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2012年10月26日 星期五

How Savings Bonds Could Impact College Financial Aid Eligibility

U.S. savings bonds and notes come in several varieties and denominations. With regard to college funding, Financial Aid Officer (FAO)s view these as assets. Just as important is the FAO's perception of the interest that accrues on your assets, Kalman Chaney, best selling author of "Paying for College Without Going Broke" says "nothing prompts a "validation" (financial aid jargon for an audit) faster than listing interest and dividend income without listing the assets it came from."

This is not to say that interest is not good. Au contraire, do not stuff your money in the mattress. This interest is your only hope of keeping up with inflation and rapidly rising college costs.

So what is a parent to do? I always stress competent planning. When dealing with Series E and EE U.S. Savings Bonds, the investor has two options: he can report interest on the bond as its earned each year, or it can be reported in one lump sum the year he cashes the bond.

The second option allows the investor to hold the bond while accruing interest for years. He'll never pay interest until the year he finally cashes in. In terms of college planning, that had better not be a base income year. That would definitely raise your EFC.

There are exceptions made for certain Series EE bonds bought after 1989. The government give tax breaks to low and middle income parents who purchased the bond specifically for college funding purposes. As of 2011 tax rates, this benefit applied fully to single parents making up to $71,000 and couples making up to $106,650; partially to any single parent making under $86,100 or couple making less than $136,650.

We still recommend that families cash these bonds after the student's final base income year (after Jan 1 of the Junior year). Taxed or untaxed, the FAOs still consider the interest as income and assess it with the same methodology as your income.

Typically the investor has options to avoid cashing bonds in a base income year. E and EE bonds can sometimes be rolled over into H or HH bonds. No law says bonds must be cashed upon maturation. In many cases, the bond will be held and accrue interest beyond its face value.

In any case the scenario should be discussed with a qualified college funding counselor. Only professionals can assess holistically which move makes the most sense in any given situation.

To take savvy steps to increase your chances of receiving aid regardless of income, while implementing long and short term strategies to lower college costs or comparing and negotiating aid offers as well as to avoid costly but routine mistakes, visit http://eapen.com/, a network of critically acclaimed experts in college admissions and financial planning.


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2012年9月12日 星期三

Are Your Bank Deposits Safe? Financial Facts - What You Need to Know About Your Savings


If your bank deposits are covered by the Federal Deposit Insurance Corporation (FDIC), your money is safe up to $100,000 personally and $250,000 in eligible retirement plans. In fact, depending on how you have structured your accounts, coverage can significantly exceed $100,000 per bank. We have been negative on the outlook for U.S. Bank stocks since early last summer, but FDIC insurance has added a level of safety since its inception shortly after the Great Depression. Social Security and greater flexibility by the Federal Reserve to inject liquidity into the financial system are two other key safety measures helping to prevent another 1929-type collapse.

One of the biggest risks regarding this country's current financial malaise is more from a "crisis of confidence" in which worries about the banking system creates a run on certain banks, forcing otherwise solvent banks into insolvency.

This is one reason the Fed acted so swiftly when problems erupted with Bear Stearns in March, and more recently, took measures to instill confidence in both Fannie Mae and Freddie Mac with promises of financial backing. Only a year and a half ago, the number of troubled banks on the FDIC list were at record lows, as most banks were enjoying record earnings and soaring stock market valuations. Excess liquidity brought on by historically low interest rates coupled with relaxed, or non-existent, loan covenants created a massive bubble in real estate that has pushed a growing number of banks to the edge. This problem was many years in the making and with real estate representing approximately 60% of all bank assets, investors should not expect a dramatic turn around anytime soon. It is important to keep in mind that the plight of many bank stocks, with many down 70% or more over the past year, does not necessarily correlate with the safety of your deposits in these banks. As long as you make sure all of your bank accounts are FDIC insured you will be fine, and there is definitely no reason to panic. But what are the rules and stipulations of FDIC insurance?

FDIC insurance was started in 1933 after thousands of banks failed following the stock market crash of 1929. The deposit insurance coverage was initially set at $2,500 and steadily increased until it was raised to the current amount of $100,000 in 1980. The FDIC has the power to increase the insurance limits on all deposits every five years, based on inflation, but has demonstrated a very conservative stance by electing not to do so.

In April of 2006, the FDIC established $250,000 of insurance coverage for deposits that are held in IRA and select other retirement accounts. It should be noted that accounts not covered by FDIC include mutual funds, annuities, life insurance policies, stocks and bonds. In addition, an uninsured money market mutual fund should not be confused with an FDIC-insured money market deposit account.

After the first quarter of 2008, the FDIC released its list of 90 troubled banks, up from 53 in the first quarter of 2007 and 76 in the fourth quarter. Very few banks that make the list are destined for failure. Among all the troubled banks listed last year, only three actually failed. The recent collapse of IndyMac was a shocker to many, as the bank wasn't even on the FDIC's watch list. After its failure, it was reported that IndyMac received 100% of FDIC insured funds, and 50% of non-insured funds. Many times in the past, uninsured deposits have been partially insured, but there is no guarantee that trend will continue. For trust account holders, depositors have to wait to get their deposits until the beneficiaries of trusts can be verified.

It is important that you take the necessary steps to help navigate through this crisis:

1. Don't panic. Confirm that all of your assets in banks (savings accounts, checking accounts, money market deposit accounts and certificates of deposits) are insured up to the $100,000 per account and $250,000 per retirement account. For example, make sure if you have a joint account with over $100,000 that it is structured properly to receive up to $200,000 of coverage.

2. Establish a secondary banking relationship to have liquid assets (emergency money) available from two separate sources, should your bank become insolvent. This can also be helpful to compare yields and fees to make sure you're getting the most from your bank for every dollar of savings. Remember that insured deposits in trust accounts may not be immediately accessible and recovery of broker CDs may also experience delays.

3. If you have considerable assets, consider the Certificate of Deposit Account Registry Service (CDARS), a program designed to accept deposits of more than $100,000 and still receive FDIC coverage by spreading funds among many FDIC insured institutions. Your deposits can be insured for up to $50M with CDARS without having to set up accounts at multiple banks.

One final point - as with all banking relationships, yields are negotiable. The current credit crisis has created strong demand for loyal "credit worthy" clients so investors have never been in a better position to negotiate the best rates, and lowest fees, for each banking deposit or service.




Article presented by LanczGlobal.com

Alan B. Lancz is a nationally recognized authority on investing and financial analysis. He is the president of Alan B. Lancz & Associates, Inc. (http://www.ABLonline.com), a registered investment advisory firm and Director of Research at LanczGlobal.com (http://www.LanczGlobal.com).





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2012年9月2日 星期日

How to Use Certificate of Deposits As Part of Your College Savings Strategy


The cost of college education increases at a rate that far exceeds inflation. It is also much greater than the average rate of return your savings and investments are getting, which makes it difficult to save enough money to keep up with the ever-increasing costs of higher education.

Saving for your child's higher education is a challenge faced by most families regardless of their income levels - but the money you save now will help prevent your son or daughter from graduating under a mountain of school loans they will struggle to pay for many years after leaving college. If you want to help your child graduate in something other than debt, here are some tips for developing a strong college savings strategy that includes certificate of deposits:

Start Saving for College As Early As Possible

The key to saving for college is to start when the children are young. The earlier you start saving the more time your money has to grow. Many people invest in riskier options when their children are young in an effort to increase their earnings, and figuring they have more time to recover if their risks don't pay off financially. As children get older and approach their college years, your choice of savings and investment vehicles are likely to move to less risky options in order to prevent the loss of money.

Risk Free Savings Strategy: Certificate of Deposits

Once you've saved up a sizable amount of money for your child's education, you might think about using fixed-rate certificate of deposits to give those savings a chance to grow risk-free until you need to use them to pay for college expenses.

When you open a certificate of deposit with your college savings, you will earn interest in exchange for agreeing to leave your money alone for a specific period of time. Once the money is in a CD, you don't have easy access to it. It's not completely impossible to withdraw money from a certificate of deposit before it matures, but it's certainly not recommended to take it out early because you will pay penalty fees and lose money in the process.

Depending how many years your child has before starting college, you can select a certificate of deposit with as little as three months to five years (or more) until it reaches it's maturity date. The longer the CD term, the higher interest your savings will earn. You may find using certificate of deposits as part of your college savings allows you to diversify and increase the amount of money your savings earns. While your saved money is held in a certificate of deposit waiting for it to reach it's maturity date, you can continue saving money in money market funds, high interest savings accounts, 529 plans, or Coverdell Education Funds to increase the amount of money you have when your child approaches their college years.

CD Laddering Increases Saving Potential and Access to Funds

Creating CD ladders may be a reasonable college savings strategy, as well. Once you have saved enough money through other means, you can withdraw it and open multiple certificate of deposit accounts with different maturity dates. By staggering the maturity dates of the certificate of deposit products you open, you can gain access to the money at pre-determined intervals. Plan it right, and you can have certificate of deposits maturing right before each of your college semesters begin, and gain access to money to pay for tuition and expenses right as you need it each semester.




Debra Dragon is a freelance writer for DepositAccounts.com. She writes about how to make your money work better for you through various deposit accounts, including savings accounts, interest checking accounts, IRAs, and money market funds.





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2012年8月27日 星期一

Certificate of Deposit Vs Savings Account: What Fits You?


For most people, the idea of investing is basically the same as saving up money. However, there are other ways for you to invest your money without really having to undergo a lot of risk. One such way is through certificates of deposit.

First, what is a certificate of deposit? You can consider a certificate of deposit as a time deposit, basically like your usual savings account except that you cannot really withdraw it as you see fit. A certificate of deposit usually allows you to earn a higher interest on your money but at the same time, you are discouraged to alter or withdraw that money before the fixed period of time.

If you are thinking of investing your money, and don't know whether you should go and open a savings account or if it will be better to invest in a CD, then here are some of the pros and cons of the two.

Pros and Cons

Savings accounts and certificates of deposits are all relatively risk-free, meaning if the bank collapses, you don't collapse with it as well and that your money is protected up to a certain degree. These are probably the only risk-free or minimal risk investment strategies that you can find.

One of the biggest difference between a savings account and a CD however is that there is a fixed period of time, between three months to five years, before you can really access the money you invested in a CD compared to the unlimited access that you may have with your savings account. However, banks and other institutions encourage you to invest your money longer by offering higher interest rates, meaning your money will be earning more in the longer period. The same way, a savings account may give you quick access to your money but then you might not be earning as much as you would have wanted compared to in a CD.

So how do you choose?

Your choice will basically depend on two factors: whether you need quick access to your funds or whether you want your money to earn a lot. If you think that you might need the money in the near future, then it may not be a good idea for you to invest in a CD. However, if you won't be using that money and you want your money to earn more while it 'sleeps', then investing in a CD might be the best way for you to go.




Jane Sanders at Certificate of Deposit Rates about getting the best CD rates. Learn more about Certificate of Deposit here.





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2012年8月21日 星期二

When Will Online Savings Account And Certificate of Deposit (CD) Rates Go Up?


For many money-savvy Americans, the current interest-rate environment is very frustrating. Imagine spending years being frugal and responsible with your money, spending as little as you can and saving as much as you can, only to be rewarded with a savings account rate of 1.25%. Very frustrating indeed. Even online savings accounts, which typically offer better yields than traditional savings accounts, are offering less than 2%.

The situation with Certificates of Deposit (CD's) is no better.

The reason for the lousy rates is quite simple: the Federal Reserve is currently letting banks borrow at no more than 0.25%. So, if a bank can borrow at 0.25% -- which is the current fed funds target rate -- why would it borrow money from you at 5% via a savings account or a CD? That's the gist of it. This is why CD and savings-account rates rise as fall in tandem with the target fed funds rate, the Fed's most important monetary policy tool.

So the big question is: when will savings rates start to rise?

The answer, unfortunately, is not any time soon. Any experienced rate watcher will tell you that the Fed is going to keep the benchmark fed funds target rate at 0%-0.25% for the rest of the year, and probably well into 2011. The fed funds futures market, a very good predictor of where interest rates are headed, is currently 100% certain that the Fed will keep short-term rates at record low levels for the rest of 2010.

Who's to blame? Why, the Great Recession, of course. The Fed can't raise rates while unemployment is high, economic growth is weak and the very real threat of deflation persists. Moreover, many seasoned economists believe that the very recent Great Recession will soon become the Great Double-Dip Recession.

The Fed is just as frustrated as the unnumbered folks around the country trying to find stronger yields for their hard-earned savings. The Federal Reserve is currently dealing with what's called a liquidity trap. It has lowered rates as much as it can, and has pumped massive amounts of new cash into the economy. Despite these actions, the economy is still not expanding in a sustainable way. That's the trap. It's the same trap that has kept Japanese central bankers scratching their heads in frustration since the 1990's.

And if you think you might do better with US Treasury securities, think again. The Fed has been pumping many billions into Treasury securities, thus driving the yields associated with these super-safe investments down. This not only keeps mortgage rates low, which is good for the languishing housing market, but it also makes Treasuries less appealing to investors. To help bolster the anemic US economy, the Fed would much rather prod Wall Street to put its money into riskier investments like stocks and corporate securities, which aren't as safe as Treasuries but do offer higher yields. The Fed wants your 401K to look like it did back in 2006, which would certainly help to make you and millions of other American feels prosperous again.

So what is the responsible saver to do?

The best course of action a money-savvy American can take is to simply continue to scan the Internet for the best available rates on CD's and online savings accounts. Definitely not a good idea to lock up a significant amount of cash for 3 or 5 years. Best to stick with 6 to 12 month CD's while yields are low. There are lots of easy-to-find blogs out there that report on the latest and greatest from around the country.




The US Prime Rate website at FedPrimeRate.com recommends some of the best Certificate of Deposit and online savings accounts available.

The website at BalanceTransfer.cc offers advice on how to use credit card balance transfer checks to earn money via 0% credit card offers.





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2012年6月26日 星期二

How to Compare Savings Accounts Online


Over 50% of American adults don't have any savings. It's all to easy to buy what you want now with credit and loans within easy access to fund purchases. If your looking to get debt free and save for purchases or have a cash reserve for lifes unexpected costs then a online savings account could be the answer. Before rushing off to apply you need to look out for features to compare such as introductory offers, interest rates, minimum investment and any fees or interest penalties.

Banks, of course, are always looking to attract new customers, and introductory interest rates are one way they do that. Just as credit cards may offer zero-percent rates to bring in new customers, banks offer higher-than-normal interest rates for a specific amount of time. When comparing savings accounts, this is one thing to take into consideration, but not the only thing.

If your planning on a longer term investment then the ongoing rate will be of far greater importance than a short term introductory offer. If on the other hand you have a large lump some cash investment, such as a home deposit, that you know you'll be using within six months or so then you may be able to make use of the high introduction rates.

Some of the best long term savings accounts do have opening offers but others use the offers to pull you in but have downsides hidden in the small print. In some cases banks require a minimum balance to be maintained either permanently or for a certain period after you open the account to avoid being penalized by fees. If you withdraw before the specified time period is up, you'll pay for it. In some cases the penalty amount can more than negate the interest you earned.

Some accounts may be assessed fees, either to open, to close, or on an ongoing basis. Again, these must be disclosed, but they're usually in the fine print. Especially if you choose an online high interest account, you'll want to think carefully if there are fees involved. One of the main advantages of online accounts is low or no fees, since the bank doesn't have to maintain brick-and-mortar branches. If the best savings rates are offset with high fees, you may be better off looking elsewhere.

Another thing to look for are hidden interest penalties in the month you withdraw your funds. Many people overlook these in the fine print, but they can make a difference in the amount of money you receive. Getting less than you thought could put a crimp in your plans.

Sometimes, in order to get an advertised rate, you need to deposit a fairly high minimum. This can be $10,000 or more, in some cases. The minimum deposit amount can be combined with an early withdrawal penalty, turning a high interest savings account effectively into a short-term certificate of deposit. Make sure an account with these restrictions will serve your needs before signing up and sending your money.

High interest saving accounts are a great tool whether you make use of an online account or something offered by your regular bank. Just be sure you read all the information about the account before you sign up, and know about any dates for withdrawal and any fees that might be associated with the account, either on a one-time basis or on an ongoing basis.




Richard Greenwood is Director for the Click 4 Group who run a range of websites to help consumers compare savings account products from leading banks including Raboplus savings.





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2012年6月24日 星期日

Young, Self Employed, No Accounts and No Savings - How Did I Get a Mortgage?


I was having considerable problems getting a mortgage to buy my first home about four years ago. If I was to believe everything I had heard, I was the ideal candidate for a mortgage - young, a first-time buyer and with an annual income of about £30k. Easy!

No, not easy, actually. Being young with a leaning towards enjoying myself, I had no savings - nothing to use as a deposit. But what about these 100% mortgages I had been hearing about? Surely I qualified? Oh, there was something else - I was also self employed with no accounts.

Self employed with no accounts and no savings.

Could I get a mortgage? It was virtually impossible. Not a single High Street lender would give me a mortgage. Even my bank who have had my services for ten years turned me down; even though my bank knew exactly how much I earned each year and how much I spent each week; even though my bank knew that making the monthly payments on a repayment mortgage would not be an big problem for me.

Then I heard about Self Certification Mortgages.

What is a Self Certification Mortgage? It's essentially a mortgage whereby you decide whether or not you are capable of making the repayments. And that is when the penny dropped, because you see the entire process of applying for a mortgage is premised upon an institution (such as your bank) deciding whether or not you are able to make the monthly repayments.

And what is the formula for working this out? Well, if you are employed it is your salary - a bank will lend you, say, 3 or 4 times your annual salary. Normally they will ask you for a small deposit, say 5%, to demonstrate that your intentions are serious.

Obviously, if you are self employed, and particularly with no accounts, you often do not have an annual salary and you are unable to demonstrate regular monthly income. Many self employed people - notably me - live hand-to-mouth, regularly waiting for reluctant clients to settle outstanding invoices. So how can your ability to repay a mortgage be judged? I discovered that self certification was the answer - i.e. YOU. You make a judgement as to whether or not you are borrowing too much money and whether or not you will be able to afford the monthly repayments. After all, if you are bright enough to run your own business, manage your own tax affairs, handle purchasing and invoicing, surely you are bright enough to work out whether you can repay your mortgage!

Think about it - conventional, salary-based mortgages are judged on the basis of what a person has earned in the past, but a person could be made unemployed within hours of securing a mortgage. On the other hand, Self Certification puts the onus on you predicting what you will earn in the future. Sure, you could go out of business, but a salaried person could also lose their job.

So I thought, well this is good, but I bet that a Self Certification Mortgage is the stuff of loan sharks, with huge interest rates, crushing monthly repayments and Guantanemo-style penalties.

But there was something else I discovered about mortgages. Although the High Street is swamped by lenders, there are only actually a very small number of 'actual' lenders: the majority are intermediaries acting on their behalf, because the number of mortgage applications is so great that intermediaries are required to perform the process of judging each applicant and assessing risk.

So I discovered that whereas a High Street lender would turn me down, a smaller lender might accept me. But get this: the mortgage that I actually received from the small lender at the end of the day was exactly the same as the mortgage which had been refused me by the High Street lender! Only the forumla for judging my ability to repay the mortgage was different, not the mortgage itself!

So what's the catch with Self Cerftification? There is always a catch in my experience, and in this instance it was a very big catch. Whereas a regular mortgage requires the borrower to contribute a deposit of, say, 5%, my Self Certification Mortgage required a deposit of 15%. Fifteen percent!! Of course I can see why they ask for this, why if you are not being judged using the conventional formula you are expected to show some serious commitment. But I didn't have any savings. I was young and self employed for crying out loud.

So what did I do? Okay, I would not recommend this to everybody, but I was desperate for my own home and I knew that I could afford the repayments. I took out a Personal Loan shortly before my mortgage application and, supplemented with a timely invoice payment, I was able to pay the deposit and afford the key refurbishment costs on the property (roof, re-wiring, plumbing etc).

On the High Street this would be called a Home Improvement Loan and acquired AFTER you have obtained a mortgage and purchased the property. I simply borrowed a little more in the form of a Personal Loan before I had acquired a mortgage. I was fortunate in that I could afford to carry the costs of these repayments for the foreseeable future and I had bought on a rising market - the value of my property was already more than the mortgage and personal loan combined before I had even finished the refurbishment (ie. 4 months after buying the property). I would not recommend this to everyone, and you have to be very, very clear about how much you are borrowing and what the total repayments will be.

However, getting on the property ladder and having my own home was the most important thing to me, and it just goes to show that if you look beyond the High Street you can actually find the same or similar financial products but with less of the hassle. The High Street had always made me feel inadequate, a financial failure.

You might be interested to know that, because I was still looking for the catch in my Self Certification Mortgage, I went to a respected, independent financial advisor recently (on the High Street as it happens) and asked if I should change my mortgage to something better. His advice was that I had got a very good mortgage deal and that I should stick with it for the foreseeable future. So I have.

Richard




Richard Evans became self employed as an ICT Consultant and System Developer in 2001. Becoming bored of building systems for other people, he now assists in the running of a financial introducer [http://www.HallamFinance.com] and the loan and mortgage directory [http://www.LoansUnited.com]. Please give these sites a visit, especially HallamFinance.com if you are actively looking for a Self Cert Mortgage in the UK.





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2012年6月21日 星期四

Short Term Savings Products


When you invest, it simply means that you are putting your funds in products, in this case short-term savings vehicles, which will allow you to reap high financial rewards.

Here is a list of the more common short term savings products you should consider investing in.

Savings account: If you are getting your feet wet for the first time in investing, you should consider this, as it is the most popular banking product people use. The interest rates of a traditional savings account vary between 2.0% to 4.0. This is better than keeping them at home. Investing in a savings account is relatively risk free, as these products are protected by the federal deposit insurance. Generally, the government protects the money you have on deposit to a limit of $100,000. Some questions you'll need to ask: What is the interest rate on your savings? Can the bank change the rate after you've opened the account? Will you pay a flat monthly fee? What if the balance drops? Is the ATM service free? Are the fees reduced or waived if you directly deposit your paycheck or government payments?

Money market funds: Money market funds are a specialized type of mutual fund that invests in extremely short-term bonds. Its shares are designed to be worth $1 at all times. It's a better product for investing in than the traditional savings account, with regards to the interest rate it will give you. But has a lower rate than certificates of deposit. However, the virtue of investing in the money market fund is that, while the interest rates may be lower, you can withdraw your funds when you see fit.

Certificate of deposit (CD): When you purchase a certificate of deposit, you are lending the bank use of your money, for a specific amount of time. In investing your funds, you're guaranteed annual interest payments. Investing in CD is relatively low risk, for it is FDIC insured for up to $100,000. If you are investing $200,000.00 buy two CDs. Before investing your money, shop around for the best bank interest rates. Consider the fact that by purchasing CDs, you are investing funds that will stay locked up for a specific period of time. Can you afford to have these funds locked up? For if you withdraw the funds before this matures, you'll pay steep penalties. If you are conservative about investing, this is a good place to start.

Financial experts recommend investing your funds into these short term savings vehicles, if you are looking to earn some interest in minimal risk products.




Timothy Gorman is a successful Webmaster and publisher of Debt-Relief-Solutions.com. He provides more debt relief, consolidation and financial planning advice [http://www.debt-relief-solutions.com/Financial-Planning.html] that you can research in your pajamas on his website.





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2012年6月13日 星期三

Are Your Bank Deposits Safe? Financial Facts - What You Need to Know About Your Savings


If your bank deposits are covered by the Federal Deposit Insurance Corporation (FDIC), your money is safe up to $100,000 personally and $250,000 in eligible retirement plans. In fact, depending on how you have structured your accounts, coverage can significantly exceed $100,000 per bank. We have been negative on the outlook for U.S. Bank stocks since early last summer, but FDIC insurance has added a level of safety since its inception shortly after the Great Depression. Social Security and greater flexibility by the Federal Reserve to inject liquidity into the financial system are two other key safety measures helping to prevent another 1929-type collapse.

One of the biggest risks regarding this country's current financial malaise is more from a "crisis of confidence" in which worries about the banking system creates a run on certain banks, forcing otherwise solvent banks into insolvency.

This is one reason the Fed acted so swiftly when problems erupted with Bear Stearns in March, and more recently, took measures to instill confidence in both Fannie Mae and Freddie Mac with promises of financial backing. Only a year and a half ago, the number of troubled banks on the FDIC list were at record lows, as most banks were enjoying record earnings and soaring stock market valuations. Excess liquidity brought on by historically low interest rates coupled with relaxed, or non-existent, loan covenants created a massive bubble in real estate that has pushed a growing number of banks to the edge. This problem was many years in the making and with real estate representing approximately 60% of all bank assets, investors should not expect a dramatic turn around anytime soon. It is important to keep in mind that the plight of many bank stocks, with many down 70% or more over the past year, does not necessarily correlate with the safety of your deposits in these banks. As long as you make sure all of your bank accounts are FDIC insured you will be fine, and there is definitely no reason to panic. But what are the rules and stipulations of FDIC insurance?

FDIC insurance was started in 1933 after thousands of banks failed following the stock market crash of 1929. The deposit insurance coverage was initially set at $2,500 and steadily increased until it was raised to the current amount of $100,000 in 1980. The FDIC has the power to increase the insurance limits on all deposits every five years, based on inflation, but has demonstrated a very conservative stance by electing not to do so.

In April of 2006, the FDIC established $250,000 of insurance coverage for deposits that are held in IRA and select other retirement accounts. It should be noted that accounts not covered by FDIC include mutual funds, annuities, life insurance policies, stocks and bonds. In addition, an uninsured money market mutual fund should not be confused with an FDIC-insured money market deposit account.

After the first quarter of 2008, the FDIC released its list of 90 troubled banks, up from 53 in the first quarter of 2007 and 76 in the fourth quarter. Very few banks that make the list are destined for failure. Among all the troubled banks listed last year, only three actually failed. The recent collapse of IndyMac was a shocker to many, as the bank wasn't even on the FDIC's watch list. After its failure, it was reported that IndyMac received 100% of FDIC insured funds, and 50% of non-insured funds. Many times in the past, uninsured deposits have been partially insured, but there is no guarantee that trend will continue. For trust account holders, depositors have to wait to get their deposits until the beneficiaries of trusts can be verified.

It is important that you take the necessary steps to help navigate through this crisis:

1. Don't panic. Confirm that all of your assets in banks (savings accounts, checking accounts, money market deposit accounts and certificates of deposits) are insured up to the $100,000 per account and $250,000 per retirement account. For example, make sure if you have a joint account with over $100,000 that it is structured properly to receive up to $200,000 of coverage.

2. Establish a secondary banking relationship to have liquid assets (emergency money) available from two separate sources, should your bank become insolvent. This can also be helpful to compare yields and fees to make sure you're getting the most from your bank for every dollar of savings. Remember that insured deposits in trust accounts may not be immediately accessible and recovery of broker CDs may also experience delays.

3. If you have considerable assets, consider the Certificate of Deposit Account Registry Service (CDARS), a program designed to accept deposits of more than $100,000 and still receive FDIC coverage by spreading funds among many FDIC insured institutions. Your deposits can be insured for up to $50M with CDARS without having to set up accounts at multiple banks.

One final point - as with all banking relationships, yields are negotiable. The current credit crisis has created strong demand for loyal "credit worthy" clients so investors have never been in a better position to negotiate the best rates, and lowest fees, for each banking deposit or service.




Article presented by LanczGlobal.com

Alan B. Lancz is a nationally recognized authority on investing and financial analysis. He is the president of Alan B. Lancz & Associates, Inc. (http://www.ABLonline.com), a registered investment advisory firm and Director of Research at LanczGlobal.com (http://www.LanczGlobal.com).





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張貼者： 於 上午9:21 0 意見
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2012年5月19日 星期六

How to Use Certificate of Deposits As Part of Your College Savings Strategy


The cost of college education increases at a rate that far exceeds inflation. It is also much greater than the average rate of return your savings and investments are getting, which makes it difficult to save enough money to keep up with the ever-increasing costs of higher education.

Saving for your child's higher education is a challenge faced by most families regardless of their income levels - but the money you save now will help prevent your son or daughter from graduating under a mountain of school loans they will struggle to pay for many years after leaving college. If you want to help your child graduate in something other than debt, here are some tips for developing a strong college savings strategy that includes certificate of deposits:

Start Saving for College As Early As Possible

The key to saving for college is to start when the children are young. The earlier you start saving the more time your money has to grow. Many people invest in riskier options when their children are young in an effort to increase their earnings, and figuring they have more time to recover if their risks don't pay off financially. As children get older and approach their college years, your choice of savings and investment vehicles are likely to move to less risky options in order to prevent the loss of money.

Risk Free Savings Strategy: Certificate of Deposits

Once you've saved up a sizable amount of money for your child's education, you might think about using fixed-rate certificate of deposits to give those savings a chance to grow risk-free until you need to use them to pay for college expenses.

When you open a certificate of deposit with your college savings, you will earn interest in exchange for agreeing to leave your money alone for a specific period of time. Once the money is in a CD, you don't have easy access to it. It's not completely impossible to withdraw money from a certificate of deposit before it matures, but it's certainly not recommended to take it out early because you will pay penalty fees and lose money in the process.

Depending how many years your child has before starting college, you can select a certificate of deposit with as little as three months to five years (or more) until it reaches it's maturity date. The longer the CD term, the higher interest your savings will earn. You may find using certificate of deposits as part of your college savings allows you to diversify and increase the amount of money your savings earns. While your saved money is held in a certificate of deposit waiting for it to reach it's maturity date, you can continue saving money in money market funds, high interest savings accounts, 529 plans, or Coverdell Education Funds to increase the amount of money you have when your child approaches their college years.

CD Laddering Increases Saving Potential and Access to Funds

Creating CD ladders may be a reasonable college savings strategy, as well. Once you have saved enough money through other means, you can withdraw it and open multiple certificate of deposit accounts with different maturity dates. By staggering the maturity dates of the certificate of deposit products you open, you can gain access to the money at pre-determined intervals. Plan it right, and you can have certificate of deposits maturing right before each of your college semesters begin, and gain access to money to pay for tuition and expenses right as you need it each semester.




Debra Dragon is a freelance writer for DepositAccounts.com. She writes about how to make your money work better for you through various deposit accounts, including savings accounts, interest checking accounts, IRAs, and money market funds.





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2012年5月11日 星期五

When Will Online Savings Account And Certificate of Deposit (CD) Rates Go Up?


For many money-savvy Americans, the current interest-rate environment is very frustrating. Imagine spending years being frugal and responsible with your money, spending as little as you can and saving as much as you can, only to be rewarded with a savings account rate of 1.25%. Very frustrating indeed. Even online savings accounts, which typically offer better yields than traditional savings accounts, are offering less than 2%.

The situation with Certificates of Deposit (CD's) is no better.

The reason for the lousy rates is quite simple: the Federal Reserve is currently letting banks borrow at no more than 0.25%. So, if a bank can borrow at 0.25% -- which is the current fed funds target rate -- why would it borrow money from you at 5% via a savings account or a CD? That's the gist of it. This is why CD and savings-account rates rise as fall in tandem with the target fed funds rate, the Fed's most important monetary policy tool.

So the big question is: when will savings rates start to rise?

The answer, unfortunately, is not any time soon. Any experienced rate watcher will tell you that the Fed is going to keep the benchmark fed funds target rate at 0%-0.25% for the rest of the year, and probably well into 2011. The fed funds futures market, a very good predictor of where interest rates are headed, is currently 100% certain that the Fed will keep short-term rates at record low levels for the rest of 2010.

Who's to blame? Why, the Great Recession, of course. The Fed can't raise rates while unemployment is high, economic growth is weak and the very real threat of deflation persists. Moreover, many seasoned economists believe that the very recent Great Recession will soon become the Great Double-Dip Recession.

The Fed is just as frustrated as the unnumbered folks around the country trying to find stronger yields for their hard-earned savings. The Federal Reserve is currently dealing with what's called a liquidity trap. It has lowered rates as much as it can, and has pumped massive amounts of new cash into the economy. Despite these actions, the economy is still not expanding in a sustainable way. That's the trap. It's the same trap that has kept Japanese central bankers scratching their heads in frustration since the 1990's.

And if you think you might do better with US Treasury securities, think again. The Fed has been pumping many billions into Treasury securities, thus driving the yields associated with these super-safe investments down. This not only keeps mortgage rates low, which is good for the languishing housing market, but it also makes Treasuries less appealing to investors. To help bolster the anemic US economy, the Fed would much rather prod Wall Street to put its money into riskier investments like stocks and corporate securities, which aren't as safe as Treasuries but do offer higher yields. The Fed wants your 401K to look like it did back in 2006, which would certainly help to make you and millions of other American feels prosperous again.

So what is the responsible saver to do?

The best course of action a money-savvy American can take is to simply continue to scan the Internet for the best available rates on CD's and online savings accounts. Definitely not a good idea to lock up a significant amount of cash for 3 or 5 years. Best to stick with 6 to 12 month CD's while yields are low. There are lots of easy-to-find blogs out there that report on the latest and greatest from around the country.




The US Prime Rate website at FedPrimeRate.com recommends some of the best Certificate of Deposit and online savings accounts available.

The website at BalanceTransfer.cc offers advice on how to use credit card balance transfer checks to earn money via 0% credit card offers.





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張貼者： 於 清晨7:29 0 意見
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2012年5月7日 星期一

Certificate of Deposit Vs Savings Account: What Fits You?


For most people, the idea of investing is basically the same as saving up money. However, there are other ways for you to invest your money without really having to undergo a lot of risk. One such way is through certificates of deposit.

First, what is a certificate of deposit? You can consider a certificate of deposit as a time deposit, basically like your usual savings account except that you cannot really withdraw it as you see fit. A certificate of deposit usually allows you to earn a higher interest on your money but at the same time, you are discouraged to alter or withdraw that money before the fixed period of time.

If you are thinking of investing your money, and don't know whether you should go and open a savings account or if it will be better to invest in a CD, then here are some of the pros and cons of the two.

Pros and Cons

Savings accounts and certificates of deposits are all relatively risk-free, meaning if the bank collapses, you don't collapse with it as well and that your money is protected up to a certain degree. These are probably the only risk-free or minimal risk investment strategies that you can find.

One of the biggest difference between a savings account and a CD however is that there is a fixed period of time, between three months to five years, before you can really access the money you invested in a CD compared to the unlimited access that you may have with your savings account. However, banks and other institutions encourage you to invest your money longer by offering higher interest rates, meaning your money will be earning more in the longer period. The same way, a savings account may give you quick access to your money but then you might not be earning as much as you would have wanted compared to in a CD.

So how do you choose?

Your choice will basically depend on two factors: whether you need quick access to your funds or whether you want your money to earn a lot. If you think that you might need the money in the near future, then it may not be a good idea for you to invest in a CD. However, if you won't be using that money and you want your money to earn more while it 'sleeps', then investing in a CD might be the best way for you to go.




Jane Sanders at Certificate of Deposit Rates about getting the best CD rates. Learn more about Certificate of Deposit here.





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2012年4月16日 星期一

A Simple Benefit of Offshore Banking is Seen in Offshore Savings Accounts


A simple aspect of offshore banking is seen in offshore savings accounts. In many tax advantaged locations interest on deposits is not deducted. Although the saver may need to declare savings interest "back home" the ability to let savings compound throughout the year on the untaxed balance will increase the return on your savings.

Interest on a certificate of deposit may be paid quarterly offshore but not be taxable in your home jurisdiction until you return the money to your home jurisdiction. Tax laws will vary from country to country and from offshore jurisdiction to offshore jurisdiction. However, banking in tax advantaged jurisdictions will usually save you money.

If you allow your savings account to accrue over the year and pay taxes "back home" only at year's end you will make a higher compounded rate throughout the year with will in turn accrue over the years ahead of what you would have seen with an account that stayed in your home country.

This same principle can apply to trusts, off shore funds, and investment bonds as well. If you are uncertain about the tax laws in your home country talk to your accountant. If you want to find a stable, trustworthy offshore banking jurisdiction you should talk to an offshore specialists about this.

Offshore funds, trusts, and investment bonds may be treated the same way depending upon your country of origin. In this case interest compounds tax free and is not taxed offshore upon withdrawal which is when the income from the investment vehicle will typically be taxed back home.

These any many other advantages becomes available by going off shore. Then the next question arises, about where and how to invest and save in tax advantaged locations.

Belize Offshore Banking

Opening an offshore bank account in Belize is easy. You do not even need to go to the bank. You can be introduced to a reputable, competent, trustworthy bank in Belize. You can set up your account online and by fax.

Belize has local, Belize banks, and international banks doing business in Belize. An offshore specialist can easily help you with the right banking choice for your needs. The banking guidelines in Belize provide you with unparalleled privacy and security in handling of your accounts and transactions.

In order to open an account in you need only provide your full name and a copy of your driver's license or passport, proof of your address, a utility bill for your address, and a reference from your current bank. Ideally you will need to have had a two year relationship with the bank that provides your reference.

Although the bank will need this information to open an account your personal information is not available to third parties without your knowledge and consent. You can do all of banking with your Belize offshore bank online from anywhere in the world.

Offshore Banking

This simply means that you bank in a country outside of your own. Banking offshore usually offers tax advantages as offshore bank interest is not taxed in the offshore location. Also offshore locations offer confidential, secure and convenient banking with access to your account from anywhere on earth.

These banks allow you to set up your accounts and do all of your banking on the internet. You never need to visit the bank. Many companies offer services and will help you choose a bank offering exceptional privacy and asset protection. Besides the advantages of banking tax free the banks will guard your privacy so that you can do business anywhere in the world without the world looking over your shoulder.

How Is a Belize Bank Account Taxed?

The answer is that a Belize offshore bank account is not taxed in Belize. Depending upon the tax laws in your home country you may have a tax liability there but income from your Belize account is not taxed and not reported to anyone except you.

Interest on money in your Belize offshore bank account is paid without deducting for taxes. Belize banks deal with you and not the government of your country. As such you may or may not have a tax obligation "back home" but that is not the business of your overseas banking partner.

You can bank online and carry a debit card for your account and use it anywhere in the world. You can transfer money in and out of your account in complete security and privacy. Your business is with your bank and their business is with you.

Offshore Trusts

If you would like to put money in trust for your grandchildren consider an offshore trust. Depending upon your tax jurisdiction there may be a substantial tax advantage in going offshore. Depending upon your home country and the offshore location you choose results will vary.

Offshore banks offering trust services in tax advantaged jurisdictions will typically have minimal taxation on trust income. The value of the trust will be allowed to grow and compound unencumbered by the level of taxes you might see "back home." When the trust money is made available to your grandchildren is typically when taxes will be taken out.

Talk to your accountant or tax lawyer about tax laws in your home country. Talk to the specialist about the advantages of offshore banking, trust accounts, and other savings vehicles in tax advantaged locations. Another option instead of a trust is an offshore foundation. Again, good planning with good council will reap the best rewards.

Many people see this as a shady operation and many myths comes alive remembering good old James Bond movies where money is transferred in a split of a second by just pressing a button where the bad guys retreat under the palm trees on some desolate island in the Caribbean ocean, for then moments later being caught by the good guy.

Tax planning and saving for the future is legal. Tax evasion is not. There is a lot in it for a lot of private and corporate individuals. It is a myth that this is only for the high net worth of clients. With the age of internet this has become available to people all around the world. And the offshore banks keeps their doors open, welcoming both you and me.




Gary Edwards

An offshore formations and banking specialist working for several companies regarding offshore structures, formation of companies, foundations, banks and financial institutions.

Working for User Bancorp Ltd, which is providing private and corporate accounts, merchant accounts, offshore companies such as Belize IBC's (International Business Company), Panama corporations and foundations, wire transfer services, managed funds/forex, credit- debit- and prepaid card issuing

http://userbancorp.com

Feel free to contact me by e-mail: gary.edwards@userbancorp.com





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張貼者： 於 下午3:20 0 意見
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2012年2月25日 星期六

CD Savings Rates


One of the keys to successfully investing in a certificate of deposit (CD) is being aware of the interest rate that are offered by the financial institutions that offer them. This is because being aware of the prevailing interest rate on CD's can help an investor know if a CD provider is offering a rate that is lower or higher than the average rate in the market. This in turn can help an investor pick the best CD product with regard to the rates that are being offered by CD providers. In addition to this, gaining information on the prevailing interest rate on CD's can help an investor decide if it is the right time to invest in a CD. This is because given that CD's have fixed interest rates, investing during the times that are considered ideal to do so can give an investor higher returns.

A good source of information on CD rates

One of the best sources of information on the prevailing interest rates on certificates of deposit is the Internet. This is because apart from the fact that the Internet is host to the web sites of a large number of CD providers, the Internet can also provide information on rates from a number of notable sites that offer financial advice, which includes the government. As to the web sites of the CD providers, investors can gain access to the interest rates that they offer by browsing through the different CD products that are being offered by the CD provider. This can be very helpful, as an investor can canvass among different providers and choose the one that offers the best deal.

With regard to the financial advice that investors can get online, they can be very helpful in guiding an investor with regard to his investment on CD's. This is because the advice that is given focus on how investors can successfully invest in CD's, which includes knowing the right time to invest in CD's given the interest rate environment.

For people who are thinking of investing in CD's, it is very important that they get the necessary information they need with regard to this kind of investment, which includes information on the interest rates that are offered by CD providers. This is very important, as information on interest rates can help an investor successfully investing in CD?s because he can pick the CD provider that offer the best deals and he would know the right time to invest in CD?s. The good news is that information on rates is readily available online, as with other helpful information regarding CD investments.




CD Rates provides detailed information on Best CD Rates, CD Rate Calculators, CD Rate Comparisons, Certificate Of Deposit Maturation and more. CD Rates is affiliated with Cash For Future Payments.





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張貼者： 於 晚上8:30 0 意見
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2012年2月3日 星期五

Are Your Bank Deposits Safe? Financial Facts - What You Need to Know About Your Savings


If your bank deposits are covered by the Federal Deposit Insurance Corporation (FDIC), your money is safe up to $100,000 personally and $250,000 in eligible retirement plans. In fact, depending on how you have structured your accounts, coverage can significantly exceed $100,000 per bank. We have been negative on the outlook for U.S. Bank stocks since early last summer, but FDIC insurance has added a level of safety since its inception shortly after the Great Depression. Social Security and greater flexibility by the Federal Reserve to inject liquidity into the financial system are two other key safety measures helping to prevent another 1929-type collapse.

One of the biggest risks regarding this country's current financial malaise is more from a "crisis of confidence" in which worries about the banking system creates a run on certain banks, forcing otherwise solvent banks into insolvency.

This is one reason the Fed acted so swiftly when problems erupted with Bear Stearns in March, and more recently, took measures to instill confidence in both Fannie Mae and Freddie Mac with promises of financial backing. Only a year and a half ago, the number of troubled banks on the FDIC list were at record lows, as most banks were enjoying record earnings and soaring stock market valuations. Excess liquidity brought on by historically low interest rates coupled with relaxed, or non-existent, loan covenants created a massive bubble in real estate that has pushed a growing number of banks to the edge. This problem was many years in the making and with real estate representing approximately 60% of all bank assets, investors should not expect a dramatic turn around anytime soon. It is important to keep in mind that the plight of many bank stocks, with many down 70% or more over the past year, does not necessarily correlate with the safety of your deposits in these banks. As long as you make sure all of your bank accounts are FDIC insured you will be fine, and there is definitely no reason to panic. But what are the rules and stipulations of FDIC insurance?

FDIC insurance was started in 1933 after thousands of banks failed following the stock market crash of 1929. The deposit insurance coverage was initially set at $2,500 and steadily increased until it was raised to the current amount of $100,000 in 1980. The FDIC has the power to increase the insurance limits on all deposits every five years, based on inflation, but has demonstrated a very conservative stance by electing not to do so.

In April of 2006, the FDIC established $250,000 of insurance coverage for deposits that are held in IRA and select other retirement accounts. It should be noted that accounts not covered by FDIC include mutual funds, annuities, life insurance policies, stocks and bonds. In addition, an uninsured money market mutual fund should not be confused with an FDIC-insured money market deposit account.

After the first quarter of 2008, the FDIC released its list of 90 troubled banks, up from 53 in the first quarter of 2007 and 76 in the fourth quarter. Very few banks that make the list are destined for failure. Among all the troubled banks listed last year, only three actually failed. The recent collapse of IndyMac was a shocker to many, as the bank wasn't even on the FDIC's watch list. After its failure, it was reported that IndyMac received 100% of FDIC insured funds, and 50% of non-insured funds. Many times in the past, uninsured deposits have been partially insured, but there is no guarantee that trend will continue. For trust account holders, depositors have to wait to get their deposits until the beneficiaries of trusts can be verified.

It is important that you take the necessary steps to help navigate through this crisis:

1. Don't panic. Confirm that all of your assets in banks (savings accounts, checking accounts, money market deposit accounts and certificates of deposits) are insured up to the $100,000 per account and $250,000 per retirement account. For example, make sure if you have a joint account with over $100,000 that it is structured properly to receive up to $200,000 of coverage.

2. Establish a secondary banking relationship to have liquid assets (emergency money) available from two separate sources, should your bank become insolvent. This can also be helpful to compare yields and fees to make sure you're getting the most from your bank for every dollar of savings. Remember that insured deposits in trust accounts may not be immediately accessible and recovery of broker CDs may also experience delays.

3. If you have considerable assets, consider the Certificate of Deposit Account Registry Service (CDARS), a program designed to accept deposits of more than $100,000 and still receive FDIC coverage by spreading funds among many FDIC insured institutions. Your deposits can be insured for up to $50M with CDARS without having to set up accounts at multiple banks.

One final point - as with all banking relationships, yields are negotiable. The current credit crisis has created strong demand for loyal "credit worthy" clients so investors have never been in a better position to negotiate the best rates, and lowest fees, for each banking deposit or service.




Article presented by LanczGlobal.com

Alan B. Lancz is a nationally recognized authority on investing and financial analysis. He is the president of Alan B. Lancz & Associates, Inc. (http://www.ABLonline.com), a registered investment advisory firm and Director of Research at LanczGlobal.com (http://www.LanczGlobal.com).





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張貼者： 於 上午8:20 0 意見
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2011年12月10日 星期六

When Will Online Savings Account And Certificate of Deposit (CD) Rates Go Up?


For many money-savvy Americans, the current interest-rate environment is very frustrating. Imagine spending years being frugal and responsible with your money, spending as little as you can and saving as much as you can, only to be rewarded with a savings account rate of 1.25%. Very frustrating indeed. Even online savings accounts, which typically offer better yields than traditional savings accounts, are offering less than 2%.

The situation with Certificates of Deposit (CD's) is no better.

The reason for the lousy rates is quite simple: the Federal Reserve is currently letting banks borrow at no more than 0.25%. So, if a bank can borrow at 0.25% -- which is the current fed funds target rate -- why would it borrow money from you at 5% via a savings account or a CD? That's the gist of it. This is why CD and savings-account rates rise as fall in tandem with the target fed funds rate, the Fed's most important monetary policy tool.

So the big question is: when will savings rates start to rise?

The answer, unfortunately, is not any time soon. Any experienced rate watcher will tell you that the Fed is going to keep the benchmark fed funds target rate at 0%-0.25% for the rest of the year, and probably well into 2011. The fed funds futures market, a very good predictor of where interest rates are headed, is currently 100% certain that the Fed will keep short-term rates at record low levels for the rest of 2010.

Who's to blame? Why, the Great Recession, of course. The Fed can't raise rates while unemployment is high, economic growth is weak and the very real threat of deflation persists. Moreover, many seasoned economists believe that the very recent Great Recession will soon become the Great Double-Dip Recession.

The Fed is just as frustrated as the unnumbered folks around the country trying to find stronger yields for their hard-earned savings. The Federal Reserve is currently dealing with what's called a liquidity trap. It has lowered rates as much as it can, and has pumped massive amounts of new cash into the economy. Despite these actions, the economy is still not expanding in a sustainable way. That's the trap. It's the same trap that has kept Japanese central bankers scratching their heads in frustration since the 1990's.

And if you think you might do better with US Treasury securities, think again. The Fed has been pumping many billions into Treasury securities, thus driving the yields associated with these super-safe investments down. This not only keeps mortgage rates low, which is good for the languishing housing market, but it also makes Treasuries less appealing to investors. To help bolster the anemic US economy, the Fed would much rather prod Wall Street to put its money into riskier investments like stocks and corporate securities, which aren't as safe as Treasuries but do offer higher yields. The Fed wants your 401K to look like it did back in 2006, which would certainly help to make you and millions of other American feels prosperous again.

So what is the responsible saver to do?

The best course of action a money-savvy American can take is to simply continue to scan the Internet for the best available rates on CD's and online savings accounts. Definitely not a good idea to lock up a significant amount of cash for 3 or 5 years. Best to stick with 6 to 12 month CD's while yields are low. There are lots of easy-to-find blogs out there that report on the latest and greatest from around the country.




The US Prime Rate website at FedPrimeRate.com recommends some of the best Certificate of Deposit and online savings accounts available.

The website at BalanceTransfer.cc offers advice on how to use credit card balance transfer checks to earn money via 0% credit card offers.





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張貼者： 於 凌晨2:06 0 意見
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2011年11月25日 星期五

How to Use Certificate of Deposits As Part of Your College Savings Strategy


The cost of college education increases at a rate that far exceeds inflation. It is also much greater than the average rate of return your savings and investments are getting, which makes it difficult to save enough money to keep up with the ever-increasing costs of higher education.

Saving for your child's higher education is a challenge faced by most families regardless of their income levels - but the money you save now will help prevent your son or daughter from graduating under a mountain of school loans they will struggle to pay for many years after leaving college. If you want to help your child graduate in something other than debt, here are some tips for developing a strong college savings strategy that includes certificate of deposits:

Start Saving for College As Early As Possible

The key to saving for college is to start when the children are young. The earlier you start saving the more time your money has to grow. Many people invest in riskier options when their children are young in an effort to increase their earnings, and figuring they have more time to recover if their risks don't pay off financially. As children get older and approach their college years, your choice of savings and investment vehicles are likely to move to less risky options in order to prevent the loss of money.

Risk Free Savings Strategy: Certificate of Deposits

Once you've saved up a sizable amount of money for your child's education, you might think about using fixed-rate certificate of deposits to give those savings a chance to grow risk-free until you need to use them to pay for college expenses.

When you open a certificate of deposit with your college savings, you will earn interest in exchange for agreeing to leave your money alone for a specific period of time. Once the money is in a CD, you don't have easy access to it. It's not completely impossible to withdraw money from a certificate of deposit before it matures, but it's certainly not recommended to take it out early because you will pay penalty fees and lose money in the process.

Depending how many years your child has before starting college, you can select a certificate of deposit with as little as three months to five years (or more) until it reaches it's maturity date. The longer the CD term, the higher interest your savings will earn. You may find using certificate of deposits as part of your college savings allows you to diversify and increase the amount of money your savings earns. While your saved money is held in a certificate of deposit waiting for it to reach it's maturity date, you can continue saving money in money market funds, high interest savings accounts, 529 plans, or Coverdell Education Funds to increase the amount of money you have when your child approaches their college years.

CD Laddering Increases Saving Potential and Access to Funds

Creating CD ladders may be a reasonable college savings strategy, as well. Once you have saved enough money through other means, you can withdraw it and open multiple certificate of deposit accounts with different maturity dates. By staggering the maturity dates of the certificate of deposit products you open, you can gain access to the money at pre-determined intervals. Plan it right, and you can have certificate of deposits maturing right before each of your college semesters begin, and gain access to money to pay for tuition and expenses right as you need it each semester.




Debra Dragon is a freelance writer for DepositAccounts.com. She writes about how to make your money work better for you through various deposit accounts, including savings accounts, interest checking accounts, IRAs, and money market funds.





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張貼者： 於 中午12:22 0 意見
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Certificate of Deposit Vs Savings Account: What Fits You?


For most people, the idea of investing is basically the same as saving up money. However, there are other ways for you to invest your money without really having to undergo a lot of risk. One such way is through certificates of deposit.

First, what is a certificate of deposit? You can consider a certificate of deposit as a time deposit, basically like your usual savings account except that you cannot really withdraw it as you see fit. A certificate of deposit usually allows you to earn a higher interest on your money but at the same time, you are discouraged to alter or withdraw that money before the fixed period of time.

If you are thinking of investing your money, and don't know whether you should go and open a savings account or if it will be better to invest in a CD, then here are some of the pros and cons of the two.

Pros and Cons

Savings accounts and certificates of deposits are all relatively risk-free, meaning if the bank collapses, you don't collapse with it as well and that your money is protected up to a certain degree. These are probably the only risk-free or minimal risk investment strategies that you can find.

One of the biggest difference between a savings account and a CD however is that there is a fixed period of time, between three months to five years, before you can really access the money you invested in a CD compared to the unlimited access that you may have with your savings account. However, banks and other institutions encourage you to invest your money longer by offering higher interest rates, meaning your money will be earning more in the longer period. The same way, a savings account may give you quick access to your money but then you might not be earning as much as you would have wanted compared to in a CD.

So how do you choose?

Your choice will basically depend on two factors: whether you need quick access to your funds or whether you want your money to earn a lot. If you think that you might need the money in the near future, then it may not be a good idea for you to invest in a CD. However, if you won't be using that money and you want your money to earn more while it 'sleeps', then investing in a CD might be the best way for you to go.




Jane Sanders at Certificate of Deposit Rates about getting the best CD rates. Learn more about Certificate of Deposit here.





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