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2012年6月20日 星期三

Maximize CD Rates During a Flat and Inverted Yield Curve


If you want an investment that maintains your principal, Certificates of Deposit (CDs) are a great way to go. As with most investments, we all hope to time the market at its highest, but without a crystal ball that proves to be difficult. The best advice is to create a ladder and then maintain that ladder.

The temptation in a flat or inverted yield curve environment is to go short. However, this can be disastrous if rates drop considerably. For instance, if you invest all of your funds in 6-month CDs because short-term rates are projected to rise your entire portfolio may be in for a surprise if the commentators are wrong.

Let's first assume they are right. By March, Fed Funds will be 4.75% and by May 5.00%. You can purchase a 6-Month CD today with a rate of 4.95%. If rates hold after May, when the CD matures in August you may be able to earn 5.20%. This could be higher if inflation starts to be a worry and more increases come. When August comes around, you are celebrating because your portfolio will re-price with higher CD rates.

Okay, now if they are wrong and the economy takes a down turn. Rates rise in March, but they hold in May. By the time August comes around, the FOMC needs to lower rates to spur the economy once again. As a result your portfolio re-prices lower.

However, there is any easy solution to this dilemma. Build a laddered portfolio! Generally, CD investors are paid a premium for opening longer-term accounts. With a normal sloped curve, longer-term CDs (5-Year to 10-Year) generally pay 50 Basis Points to 150 Basis Points (0.5% to 1.5%) more than shorter term CDs (6-Month to 1-Year). For a $100,000 investment, this is $500 to $1500 more a year. For $1MM, this is $5,000 to $15,000 more. And taking this out for five years, that could be $75,000 more in your pocket.

Now is a perfect time to build your ladder. You can be somewhat confident that in the short-term rates will rise and you will probably be able to take advantage of some higher rates. The added bonus is that you know a 5% return over any length of time is a good return and investing long term protects against the ups and downs that are coming.




Chris Duncan Jumbo CD Investments, Inc. http://www.jumbocdinvestments.com





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2012年3月1日 星期四

Are High Yield CDs Still a Good Investment in 2010?


Are high yield CDs still a good investment in 2010? That's a good question. But, the answer isn't an easy yes or no. Investing in high yield CDs depends upon your individual situation. First of all, let's define what a high yield certificate of deposit is. In simple terms, it's a CD that will give you a good return. But in 2010, how high of a yield are we talking about? Let's take a closer look.

One of the best websites for comparing CD rates is Bankrate.com. To get a high yield certificate of deposit, you are going to have to invest your money for a longer period of time. Investing in a one-year CD is going to give you a measly CD rate of less than 2% APY (Annual Percentage Yield). So, the first thing you need to decide is whether you can afford to invest your money for a longer period of time. If you think that you will need your money within the next five years, a high yield CD is not for you. Assuming you can invest your money for five years, currently you can get a CD rate of between 3.15% and 3.55% (APY) with as little as $1,000. Now here is where the guessing comes in. In the next five years, will CD rates rise or fall or stay the same? CD rates can't go very much lower. If the Federal Reserve keeps its fund rate low, then certificate of deposit rates won't rise. But, if the economy improves, the Federal Reserve will raise the fund rate and CD rates will slowly climb. There is no way, short of a crystal ball, to know when or how fast the rates will rise.

If you have enough money to invest in CDs, your best bet is to invest by laddering. For instance, invest $1,000 in a one-year CD, $1,000 in a two-year CD and so on until you get to a five-year CD. When the one year CD matures, you would invest in another five-year CD. As each CD matures, you would do this same thing. This spreads the CD rates out over a number of years and is a safer way to invest.

Another way to invest in a certificate of deposit, is look for a bank that is offering the opportunity to raise your rate. Currently, Ally Bank is offering a two-year CD at an interest rate of 2.10% APY and will allow you to raise your rate once during the two years. So if interest rates rise, you won't lose out.




For more information on CD Rates [http://Rates.cd] visit [http://www.rates.cd]





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2012年2月24日 星期五

Find the Highest Yield CD: Here's How


Those who have been investing their money long enough are probably already familiar with certificates of deposit. However, for those who are not, here is a brief explanation on what a certificate of deposit is and how it works.

A certificate of deposit is an almost risk-free investment method that allows you to profit off your money. You can compare a Certificate of Deposit to a time deposit, wherein you, the investor, deposit a certain fixed amount of money to a financial institution for a fixed period of time. Since you are discouraged to alter or withdraw this money before the fixed period of time elapses or before the money matures, financial institutions offer higher interest rates as some sort of 'payment' for your inability to withdraw or alter that said amount during the fixed period.

Now, a certificate of deposit is a great idea but of course, there are certain factors that you want to consider plus, you want to make sure that you get a certificate of deposit with the highest interest rate and as such, you earn the most off your money. Here are a few options that you may want to consider when investing your money in a CD.

Use the Ladder Strategy

One downside to investing in a CD is the fact that you won't be able to access your money for that fixed duration of time. So just in case there is an emergency or you need that money fast, you will be given a penalty when you withdraw or alter that money you invest in a CD. You will still be allowed to take out your money, of course, but as penalty, the bank or credit union might withhold the accrued interest that your money has earned for a certain period of time (usually accrued interest for the last 6 months).

The best way to do this would be to use a ladder strategy. By laddering your investment, you are not just investing on one CD but rather, taking a couple of CDs that will mature in different period of time like in a year, or two apart. This way, you can still access your money with a part of it still earning interest.

Fixed or Variable Interest Rate

Before you invest your money in a CD, financial institutions give you the option on whether you want a fixed or variable interest rate. When you go for a fixed variable interest rate then you will be protected from plummeting interest rates and such but at the same time, you won't be able to enjoy the benefits of rising interest rates. This is really more on your preference and if you think that the fixed interest rate is high enough to satisfy you.

Don't withdraw the interest

You will be given the option if you want the accrued interest deposited in your savings or checking account. The best way to earn more off your money is to not do so and let the interest be added to the principal. By doing this, you are increasing the amount that interest is being paid of.




Jane Sanders writes at Certificate of Deposit Rates about getting the best CD rates. Read our Highest Yield CDs article here.





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張貼者： 於 上午11:12 0 意見
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2012年1月14日 星期六

Tax Certificates - When and How Do I Get My Investment Plus My Interest Yield Back?


You, as an investor, do not need to be wealthy to invest money, but you should be knowledgeable about the various investments and the strategies used to reach your goal. Many professional advisors advocate that money needed in the near future should be kept in savings accounts and short term certificate of deposits. These same advisors further advocate money not needed for many years to be invested in non liquid asset investments.

One of the many good things about Tax Certificates is the way they are paid back to the investor. Usually about 50% to 65% of all Tax Certificates are redeemed by the property owner during the first year. The property owner must pay the investor the original amount he/she paid for the Tax Certificate plus the stated interest rate of return (usually 15% to 18% annual percentage yield). Usually about 20% to 25% of the outstanding certificates are redeemed by the property owner during second year. The same conditions apply as that of the first year redemption -- the property owner must pay the investor the original amount he/she paid for the Tax Certificate plus the stated interest rate of return (usually 15% to 18% annual percentage yield).

The large percentage of of tax lien certificates redeemed during the first two years makes tax certificates a combination of short term and intermediate term investments. About 20% of Tax Lien Certificates could be considered as longer term investments as they will either take 3 or more years to pay the investor back or the investor will have to apply for a Tax Deed on the property as the property owner has no intention of paying the property taxes. For free information to learn more about Florida Tax Certificates and Tax Deeds please contact me at: http://www.taxcertificates4sale.com or email: taxman813777@yahoo.com




http://en.wikipedia.org/wiki/Community_Tax_Certificate

http://en.wikipedia.org/wiki/Tax_lien





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