CD rates are going up!

Brookswood

Brookswood

Senior Member
Amazingly, I jut bought a CD for a period of two years that yields over 3%. That is pathetic given the current inflation rate as it is still losing money in real terms. But, it is better than than the 0.2 percent my local brick and mortar bank pays.
 

Bank interest rates hit double digits, back in the early 1980's...but, then...inflation was soaring even worse than today. As the FED continues to raise the fed funds rates, the banks will be obligated to pay higher interest on savings accounts and CD's. If the predictions of a coming recession are correct, we may see savings earning 4 or 5% again.
 
Interest rates rise, bonds, CD's and the like go up, economics 101. The bigger question in my mind is will even they be worth anything in the coming recession/depression? We are living in an unprecedented time, but I guess things like that make life interesting, and sometimes instigate much needed changes.
 
Bretrick said:
My bank was paying me 0.2%. I was notified yesterday the new rate will be 0.6%. So generous :D
$300 on $50,000
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If I was getting 0.2% I would be getting my cash out of that bank and into another one. Getting 1% (Five times what you are earning) is not hard. You can do it online at Ally Bank. Getting 2% on a CD is also not hard. That is 10x more than this bank is paying you.

Unless you feel that for some reason you owe this bank 90% of what you could be earning someplace else, changing banks is a good idea. If you don't need that extra money, then give it to somebody who does. Why let some tight fisted banking exec keep it?
 
@JB in SC we have all our money in bonds with Vanguard. I have no idea what they're paying right now but I know they have no limit -- they'll gladly take all our millions! LOL

When I married my husband in1980 he had $50,000 he was keeping in the military credit union where I worked. That was a lot of money for a young Staff Sergeant and should have given me a hint about possibly miserly ways (heh).

Anyway, I told him he should put the money in the bank down the hall where he would get 18%. Hard to believe now isn't it?

I do wonder about us having all our eggs in one basket, but he says it really isn't in one basket because they spread it around. Still if Vanguard folds It's all gone isn't it?

I don't really worry. We own our house and my son, who shares the house with us, earns enough to feed us. It's young families I worry about.
 
Della said:
@JB in SC we have all our money in bonds with Vanguard. I have no idea what they're paying right now but I know they have no limit -- they'll gladly take all our millions! LOL

When I married my husband in1980 he had $50,000 he was keeping in the military credit union where I worked. That was a lot of money for a young Staff Sergeant and should have given me a hint about possibly miserly ways (heh).

Anyway, I told him he should put the money in the bank down the hall where he would get 18%. Hard to believe now isn't it?

I do wonder about us having all our eggs in one basket, but he says it really isn't in one basket because they spread it around. Still if Vanguard folds It's all gone isn't it?

I don't really worry. We own our house and my son, who shares the house with us, earns enough to feed us. It's young families I worry about.
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Banks learned their lessons on rates, we will never see bank rates anywhere close to inflation rates. Some don't feel comfortable with the market.
 
Della said:
I do wonder about us having all our eggs in one basket, but he says it really isn't in one basket because they spread it around. Still if Vanguard folds It's all gone isn't it?
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Since retiring I'm trying to understand investment stuff, and from my, so far quite meager understanding, Vanguard itself does not hold your assets, the money would be in a fund that has a custodian, and from what you said it is invested in some sort of bond index fund - which most probably has a lot of US government bonds, so I'd guess Vanguard could fold and you would still have your money. A person can invest in a 'Vanguard' bond fund without having a Vanguard account at all.
 
HoneyNut said:
Since retiring I'm trying to understand investment stuff, and from my, so far quite meager understanding, Vanguard itself does not hold your assets, the money would be in a fund that has a custodian, and from what you said it is invested in some sort of bond index fund - which most probably has a lot of US government bonds, so I'd guess Vanguard could fold and you would still have your money. A person can invest in a 'Vanguard' bond fund without having a Vanguard account at all.
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Yes that's the case, just a broker of securities. Bond funds are not guaranteed, risk is dependent on the bonds themselves. CD's, like them or not, and I Bonds are the safest. Well as safe as the US Government :LOL:
 
Not all bond funds are created equal.

Be careful of long-term bond funds in a rising interest rate environment.

As the yield on the bonds increases the underlying value of the bonds in the fund drop.

business-commerce-gurus-economics-economists-bond_prices-interest_rate-hscn2880_low.jpg
 
JB in SC said:
I Bonds are paying 9.62%. I wish they would raise the limit from $10,000, I would buy $100,000 worth today.
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Why not $1,000,000.00? My wife and I are administrators of the family trusts. We have estate managers that invest the money in the trusts as they see fit, but with our consent. The one investment has “X” amount of dollars in an account called “Googenheim Funds.” The money in that one fund of the one trust only pays if the S&P goes up. For example: If the S&P goes up 4% this year, that account will get a 4% bump, but if the S&P decreases by 2%, the account doesn’t get or lose anything. The last 10 years, the account has done very well, but it appears that my winning streak may come to an end seeing that the S&P’s are down by about 20% ytd.
 
oldman said:
Why not $1,000,000.00? My wife and I are administrators of the family trusts. We have estate managers that invest the money in the trusts as they see fit, but with our consent. The one investment has “X” amount of dollars in an account called “Googenheim Funds.” The money in that one fund of the one trust only pays if the S&P goes up. For example: If the S&P goes up 4% this year, that account will get a 4% bump, but if the S&P decreases by 2%, the account doesn’t get or lose anything. The last 10 years, the account has done very well, but it appears that my winning streak may come to an end seeing that the S&P’s are down by about 20% ytd.
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What are the fees associated with that type of large fund...and if the S&P goes down by 20% this year, will you lose 18% then?
 
There are no fees and if the S&P’s lose money, your account doesn’t suffer one cent. I bought this fund through a broker. I don’t have $1mil invested. I don’t put a lot of trust in these types of funds where you can gain, but not lose. I have been vested into this account for the past 11 years and haven’t been disappointed. But as you already know, the mutual funds did better than the s&p’s as long as you were in the correct funds. This is why we pay a manager to invest our money, but we still must give our consent. Managers can pick the better funds and they also gave not disappointed us.
 

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