bidder pays the overdue real estate taxes on the real estate property. In change, they receive a certificate that pays them a rate of return of 18 percent curiosity a year, or extra, on their investment. Moreover, if the property proprietor doesn't redeem the real estate property inside a selected time frame, the property may be foreclosed on and the investor can end up with ownership of the real estate. So tax liens are an extremely engaging investment opportunity.

What are the pros of buying tax lien certificates?


The maximum yield on a tax lien certificate is quite lucrative compared to other investments. Returns are usually someplace round 18 percent or more per year. In some states the interest rate is 24 percent annually. The investor might gain full ownership of real estate that has a market value considerably greater than what the investor paid for the tax lien.
Tax liens have precedence over different liens or encumbrances, such as mortgages, judgments, deeds of trust and other liens. This means you're first in line to get your investment (in some states federal and state tax liens share equal precedence).
This type of investment is without doubt one of the most secure you can make. The majority of certificates are redeemed earlier than the property is foreclosed; thus, the risk of loss is minimal.
If the lien certificates are redeemed by the delinquent property owner, you possibly can acquire a double-digit return. If not, you possibly can foreclose and procure full ownership rights.
It is the responsibility of the county to collect all fees - it is not your problem.
The tax lien is usually for a small fraction of the real estate property's market worth, so your investment is very secured.
The investor will not be liable to the property owner. That is clearly an advantage, as there are a rising variety of lawsuits from real estate property owners.
The investment is low maintenance
Few people have ever heard about tax liens. Even fewer individuals figure out how to spend money on them. Within the United States there are thousands of counties which have tax-lien-certificate auctions every year. Many states have so many tax lien certificates that you would be able to buy the ones that counties didn't promote at public sale by mail (also known as over-the-counter sales). No one can cover all the of counties that have tax lien sales. This virtually ensures that the availability of certificates will be much better than the demand.

What are the cons of investing in tax lien certificates?


Payment is normally required at the time of purchase or inside a really quick time period afterward (typically no more than 24-seventy two hours). Failure to pay the total amount leads to all lien certificates purchased by the investor being canceled, and will end result in the investor losing his/her deposit and/or being barred from future sales.
In lots of states, additional actions have to be taken to protect the lien certificates holder's rights after purchase of a lien. Failure to conform exactly with these necessities may make the lien certificates worthless.
Tax liens on "alternative" properties are quickly bought by major institutional buyers having enough time and resources to research beneficial properties versus worthless ones, and who can afford the occasional poor choice. Smaller liens often involve properties which can be typically nugatory (comparable to odd strips of land).
Assessing the real estate. Since you might be buying the lien, not the real estate property itself, it's tempting to go ahead with out bothering to view the real estate. Nevertheless, the security and worth of the lien certificates are primarily based on the actual property. So you do must see what sort of property it is.
Not like a certificate of deposit, tax liens are illiquid. They can't be "cashed in" (resold to the taxing authority), but must be held till both they are repaid or the holder takes motion to foreclose. (It's potentially okay, nonetheless, to assign one's interest in a tax lien certificates to another party.)
Some specialists tout tax lien investing as a method of acquiring real estate property at extremely discounted prices. In observe, except for very rare situations, liens of any value are redeemed properly before the property will be foreclosed (especially the place a mortgage is concerned; the mortgage holder is secondary in line to a tax lien holder but, upon fee of the lien, the mortgage holder would then become the primary lien holder).
If someone successfully obtains the deed to the real estate property, the real estate property may have environmental problems for which the new owner will probably be responsible. Depending upon the state by which the property is situated, this might be very disadvantageous; the investor might need to pay a big amount of cash to have the issue taken care of, or is likely to be fined day by day till the issues are fixed.
Deeds obtained are normally quit claim deeds, which do not provide insurable title. The owner would then need to file a quiet title motion to obtain marketable title to the property, which entails further cost.
There might also be other governmental liens that the investor must pay off when attaining title to the real estate. These usually are not a part of the lien sale and stay even when the lien holder acquires the real estate.
If the owner of the real estate property declares chapter 7 bankruptcy, the courts may decrease the rate of interest to be paid, or might discharge half or all the lien, leaving the lien certificates holder with nothing. The tax lien certificates holder is often given excessive precedence on this situation.

The good news is that most of these dangers may be averted by doing affordable analysis before investing. This makes tax liens one of the safest and most profitable forms of investment. If you the investor fall into any of these traps after reading this, you solely have your self to blame! Happy and Successful Investing!




Mark Schwartz writes numerous articles on tax lien investing, buying and selling structured settlements and annuities, and real estate investing.

To learn more on how you can profit by investing in tax lien certificates please visit his Tax Lien Investing website and blog at Benefits of Tax Lien Certificate Investing.

P.S. His YouTube channel is at markvschwartz1





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All About CDs (Certificates Of Deposit)


When the richest people in the world are asked to give advice about how to earn and retain money, their response almost always resounds with the same principles: Your money should always be working for you, instead of you working for it.

The ideal situation is to put your money into something with a high rate of return. Then, while you are enjoying life, your money is constantly returning more. One option is to put your money in a CD (Certificate of Deposit), which is a type of account offered by many banks. They don't work like regular bank accounts. So if you've been contemplating ways to make your money work for you, read on.

CDs are characterized by being registered for at a fixed amount of time. When you put your money in, you tell the bank that you are going to leave it for a certain amount of time. The most common amounts are 3 months, 6 months, or any amount of years up to 5. The specific interest rate is set at the beginning, and does not change over the period of time.

The money in the CD is held until it 'matures', at which point the customer can withdraw it without bringing about any fees (which are applied if he or she withdraws before the date of maturation).

This may sound like a bad deal, but consider this: since the customer has to put up with having their cash unavailable for so long, they have their diligence rewarded with a particularly high interest rate. This is the aspect that attracts people to using CDs. Since they are offered by regular banks, they are completely insured. This makes them an almost entirely risk free investment, as long as you know you won't need the money.

If you've got a large sum of money sitting around and you're not doing anything else with it, then you should make every effort to put it to work. Some people are not cut out for high risk investments like the stock market. If this is the case, then the calm assuredness of CDs could be perfect for you.

Talk to people at your local banks to find their specific terms and conditions for CDs. Look for things like flexible liquidity, high interest rates, and time periods that suit your needs. Hopefully you will find something that is perfect for your finances, and will put your money to good use.




Find great cd rates at http://www.gotalkmoney.com/





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2012年9月6日 星期四

How Does Your 401k, IRA, and Certificates of Deposit Compare in Their Value to You?


What will your retirement account look like when you reach that age when it will be your only means of living? Well let me tell you, there is a surprising kick of reality when most people consider their final forecast for their retirement savings. In this article, we will compare the three scenarios mentioned in the title, and see how well they will each provide a retirement.

But lets ask a question, first. When you consider the long-term value of your retirement savings, does it look like you will have poor living conditions when you retire, or doe is look like you will be well off? Does it even look like you will be able to retire at all as you have planned?

With the current losses that have been imposed on those having a 401k, it becomes obvious that we need to use other means of securing a nest-egg for our golden years. And there are several options aside from having a 401k.

Considering the Advantages of a 401k
Concerning the 401k, the advantages are that we can have our money taken out pretax, while we are still in a larger tax bracket, and then withdraw the money at retirement when we are in a lower tax bracket. And to top it off, the company we work for may even match a certain percentage of our contributions.

But lets consider our 401k contributions a little further. To make it simple, if you make $50,000.00 a year and you contribute 3%, your total contributions for 30 years, that would be a grand total of $45,000.00 ($1,500.00 x 30). And if your company matches that, your total contributions for 30 years would be the total of $90,000.00 ($3,000.00 x 30). That is not a lot of money to retire on. And considering that you may be able to earn compound interest-if there are no great losses in the meantime-on that money, you can easily have over $100,000.00. But that is still not enough. The average person will probably need approximately $500,000.00 in the bank to have a descent retirement.

The Benefits of an IRA
The benefit of an IRA is that you can contribute your money after tax, and, therefore, you do not have to pay taxes on it when you retire, which can be a nice feature. But you need to remember that you will probably be in a lower tax-bracket when you retire. And so you are left with the choice to either not save the money because you do not want to pay the higher tax-which you will do anyway, if you do not save it-or you can save the money in a way that is not as good as earning interest on the non-taxed portion of your money, as your 401k does.

The Benefits of a CD
Another way to save money is a CD. And similar to a 401(k) plan, a CDs money is tied up. (However, it does guarantee a higher interest than you will get from a regular savings account.)

The Best Opportunity to Accumulate Money
But the best opportunity you can have is owning a home. If you own a home, or if you even purchase a home now, you can use the banks systems to pay your mortgage off in less than half the time. (That is better than the bi-weekly program.) Then you can begin to save the money you would have paid in your mortgage for more than 15 years and combine it with your 401k savings and earn interest on it instead of paying interest to the bank.

This will provide you several advantages. You will save tens of thousands of dollars in interest on your mortgage loan, after which you can then start saving what you would have paid to the bank in mortgage payments, and then you can even begin to contribute at least most of it in your 401k and gain compound interest on this money. This could quite possibly more than double your retirement savings. And to top it off, you will own your own home free and clear.




I hope you find this information helpful.





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2012年9月5日 星期三

Investing Options Series: Certificates of Deposit (CDs)


Certificates of Deposit (CDs)What Are They?


A Certificate of Deposit (CD), also known as a "time deposit", is a special type of deposit account with an interest rate higher than a regular savings account and federally insured. CDs are available at most banks, thrift institutions, and credit unions. They are available in almost any denomination starting at $1 (at popular online-only banks).

How do They Work?


When you deposit money into a CD, you invest a fixed sum of money for a fixed period of time - typically six months, one year, five years, or more. In exchange for your deposit, the issuing bank pays you interest, typically at regular intervals. Most CD purchasers can arrange to have the interest periodically mailed to them or directly deposited into another account; however, this reduces the total yield on investment because you miss out on your interest compounding.

When you cash in or redeem your CD, you receive the money you originally invested plus any accrued interest. But if you redeem your CD before it matures, you may have to pay an "early withdrawal" penalty or forfeit a portion of the interest you earned. Unless you can get a significantly greater return somewhere else it is advisable to avoid any early withdrawal of your CD deposit.

When the end of the CD term approaches, your bank or credit union will most likely contact you regarding how you wish to proceed with your CD. Most banks allow you to either withdraw the principal with your accumulated interest or roll the principal and interest into a new CD.

Different Flavors


In general, CDs are categorized according to their size. CDs larger than $100,000 are called "Large CDs" or "Jumbo CDs" and CDs smaller than $100,000 are known as "Small CDs."

A callable CD is similar to a regular CD except that the bank reserves the right to buy back (or "call") your CD. Due to the uncertainty these types of CDs usually command a premium interest rate. The only time a bank usually calls a CD is when it tries to protect itself from falling interest rates. For example, if your CD rate is 4.5% but interest rates fall to 2.5% then the bank is paying you more than it's receiving from its own investments and therefore losing money by continuing to pay your high interest rate.

The last "flavor" of CD is actually an investment strategy called "laddering." In almost any type investment the interest rates are going to be higher the longer you have to wait for your money. However, if you lock into a high rate for 5 years and market interest rates rise within that time frame, your "high rate" isn't going to be worth much. Laddering tries to tap into the higher interest rates associated with long-term investments but also avoid being locked into rates when the market rates rise.

For example, a 3 year laddering strategy would begin with the purchase of a 1-year, 2-year, and 3-year term CD. Each year as one of the CDs reaches maturity, you can invest it in a 3-year CD - benefiting from the higher interest rates. After 3 years of this cycle, all your money will be invested in 3-year CDs but 1/3 of your investment will mature each year - allowing you to reinvest in a new CD. Using this investment strategy you can benefit from interest rate increases while also enjoying the higher rates associated with longer-term investments.

For help coming up with a laddering strategy, BankRate.com has a great little calculator at http://origin.bankrate.com/brm/savings-advisers/cd-ladder.asp which gives you conservative, moderate, and aggressive laddering strategies. When I ran the calculator for a fictitious investment, laddering helped me earn $600 more.

Short or Long-Term Investment?


In general, CDs are considered a short-term investment due to the fact that typical CDs are available in 3 month to 5 year terms. However, CDs are not as liquid as a savings account or even Money Market Accounts due to their fixed time period. The best use of a CD is saving for a certain period of time in the future such as a car purchase in two years.

Potential Risk


The largest risk with a CD is its ability, at some banks, to be called. However, avoiding a callable CD can be as easy as talking to your financial institution or reading the "Truth in Savings" booklet the bank is required to provide you.

Since CDs are a deposit account, similar to Money Market Accounts, they are insured by the FDIC for $100,000 ($200,000 if investing with a joint account) and therefore are fairly "risk-free."

Potential Return


It's probably safe to say that CDs represent the best short-term saving option due to their higher interest rates. For example, the one of the best deals right now on CDs is ING Direct. Their 12-month "Orange" CD has a 5.25% return as of today compared to the 4.25% APY on their savings account.

Who is this a Good Investment For?


Anyone who has time to spare. Investments always favor those who are willing to wait for their money, and CDs are no exceptions. Thanks to the influx of online banks such as ING Direct, anyone with $1 to their name can invest in a CD - as long as they are able to wait 3 months or longer. If you are saving up for a specific reason in the near future a CD might be the best way not only to get the most for your investment but also to help discipline you into saving since you won't be able to withdraw your money (without heavy fees).








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What Are Certificates of Deposit and How Do They Work?


Certificates of Deposit (CD) are monetary instruments that function like a savings account. Interest is paid on the initial investment at a rate dependent on the length of time the CD is held. One decides on the length of time when the CD is purchased. Common CD lengths range from as short as six months up to ten years or longer. CD interest rates also vary over time and change weekly. Purchasers must do research and compare rates to find the best CD.

CDs are sold via banks and some other financial institutions. What the institutions do with the money is up to them and most generally invest it in stocks or bonds or use it in the form of loans. A portion of their profit is returned to the purchaser in the form of interest and the rest the bank keeps as their profit. CDs are very safe investments making them a good way to balance an investment portfolio.

Occasionally, to attract many investors, banks will offer a higher interest rate on shorter term bonds when they are in need of a quick infusion of capital. Purchasing these CDs offers not only the advantage of higher interest payments, but the ability to quickly reinvest your capital in other opportunities. Investors should always be on the alert for such deals.

When the CD reaches maturity, meaning that you can redeem it for the full interest amount, you have two options. You can either cash the CDs or do what's called a roll over and reinvest the CD for an additional period of time. Upon maturity, the CD will automatically roll over if you do not cash it. When you do a roll over, you can select a new length of time if you choose. Depending on the CD, roll overs will also allow you to defer any tax payments. This is especially beneficial to people nearing retirement age.

CDs are also a very good form of collateral. Banks and other lending facilities will gladly accept a CD as a form of collateral on a personal loan. In rough economic times, when loans are hard to acquire, this may be a perfect answer to your financial needs. Your Certificate of deposit will continue to collect interest while being held as a form of collateral. Most banks will offer very low interest rates on personal loans when a CD is used this way. Private lenders will also accept this type of collateral on a personal loan, but may not give as low of interest rates on the loan as the original bank that issued the CD.

CDs can also be used as a form of collateral against a loan just like a car or a house. This is an excellent way to secure a loan as the CD will continue to accrue interest as you pay off the loan. Interest rates on loans secured with CDs are generally very low since there is little risk involved.

In summary, CDs are a low risk, useful way to save and invest money. They offer diversity to any investment portfolio and can be used to secure loans while they are still earning you interest. Do the research, find the best rate, and purchase some CDs soon.




Todd Fletcher has been involved in financial analysis since 2007. Visit Ratelines.com for more of his advice on money markets.





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2012年9月3日 星期一

CD Rates - Finding the Best Deal on Certificates of Deposits


Get the best CD rates possible, but avoid missing out on future investment opportunities.

Certificates of deposits are one of the safest ways to invest your money for the future, much like a Treasury bond. Cd rates offer some of the highest rates of return that you can receive as an individual without risking any losses. Since they are insured by the FDIC by up to $250,000, there are virtually no risks. Still, it is worth your time to look for the best CD rates available, in order to get the most for your money.

Check Online

Some of the best rates can be found through online banks. Certificates of deposits offered by online banks often earn a higher interest rate due to the fact that the bank has fewer operational costs. There are also several different online marketplaces that you can take advantage of in order to find the best deals available.

Brokerage Firms

While CD rates offered by the bank can often be quite competitive, it is often possible to do even better by getting in touch with a brokerage firm. Financial advisers can often gain access to brokered CDs. These often offer the best CD rates available. This is because of the fact that the brokerage firm can offer access to a very large number of certificates of deposits, which allows them to negotiate better rates.

Check for Local Promotions

In many cases, a small local bank will end up in a situation where a large number of deposits are required. When this happens, a bank will often have a "sale" on certificates of deposits. This means that they will offer them with higher interest rates that usual, giving you a better return on your investment.

Consider the Term

The longer the term of the certificate of deposit, the higher the interest rate generally is.




The best CD rates are almost always offered on longer-term CDs. It is important to pay close attention to the economy when considering whether or not to invest, however. Rates can change rapidly, and if the economy is expected to improve in the near future, a good rate now could be a bad rate tomorrow.

Stacey Nelson





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2012年9月1日 星期六

Certificates of Deposit - What is it?


Commonly referred to as a CD, a Certificate of Deposit can be used as a short or long term investment. Domestic banks offer FDIC (Federal Deposit Insurance Corporation) insured Certificates of Deposit with higher rates of return than other investment options. The bank retains money for a specified period of time with the promise to repay the principal and interest to the depositor at the conclusion of the investment term.

Depending on the amount of money you invest, and the particular terms of the bank you choose to invest with, you may choose to invest your money for a period as short as one month to six years. There is usually a penalty for withdrawing money from a CD prior to the maturity date. Banks will also require a minimum deposit to open a Certificate of Deposit.

OFFSHORE CERTIFICATES OF DEPOSIT

International Certificates of Deposit vary slightly from domestic CDs. International Certificates of Deposit can also be referred to as Offshore Certificates of Deposit or Eurodollar Certificates of Deposit. When obtaining a Certificate of Deposit from an offshore bank, the investor signs an agreement with the bank in which the bank agrees to pay a fixed interest rate in exchange to use the money during the specified time period.

Similar to domestic banks, offshore banks will differ on the minimum amount required to use as a deposit for a CD. Often the amount required for an Offshore Certificate of Deposit will be much higher than what is traditionally required from domestic banks.

There are several advantages to having a Certificate of Deposit from an offshore bank. The advantages include:

1. Higher interest rates. Unlike domestic banks, offshore banks are not government regulated and are free to compete against each other for better rates. Depending on the country you choose to bank in, interest rates can be as high as ten percent.

2. Another advantage to having an Offshore Certificate of Deposit is the income tax benefits. If you choose to open a Certificate of Deposit in a recognized tax haven such as Panama, you will not be taxed on interest earned because that particular government does not impose interest on income taxes.

3. A third major advantage to an Offshore Certificate of Deposit is the anonymity and confidentiality offered to protect your assets. Depending on the jurisdiction you choose to obtain your Certificate of Deposit, the bank may be forced to adhere to strict secrecy laws which protect your money from creditors and divorce. Also, since offshore banks are outside the jurisdiction of domestic courts those wishing to sequester your funds for whatever reason will be unable to do so.

INSURANCE ON OFFSHORE BANK ACCOUNT CD

Unlike domestic banks, an offshore bank cannot offer Certificates of Deposit which are FDIC insured. Rather, these banks have their own methods of insuring investment money which guarantee that at any given time the bank has enough money in its reserves to cover all deposits made.

For example, in Panama all banks are required to report each month to the BNP (Banco Nacional do Panama) to ensure they have enough reserves to cover deposits made. Compliance officers are assigned to the banks to make sure depositor's funds are not misappropriated. Additionally, offshore banks will often maintain large insurance policies to cover depositor's funds for amounts over what is normally covered by the BNP.

EURODOLLAR CERTIFICATES OF DEPOSIT

Eurodollar Certificates of Deposit are issued in London according to the rates listed on the London Interbank Offered Rate (LIBOR). This interest rate is calculated on a daily basis by the British Banker's Association. Several countries that rely on LIBOR for calculating the rates for Certificates of Deposit are England, the United States, Switzerland, and Canada. Eurodollar Certificates of Deposit, while being issued outside the United States, are still denominated in American currency.

When choosing to open an International Certificate of Deposit, it is important to consult with a financial advisor. Your advisor will be aware of minimum deposits required to open the account, any penalties for withdrawing money early, the stability of the bank you choose to invest with, and the denomination your money will be kept in. Your advisor will also help you choose the appropriate length of time to keep your money tied up in a CD to offer you the best return of investment.




author bio - Rocco Beatrice, CPA, MST, MBA

award-winning estate planning, trust expert

MS - Taxation, Master of Science Taxation

MBA - Management / Taxation

BSBA - Management / Accounting

CPA - Certified Public Accountant

-----

Irrevocable Trust Asset Protection, Estate Planning

International Bank of Commerce

Original article posted here: Certificates of Deposit [http://www.ultratrust.com/finance/certificates-of-deposit.html]

71 Commercial Street #150, Boston, MA 02109

tel: +1.508.429.0011 fax: +1.508.429.3034





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