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2012年9月13日 星期四

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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張貼者： 於 清晨7:24 0 意見
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2012年9月8日 星期六

Strategic Certificate of Deposit Investments


Ever since the FOMC (Federal Open Market Committee) lowered Fed Funds to be between 0.00% and 0.25%, CD rates have steadily marched downwards. For a time, 1-year CD rates hovered in the 2.25% to 2.40%. Than it was the low 2.00% and finally most have retreated to be below 1.50%. Step-ups, Bump-ups and longer-term CDs with lower early withdrawal penalties can be a good strategy to maintain some yield with out a whole lot of term risk.

Term risk is where you purchase longer-term CDs (5-years and longer) and you run the risk of rates increasing dramatically before the term expires. This can also work in the reverse where you purchased all long-term rates and they all come due in a low rate environment. A laddered CD portfolio (which isn't the topic here) can help minimize the drastic ups and downs. I would say though that at this point rates are likely to go up at some point in the future, maybe late 4th quarter 2010 or early 1st quarter 2011. But since I don't have a crystal ball, I like the ideas of adding some "complex" CDs.

Step-ups give you a known point where your CD rate increases. In an environment such as this, you can potentially purchase a little longer-term CD, but with the steps you'll have protection against missing out on higher rates as the Fed increases Fed Funds. It is easier to find step-ups through brokers than direct. So far the shortest I've seen is around 12-years. They may have call dates where the bank can close the CD at a predetermined intervals.

Bump-ups allow you to move your rate up if the bank changes rates on the given term. So if you purchase a 3-year CD at 2.10% with a two-times bump option, you have the opportunity to move your rate up. If in 6-months the banks is offering a 2.50% for 3-years, you can move your CD rate up. Most Bump-ups don't change the term, however as always, read all of the fine print. Before purchasing these type of CDs, ask the bank for some rate change history, especially in a rising rate environment. You want to make sure you will be treated fairly.

Finally, longer-term CDs with low penalties can be a good way to boost income without taking a huge amount of term-risk. If you find a 5-year CD rate around 3.50% and it has a 6-month penalty, your equivalent rates would be 1-year at 1.77%, 2Y at 2.63%, 3Y at 2.92%, and 4Y at 3.06%. All of those are at or better than you can find for the given term. So until rates rise you get a boost in income. If rates rise slowly, you maintain that boost. And if rates go up quickly you can close your CD, move to the higher rate, and not lose much. A great find with be a 7-year or 10-year CD with a 6-month penalty. I've seen some 10-year CDs advertised at 4.00%.

So go searching and let us know what you find.




Chris Duncan is a FINRA Registered Representative. He specializes in helping clients find the best and highest CD rates nationwide. His clients include individuals, financial institutions, corporations, and public agencies. Visit us at Jumbo CD Investments for Bank Certificate of Deposit info.





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2012年8月25日 星期六

Benefits of Having Certificates of Deposit Investments


The economy is up and down. Stocks are up and down. Heck, life is up and down. But, when it comes to investments, there is one vehicle above all others that provides safety and return. Those are just two of the benefits of having certificates of deposit investments.

Up until the FDIC was created in 1933, you really had to have a ton of trust in your bank if you were going to open of a certificate of deposit. Similarly to today, much of the trust had been eroded, and the FDIC was created to guarantee the deposits that the bank held. Up until last year CDs were guaranteed by the federal government up to $100,000. You can actually have far more insured if things are structured properly, but that is an article for another day. However, this last year, Congress passed, and President Bush signed into law a temporary increase to $250,000 that is set to expire 12/31/2009. So the first benefit, unlike your investments in the stock market, mutual funds, ETFs, etc., your principal is backed by the full faith and credit of the US Government.

Another benefit is a return on your investment. Depending on the term of your certificate of deposit, the bank pays you interest. The interest is commonly expressed as the APY (annual percentage yield). If you invest $100,000 and the bank is paying you 3.00% APY for a 1-year CD it is easy to calculate your earnings. Another hidden benefit of CDs, it isn't tough to figure out what you will earn. You simply take the $100,000 times 0.03, and you'll earn $3000. There are lots of places on the internet that have on-line calculators as well. If you open up a 5-year CD, you basically multiply the 1-year earnings times five. Another hidden benefit is the power of compounding. With the above example you would actually earn closer to $16,000.

So far, we have indentified four benefits of having certificates of deposit, safety, return, ease, and compounding. Other benefits are sleeping soundly at night, known income, and flexibility of terms. Common CD terms range from 90-Days to 5-years. Some banks offer longer term CDs of 7-years and 10-years and some offer really short-term CDs of 30-Days.

The last benefit is creativity. Because of their popularity, many banks and brokers have come up with creative CDs, such as step-ups. A step-up CD is where the rate changes at different set time periods. For instance a 16-month step-up CD may change its rate every 4-months. Usually, the start rate is a little lower than the average rates for the given term, but the average yield over all is higher. For instance it might start at 2.50% today. And then bump up .50% each increment. You would end up with a 4.00%. Averaging the rates would yield you 3.25%.

Another type of CD is the bump-up. This certificate of deposit gives you the option of bumping the rate a certain number of times during the term if rates rise. Again, the start rate is usually lower than fixed rates for the same term. You have to be careful with these though. I'm seen banks do things like offering the bump-up CD on an odd-term like 33-months and then never adjusting the 33-month CD rate or not offering the term until the original set expires.

Finally, some banks are creating variable rate CDs where the rate is tied to various stock indexes. This allows investors to have their funds safe and insured, but earn higher interest if the indexes rise in their favor. These tend to be fairly complex. With the stock market at current lows, this could be an attractive route, but read all of the details very carefully. If you think of any other benefits of having certificates of deposit, please leave a comment.




For more information visit our Best Bank CD Rates site or a Investing in CDs Wisely guide.





This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

張貼者： 於 上午11:15 0 意見
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2012年7月10日 星期二

Safe Investments Guide - Keeping Your Money Safe - Part II


In this turbulent times people are looking for safety. In an earlier guide we focused on CDs and Treasuries. Treasuries are at their lowest in history. There are some advanced traders that make short-term bets on the rate movement, but outside of that people are looking for yield and safety. Here is Part Two with a focus on Municipal bonds. There will be a Part Three that focuses on more complex Certificate of Deposit Products.

Municipal and Build America Bonds

Municipal (Munis) and Build America Bonds (BABs) are offered by cities, counties, states, and other regional governing bodies. Note, they are not guaranteed although default is extremely rare. Of course, in this economy it is becoming more of a concern. It is because of this risk that they have pretty good yields. Depending on where you live and where you buy the bonds, there can also be state and/or federal tax advantages. Munis and BABs typically have longer-term maturities such as 12-years to 30-years. There are Revenue Bonds and General Obligation (GO) bonds.

GO bonds are typically thought to be safer because they are based on tax revenue and the ability of the municipality to increase taxes if necessary. Revenue Bonds are paid back with the revenue that the project creates such as an airport parking lot or baseball stadium. BABs are a new type of municipal bond that is fully taxable, thus higher yields to you, but lower yields to the entity. The federal government underwrites a portion of the interest thus the cost is lower to the entity. I could write a whole article on ratings (probably will), but generally you want the rating in the A range. S&P goes from A- to A A A (highest). Moody's is another popular rating agency and their top ratings go from A3 to A a a.

Like Government agency bonds, Munis often have call periods. This means that if rates go down, the entity could close the bond and send you back your principal and accrued interest. This creates an interest rate risk because you are left having to invest at lower rates. Munis also have term risk due to a potential rate increase; you could have the bond for the duration. If rates rise substantially you would be losing out. And again, although rare, they do have default risk. Some bonds do carry a guarantee offered by a private insurance company. That usually gives it a boost in its rating.

This article is for informational purposes only and does not serve as investment advice or as a recommendation of the products described within. The opinions herein are the sole opinions of the author.




Chris Duncan is a FINRA Registered Representative. He specializes in helping clients find the best and highest CD rates nationwide. His clients include individuals, financial institutions, corporations, and public agencies. Visit us at for more best investment rate info or for more certificate of deposit help.





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張貼者： 於 凌晨12:02 0 意見
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2012年6月21日 星期四

Finding Safe Investments


With the volatility of the past year and growing uncertainty of the future economy, an increasing number of people are focusing on safe investments.

If that's you, what are your options? Several financial vehicles exist as an alternative to securities. Those are:

Government Treasuries- Widely regarded as the world's safest parking place for cash, US Treasuries meet two needs. Investors need a rock-solid place to put money, and the Government needs cash to spend. Win-win right? As an investor, the yields are usually as low as you'll find but that is the trade-off for the level of safety offered.

Bonds- Corporations need to finance operations as well and bonds are the safest way to invest in the corporate world. Bondholders are the first to be paid in the event of company insolvency. If this happens, the bonds may not be redeemed at full value but it is better than the alternative of owning a stock that falls to $0.

CDs- This is simply a step-up from a savings account at a local bank. An investor agrees to lock the money up for a certain time period. In exchange for the loss of liquidity, the interest rate paid is a little higher and the deposits fall under the banner of FDIC coverage.

Annuities- Annuities are usually favored by investors nearing retirement. Annuities, at their most basic level, exchange cash today for income tomorrow- but there are thousands of different ways companies package this basic premise. Do your homework and don't be sold until you get some Straight Talk!

Annuities have certain advantages over Treasuries and CD's for people looking for safe investments. Annuities can be used for accumulating cash as well as insuring a long-lasting stream of retirement income. Earnings in an Annuity can also grow tax deferred. Finally, the returns on your investment in an annuity contract are based on the performance of an insurance company's investment portfolio. With solid companies, you have some of the best safe investment managers in the world managing your money, and additionally you have very high credit ratings guaranteeing your income long into the future.

Insurance companies own very large blocks of corporate bonds so the return will mirror the yield on bonds, less the operating expenses of the company. The safety of annuity products comes from company reserves that are used to project stable returns and guaranteed minimum interest rates. In addition, as annuities are regulated insurance products, state guaranty funds back each contract to a limit specific to the state you live in.

Each of these safe investments has its place depending on the needs and investment objectives of each individual investor. But for the right people, annuities are superior to the other safe investments listed. Here's why:

Treasuries- An annuity is backed by the reserves of the issuing insurance company, which is in the business of protecting and growing assets. The US Government seems to be in the business of printing and spending money and piling on debt. The failure of this system would have catastrophic global consequences, but we may be racing headlong to that reality right now. It is prudent to hedge your bets and invest with professionals.

Bonds- Annuity rates are based on a bond portfolio but have guaranteed minimums and default protection from the massive reserves that companies must carry. Annuities are simply a safer way to own bonds.

CDs- Certificates of Deposit have only one advantage over annuities: A CD is more liquid, so the money invested can be redeemed in full in a shorter length of time period than with annuities. Besides that, an annuity grows tax deferred and the rate of return is usually twice as high as a CD. For an investor looking for a safe investment lasting five years or more, annuities easily exceed CDs in all categories of benefits.

Each of these points deserves greater explanation which you will find at AnnuityStraightTalk.com but this covers the basics that each investor needs to know to decide if an annuity makes sense.

When making a final decision, competent advice is highly recommended. That presents a unique set of questions and challenges. Educating yourself will allow you to screen the advice you get and make an educated decision regarding your financial future.




Bryan J. Anderson is the Author of The Annuity Report at AnnuityStraightTalk.com, and offers great free resources on How to Chose an Annuity Bryan helps you understand all the complexities of High Yield Safe Investments and Annuity Rates and finds the best combination of safety, flexibility, and profitability for your money.





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張貼者： 於 晚上11:30 0 意見
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2012年5月31日 星期四

Strategic Certificate of Deposit Investments


Ever since the FOMC (Federal Open Market Committee) lowered Fed Funds to be between 0.00% and 0.25%, CD rates have steadily marched downwards. For a time, 1-year CD rates hovered in the 2.25% to 2.40%. Than it was the low 2.00% and finally most have retreated to be below 1.50%. Step-ups, Bump-ups and longer-term CDs with lower early withdrawal penalties can be a good strategy to maintain some yield with out a whole lot of term risk.

Term risk is where you purchase longer-term CDs (5-years and longer) and you run the risk of rates increasing dramatically before the term expires. This can also work in the reverse where you purchased all long-term rates and they all come due in a low rate environment. A laddered CD portfolio (which isn't the topic here) can help minimize the drastic ups and downs. I would say though that at this point rates are likely to go up at some point in the future, maybe late 4th quarter 2010 or early 1st quarter 2011. But since I don't have a crystal ball, I like the ideas of adding some "complex" CDs.

Step-ups give you a known point where your CD rate increases. In an environment such as this, you can potentially purchase a little longer-term CD, but with the steps you'll have protection against missing out on higher rates as the Fed increases Fed Funds. It is easier to find step-ups through brokers than direct. So far the shortest I've seen is around 12-years. They may have call dates where the bank can close the CD at a predetermined intervals.

Bump-ups allow you to move your rate up if the bank changes rates on the given term. So if you purchase a 3-year CD at 2.10% with a two-times bump option, you have the opportunity to move your rate up. If in 6-months the banks is offering a 2.50% for 3-years, you can move your CD rate up. Most Bump-ups don't change the term, however as always, read all of the fine print. Before purchasing these type of CDs, ask the bank for some rate change history, especially in a rising rate environment. You want to make sure you will be treated fairly.

Finally, longer-term CDs with low penalties can be a good way to boost income without taking a huge amount of term-risk. If you find a 5-year CD rate around 3.50% and it has a 6-month penalty, your equivalent rates would be 1-year at 1.77%, 2Y at 2.63%, 3Y at 2.92%, and 4Y at 3.06%. All of those are at or better than you can find for the given term. So until rates rise you get a boost in income. If rates rise slowly, you maintain that boost. And if rates go up quickly you can close your CD, move to the higher rate, and not lose much. A great find with be a 7-year or 10-year CD with a 6-month penalty. I've seen some 10-year CDs advertised at 4.00%.

So go searching and let us know what you find.




Chris Duncan is a FINRA Registered Representative. He specializes in helping clients find the best and highest CD rates nationwide. His clients include individuals, financial institutions, corporations, and public agencies. Visit us at Jumbo CD Investments for Bank Certificate of Deposit info.





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張貼者： 於 上午11:41 0 意見
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2012年5月29日 星期二

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.





This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

張貼者： 於 下午1:32 0 意見
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2012年5月18日 星期五

Benefits of Having Certificates of Deposit Investments


The economy is up and down. Stocks are up and down. Heck, life is up and down. But, when it comes to investments, there is one vehicle above all others that provides safety and return. Those are just two of the benefits of having certificates of deposit investments.

Up until the FDIC was created in 1933, you really had to have a ton of trust in your bank if you were going to open of a certificate of deposit. Similarly to today, much of the trust had been eroded, and the FDIC was created to guarantee the deposits that the bank held. Up until last year CDs were guaranteed by the federal government up to $100,000. You can actually have far more insured if things are structured properly, but that is an article for another day. However, this last year, Congress passed, and President Bush signed into law a temporary increase to $250,000 that is set to expire 12/31/2009. So the first benefit, unlike your investments in the stock market, mutual funds, ETFs, etc., your principal is backed by the full faith and credit of the US Government.

Another benefit is a return on your investment. Depending on the term of your certificate of deposit, the bank pays you interest. The interest is commonly expressed as the APY (annual percentage yield). If you invest $100,000 and the bank is paying you 3.00% APY for a 1-year CD it is easy to calculate your earnings. Another hidden benefit of CDs, it isn't tough to figure out what you will earn. You simply take the $100,000 times 0.03, and you'll earn $3000. There are lots of places on the internet that have on-line calculators as well. If you open up a 5-year CD, you basically multiply the 1-year earnings times five. Another hidden benefit is the power of compounding. With the above example you would actually earn closer to $16,000.

So far, we have indentified four benefits of having certificates of deposit, safety, return, ease, and compounding. Other benefits are sleeping soundly at night, known income, and flexibility of terms. Common CD terms range from 90-Days to 5-years. Some banks offer longer term CDs of 7-years and 10-years and some offer really short-term CDs of 30-Days.

The last benefit is creativity. Because of their popularity, many banks and brokers have come up with creative CDs, such as step-ups. A step-up CD is where the rate changes at different set time periods. For instance a 16-month step-up CD may change its rate every 4-months. Usually, the start rate is a little lower than the average rates for the given term, but the average yield over all is higher. For instance it might start at 2.50% today. And then bump up .50% each increment. You would end up with a 4.00%. Averaging the rates would yield you 3.25%.

Another type of CD is the bump-up. This certificate of deposit gives you the option of bumping the rate a certain number of times during the term if rates rise. Again, the start rate is usually lower than fixed rates for the same term. You have to be careful with these though. I'm seen banks do things like offering the bump-up CD on an odd-term like 33-months and then never adjusting the 33-month CD rate or not offering the term until the original set expires.

Finally, some banks are creating variable rate CDs where the rate is tied to various stock indexes. This allows investors to have their funds safe and insured, but earn higher interest if the indexes rise in their favor. These tend to be fairly complex. With the stock market at current lows, this could be an attractive route, but read all of the details very carefully. If you think of any other benefits of having certificates of deposit, please leave a comment.




For more information visit our Best Bank CD Rates site or a Investing in CDs Wisely guide.





This post was made using the Auto Blogging Software from WebMagnates.org This line will not appear when posts are made after activating the software to full version.

張貼者： 於 中午12:15 0 意見
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2012年3月4日 星期日

Safe Investments - How Safe Is Your Money


After working hard to build a nest egg for retirement, you want to know that your investments provide a good return but remain safe. Although well managed stocks, mutual funds, and corporate bonds can provide superior returns, risk goes hand in hand with reward. Your principal and earnings are not guaranteed and can be dramatically affected by a down turn. As people near retirement, it makes sense to move investments into fixed income products such as Treasuries, Government Agency Bonds, or Certificates of Deposits.

Here is a safe investment guide with pros and cons for each product.

Treasury Bills, Notes, and Bonds

The only difference in the above is the length of the term. T-Bills are offered with a term length of 1-year or less. T-Notes are offered with a term length of 1-year to 10-years. Finally, T-Bonds are offered with term lengths greater than 10-years. We will collectively call these Treasuries. Treasuries are issued by the Federal Government and you are basically loaning them your funds for which they guarantee to pay you a certain interest rate. They are guaranteed by the 'full faith and credit' of the United States Government. You will always get your principal back at maturity. Treasuries can also be purchased in large denominations. Their safety and ease comes with a relatively low rate of return. They can also be bought and sold in the secondary market. Treasuries are a safe investment, but as with any of these fixed income investments, they do carry the risk that interest rates and/or inflation will rise during the term, thus eroding their spending power. Treasuries are exempt from state and local taxes.

Government Agency Bonds

Government Agency Bonds are issued by agencies of the Federal Government and with the exception of the GNMA (Ginnie Mae - Government National Mortgage Association) they are NOT backed by the 'full faith and credit' of the government. As far as safe investments go, GABs are considered next in safety to Treasuries and Certificates of Deposit. GABs carry a AAA rating, but because they aren't backed like Treasuries and there can be a prepayment or call risk, they offer superior rates to Treasuries. A prepayment risk comes into play if the underlying loans that the security is backed by, pay off early and thus decreases the life of your bond. GABs are usually offered with maturities from 2-years to 15-years, but have call periods where the principal can be returned to you without having to pay further interest. This is a call risk. In a falling rate cycle, your bond will most likely be called and your re-investment rate will be lower than what it was. Many people find themselves having to buy long-term bonds to try to maintain an attractive rate. In a rising rate cycle, your funds may go the life of the bond and miss out on higher rates. Many GABs are exempt from state and local taxes. Government Agency bonds can be purchased in large denominations and are considered a very safe investment.

Certificates of Deposit (CDs)

Banks and credit Unions offer Certificates of Deposit for terms usually from 90-Days to 5-years. As long as the CD is offered by an FDIC insured bank or NCUA insured credit union, your principal is guaranteed by the federal government up to $100,000 for a single account; $200,000 for a joint account; and $250,000 for an IRA. If you open a CD that compounds and open it for less then the interest you will earn, the principal and interest would be guaranteed up to the above amounts. Because, they carry no risk (as noted above), certificates of deposit are an attractive and very safe investment. The interest from CDs is fully taxable. Most CDs are fixed for the term you select, but there are banks that offer callable CDs and even CDs linked to different market indices. Certificates of deposit generally offer yields that are better than Treasuries and GABs, but you may want to do a tax analysis to see what the Tax Equivalent Yield is. You can open Certificates of Deposit at multiple institutions and receive $100,000 of FDIC insurance at each institution. Searching for multiple institutions can be time consuming. Deposit brokers can assist you and save you time with this search.




Chris Duncan is a NASD Registered Representative. He specializes in helping clients find the best and highest CD rates nationwide. His clients include individuals, financial institutions, corporations, and public agencies. Visit us at http://www.jumbocdinvestments.com or our Certificate of Deposit rates page.





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張貼者： 於 下午5:11 0 意見
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2012年1月20日 星期五

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.




Do you want to learn the best way to escape paying interest? You can get my free ebook, How to Significantly Lower the Interest on All Your Loans, Including Your Mortgage--and That Without Refinancing.

Click here to get the free ebook: Debt Management Free eBook [http://www.alfredspengly.com/howtoavoidinterestfreeebook].

Alfred Spengly currently works through a company that is registered with the Better Business Bureau since December, 2006 and has zero complaints. It is a company that strives for their customer's satisfaction in providing a method for managing their own money with the tools they need to establish their own financial security.

Personally, Alfred has worked in the financial field for almost 15 years.





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2012年1月9日 星期一

Tax Lien Certificates - One Of The Best All-Time Investments


It's difficult to decide where to put your money these days.

I mean, really - what are our primary "safe" investment choices today?:

Bank account? Sure, however the paltry interest you'd receive would be completely outpaced by inflation. You would actually lose money keeping it in a checking (or savings) account.

Certificate of Deposit (CD)? Basically a glorified bank account. You'd get more interest than a normal checking/savings account, but not by much. The biggest downside is that you lose liquidity, since you have to "lock up" your money for a specified period of time.

Money market account (MMA)? Better than a CD in terms of liquidity, but pays less interest. You may get penalized if you write more than a certain number of checks. It's a medium between a checking/savings account and a CD.

401k? This is perhaps the most UNsafe option of them all. Expense ratios are rising (the costs of using mutual funds, which typically make up a 401k), and the markets have dropped and or have been otherwise very volatile over the last few years. It will be a very long time until they stabilize again.

US Treasuries? Once considered the safest investment, the United States is increasingly becoming in danger of default on their debt. This fact led to the downgrading of the country's credit rating. Would you feel safe putting your money somewhere that you might not see again, never mind earn interest?

Real Estate? Now we're getting warmer. The only problem with traditional real estate is that it's expensive! Having a 20% down is a must these days, and for most people, they simply don't have that kind of cash.

So where is a savvy investor supposed to put money where he or she can profit, no matter if the investment succeeds or if the investment falls through?

Enter tax lien certificates. Tax lien certificates offer high returns with very little risk, which is precisely why less-savvy investors have misguidedly called them a tax lien certificates scam.

When back property taxes are owed, the county issues a lien on the property. Wanting to get their taxes, the county holds auctions for these liens which investors can buy (for the price of the owed back taxes).

Typically, the returns are between 16-18% which is set by the county to encourage delinquent owners to pay their taxes, and also interest investors in buying them.

Plus, because the lien is backed by a real asset (the property itself), if the delinquent owner completely defaults on the back taxes owed, the lien holder get the property free and clear.




There is a lot more great information about tax lien certificates available at http:/www.taxliencertificatesscam.com, along with resources to help you get safely started investing in tax liens.





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2011年12月16日 星期五

Strategic Certificate of Deposit Investments


Ever since the FOMC (Federal Open Market Committee) lowered Fed Funds to be between 0.00% and 0.25%, CD rates have steadily marched downwards. For a time, 1-year CD rates hovered in the 2.25% to 2.40%. Than it was the low 2.00% and finally most have retreated to be below 1.50%. Step-ups, Bump-ups and longer-term CDs with lower early withdrawal penalties can be a good strategy to maintain some yield with out a whole lot of term risk.

Term risk is where you purchase longer-term CDs (5-years and longer) and you run the risk of rates increasing dramatically before the term expires. This can also work in the reverse where you purchased all long-term rates and they all come due in a low rate environment. A laddered CD portfolio (which isn't the topic here) can help minimize the drastic ups and downs. I would say though that at this point rates are likely to go up at some point in the future, maybe late 4th quarter 2010 or early 1st quarter 2011. But since I don't have a crystal ball, I like the ideas of adding some "complex" CDs.

Step-ups give you a known point where your CD rate increases. In an environment such as this, you can potentially purchase a little longer-term CD, but with the steps you'll have protection against missing out on higher rates as the Fed increases Fed Funds. It is easier to find step-ups through brokers than direct. So far the shortest I've seen is around 12-years. They may have call dates where the bank can close the CD at a predetermined intervals.

Bump-ups allow you to move your rate up if the bank changes rates on the given term. So if you purchase a 3-year CD at 2.10% with a two-times bump option, you have the opportunity to move your rate up. If in 6-months the banks is offering a 2.50% for 3-years, you can move your CD rate up. Most Bump-ups don't change the term, however as always, read all of the fine print. Before purchasing these type of CDs, ask the bank for some rate change history, especially in a rising rate environment. You want to make sure you will be treated fairly.

Finally, longer-term CDs with low penalties can be a good way to boost income without taking a huge amount of term-risk. If you find a 5-year CD rate around 3.50% and it has a 6-month penalty, your equivalent rates would be 1-year at 1.77%, 2Y at 2.63%, 3Y at 2.92%, and 4Y at 3.06%. All of those are at or better than you can find for the given term. So until rates rise you get a boost in income. If rates rise slowly, you maintain that boost. And if rates go up quickly you can close your CD, move to the higher rate, and not lose much. A great find with be a 7-year or 10-year CD with a 6-month penalty. I've seen some 10-year CDs advertised at 4.00%.

So go searching and let us know what you find.




Chris Duncan is a FINRA Registered Representative. He specializes in helping clients find the best and highest CD rates nationwide. His clients include individuals, financial institutions, corporations, and public agencies. Visit us at Jumbo CD Investments for Bank Certificate of Deposit info.





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2011年12月7日 星期三

Benefits of Having Certificates of Deposit Investments


The economy is up and down. Stocks are up and down. Heck, life is up and down. But, when it comes to investments, there is one vehicle above all others that provides safety and return. Those are just two of the benefits of having certificates of deposit investments.

Up until the FDIC was created in 1933, you really had to have a ton of trust in your bank if you were going to open of a certificate of deposit. Similarly to today, much of the trust had been eroded, and the FDIC was created to guarantee the deposits that the bank held. Up until last year CDs were guaranteed by the federal government up to $100,000. You can actually have far more insured if things are structured properly, but that is an article for another day. However, this last year, Congress passed, and President Bush signed into law a temporary increase to $250,000 that is set to expire 12/31/2009. So the first benefit, unlike your investments in the stock market, mutual funds, ETFs, etc., your principal is backed by the full faith and credit of the US Government.

Another benefit is a return on your investment. Depending on the term of your certificate of deposit, the bank pays you interest. The interest is commonly expressed as the APY (annual percentage yield). If you invest $100,000 and the bank is paying you 3.00% APY for a 1-year CD it is easy to calculate your earnings. Another hidden benefit of CDs, it isn't tough to figure out what you will earn. You simply take the $100,000 times 0.03, and you'll earn $3000. There are lots of places on the internet that have on-line calculators as well. If you open up a 5-year CD, you basically multiply the 1-year earnings times five. Another hidden benefit is the power of compounding. With the above example you would actually earn closer to $16,000.

So far, we have indentified four benefits of having certificates of deposit, safety, return, ease, and compounding. Other benefits are sleeping soundly at night, known income, and flexibility of terms. Common CD terms range from 90-Days to 5-years. Some banks offer longer term CDs of 7-years and 10-years and some offer really short-term CDs of 30-Days.

The last benefit is creativity. Because of their popularity, many banks and brokers have come up with creative CDs, such as step-ups. A step-up CD is where the rate changes at different set time periods. For instance a 16-month step-up CD may change its rate every 4-months. Usually, the start rate is a little lower than the average rates for the given term, but the average yield over all is higher. For instance it might start at 2.50% today. And then bump up .50% each increment. You would end up with a 4.00%. Averaging the rates would yield you 3.25%.

Another type of CD is the bump-up. This certificate of deposit gives you the option of bumping the rate a certain number of times during the term if rates rise. Again, the start rate is usually lower than fixed rates for the same term. You have to be careful with these though. I'm seen banks do things like offering the bump-up CD on an odd-term like 33-months and then never adjusting the 33-month CD rate or not offering the term until the original set expires.

Finally, some banks are creating variable rate CDs where the rate is tied to various stock indexes. This allows investors to have their funds safe and insured, but earn higher interest if the indexes rise in their favor. These tend to be fairly complex. With the stock market at current lows, this could be an attractive route, but read all of the details very carefully. If you think of any other benefits of having certificates of deposit, please leave a comment.




For more information visit our Best Bank CD Rates site or a Investing in CDs Wisely guide.





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