Certificate of Deposit

Archive for January, 2009

Question: Are there any drawbacks if you transfer an IRA to a credit union and deposit in a Certificate Of Deposit?

Such as- Can it be transferred as easily as at a bank in the future and are there any more risks or hassle than at a bank.
I am retired and want safety.

Answer: You IRA funds should never be in a CD unless you are already in retirement!! And even then only a small portion of your IRA should be in cash (CDs). Besides, right now even savings accounts and money markets are outperforming CDs. CDs aren’t even keeping up with inflation! You will LOSE purchasing power (money) if you “invest” in CDs right now!

Your IRA should consist of a broad diversification of US and international stocks. You may also have a small portion in bonds if you are within 10-15 years of retirement.

Credit unions and banks are not usually good places to have an IRA because they have few investment options and charge high annual fees, commissions, and investment fees. Don’t let your bank/credit union sell you an IRA. I’m a banker; I know how this works. I would never have my investments at a bank (even the one I work for which I love and respect).

You should have your IRA at a reputable investment firm that offers a wide range of high quality, low cost investment options. That sounds like a gimmick, but it’s not. Vanguard and Fidelity are the low-cost leaders of retirement investing–and their funds are consistently top rated. Put your money there, buy a cheap index fund or target retirement fund, and rest easy.

Safe Credit Union – Beaumont, TX??

Question: What are the advantages and disadvantages of the following forms of investing:?

A.) Common Stocks
B.) Mutual Funds
C.) Life Insurance
D.) CD (Certificate Of Deposit)
E.) Savings account or US Savings Bond

Answer: With the exception of life insurance, the common denominator with the others is different degrees of risk. E has the least risk, it has a safe return, its insured, and its liquid. CD’s are not so liquid and you have to pay a penalty (which is tax deductible) for early withdrawals. Common stocks carry the most risk. Life insurance isnt an investment. If you need insurance buy insurance. If you want an investment, invest in a security.

Annuities VS. CD’s

Question: What does this mean for my Certificate Of Deposit?

The interest rate for your account is 3.20% with an annual percentage yield of 3.25%. We will pay this rate until first maturity.

This was in my truth in Savings Disclosure for a CD account I just opened. Can someone break down the interest rate yield and how it will effect my investment?

Answer: You will earn 3.25% APY on whatever the amount of the CD is. For example, if its for 12 months, and your CD is $1,000, then you will earn roughly $32.52 for a total of $1,032.52.

Investment Tips & Financial Planning : How to Find the Best CD Rates Online