CDs Remain Useful Despite Low Yields

ShokWaveRider said:
I am a CD fan...
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Me too. No matter how low the interest rates are, your money always increases in value.

Playing the stock market is a game of chance. You might be in the process of winning big... but you haven't really won until you cash in your chips.
 

KingsX said:
Me too. No matter how low the interest rates are, your money always increases in value.

Playing the stock market is a game of chance. You might be in the process of winning big... but you haven't really won until you cash in your chips.
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just the opposite . after inflation cd's have LOST MONEY almost 50% of the time the last 50 years .

that is a serious issue over the long term .

in the mean time a balanced portfolio has ALWAYS been up and been up nicely over the typical 30 year retirement or accumulation stages . which one is really the riskiest ?

playing the stock market ? perhaps if you are a speculator and invest in individual stocks trying to find the next apple . but diversified funds is NOT playing the market . it is investing . there is a big difference between risk and something that is just volatile in the short term .

you don't need to sell a thing either . it is always your money , it may change daily but that balance is all yours .

news flash -you purchasing power changes too over time in your cd'sd but it goes from bad to worse . it is a coin toss as to whether your dollars will buy what they did each year . a very dangerous game to play if retired .

but hey , your choice .... it is not for me to convince anyone , i only educate and present the facts ..
 
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Inflation is just one factor to consider... and will negatively affect spenders.
The more you spend, the more it might affect you.

I put my first Roth IRA into a mutual fund and lost money. Never again.

I'll stick to slow and steady CDs.

I retired at age 55 and live a debt-free comfortable independent life... that's plenty of winning to suit me.
 

it would be impossible for your first roth to have lost money in diversified funds because of markets . it could only be bad investor behavior .

you either bailed out wrongly , speculated in individual companies or sectors or you used long term investments for short term money needs .

there is no other way . markets have never lost money for anyone over the long term in this country. if they did the only way was because of poor investor behavior .
 
mathjak107 said:
it would be impossible for your first roth to have lost money in diversified funds because of markets . it could only be bad investor behavior .

you either bailed out wrongly , speculated in individual companies or sectors or you used long term investments for short term money needs .

there is no other way . markets have never lost money for anyone over the long term in this country. if they did the only way was because of poor investor behavior .
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Sure, blame it on me. It wasn't me... it was the mutual fund.

And it was GOD giving me a valuable object lesson so I would never invest in the stock market again.

Years later I was able to retire early at age 55. I am blessed.

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really , it is the fund ? there is not a diversified fund that is down over any typical accumulation stage or even retirement stage that typically spans decades unless it was used for short term speculating or the owner did the wrong thing and bailed out. how could a long term investment like a diversified mutual still be down ? every fund is up tremendously . you had to bail over the short term to lose money .

that is what happens , folks bail out and exhibit poor investor behavior , then it is the fund or markets fault they did the wrong thing .

tell us what fund it is ? i will tell you how it did
 
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The stock market is a game of chance.

Gamblers think they can win lost money back too... so they keep playing the game.

I don't play games.
 
mathjak107 said:
what fund was it you claim lost your money ?
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It was called Strong Fund.

https://en.wikipedia.org/wiki/Strong_Capital_Management

I put $2000 into that mutual fund. It began to lose money for a prolonged period of time.
I waited... only to lose more money. After losing $500, I withdrew the remaining $1500.
Although it is mentioned in the link above, I never received any restitution or even a notice.
It was many years later when I found out the rest of the story.

As I previously posted, it was an object lesson that taught me never again to put my money at risk.

If you have had success and feel comfortable with whatever risk you take to get a higher return... good for you.

But there are others like me who prefer a sure thing over gambling.
 
so it was not markets . it was fraud . fraud happens in all walks of life . markets cycle plain and simple . to date no one ever lost any money because of markets . they couldn't because markets are higher than ever .
markets have grown huge amounts of money . the portfolio i use which i have followed since 1987 has taken 100k and through all the ups and downs took 100k and grew it to 2.70 million .

it consists of nothing special fidelity funds . i use the fidelity insight newsletter so even my wife who has no interest can follow what to do .

had one owned nothing but the s&p 500 it would still be over 2 million . never forget a penny saved is a penny earned but it will always be a penny without compounding . there is a big difference between gambling ,speculating AND INVESTING .
 
Being Muslim, CDs are actually not approved investments for us. But before I accepted Islam, I did have them. I remember a long time ago one savings and loan in town had an interest rate of !4%...that is unheard of today! We are not supposed to pay, collect or charge interest. The ruling for collecting has been relaxed a bit to accommodate inevitable business transactions here in the west, so that a very small percent can be earned but should be given to non-Muslim charities. Interest is such a pittance these days that that can be accomplished by tipping a waitress or leaving money in the Dunkin Donuts tip cup. The reason for the ruling about interest (Riba) is because back in the days of Prophet Muhammad (PBUH), poor people were being made poorer (and the rich, richer) because they couldn't pay off their debts due to the high interest. As we know, today people are having the same issues. Much of payments on loans and credit cards go to the interest, not the principal unless payment is made in full. People have lost their homes and cars because of this system. Muslims can invest in stocks, mutual funds, ETFs and financial vehicles that pay capital gains and dividends; eg: we share in the profits and losses. In the scheme of things, when well invested, this usually brings in way more income than interest bearing accounts. Ultimately however, people have to do what they feel comfortable with financially.
 
KingsX said:
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The stock market is a game of chance.

Gamblers think they can win lost money back too... so they keep playing the game.

I don't play games.
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The stock market is not a game unless someone plays it like it is (eg: one doesn't do his/her due diligence, or tries to time the market, which usually doesn't work in one's favor, or gets in or out too fast). Finding tried and true mutual fund companies that have excellent or very good investment vehicles with a history of good returns and sticking to the investment plan is recommended (many use dollar cost averaging...a certain amount invested each month, or quarter). I've had only a couple of losses. Ironically both were investments highly touted by the "experts" that you see on T.V. and financial articles get written about. I went on to sell at a loss (the mutual fund) but found an even better investment that more than made up for the loss. The other is a stock, which takes up a minuscule portion of my portfolio, that I expect to eventually rebound. Since I invest for the long haul, there's plenty of time for it to do that. I'm a self taught investor who's portfolio has gained double digits most years and I've been investing for 32 years. Even during the big crash in 2008, I sold shares of a fund at a profit. I have my own methods for choosing investments and I've surprised myself at how much risk I can stomach.

I have a friend who put his investments in the hands of a broker. He never tried to find anything out about what was in his portfolio. He claims to have lost a lot of money during the crash, much more than the average investor. I suspect his broker took him for a ride. So he decided to put more into cash investments (savings, checking, CDs). Although he often asks my opinion about money matters, I didn't even try to talk him out of it because he has to be able to sleep at night. But the fact is that safe investments, which certainly should be held in accounts geared for emergencies or will be needed in 5 years, will not keep pace with inflation so the value of those dollars will be severely eroded over time.
 
OneEyedDiva said:
The stock market is not a game unless someone plays it like it is (eg: one doesn't do his/her due diligence, or tries to time the market, which usually doesn't work in one's favor, or gets in or out too fast). Finding tried and true mutual fund companies that have excellent or very good investment vehicles with a history of good returns and sticking to the investment plan is recommended (many use dollar cost averaging...a certain amount invested each month, or quarter)...... I'm a self taught investor who's portfolio has gained double digits most years and I've been investing for 32 years......
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Good for you! I started investing about 40+ years ago, all on my own (with the definite help of Money, Kiplinger magazines, Wall Street Journal, library books, brochures handed out from brokerage firms, personal finance articles in various magazines). It wasn't until relatively recently we all had PC's and could instantly find info.
I've always had difficulty understanding why people could not see that wealth could be created in the markets, and why they didn't put in the time and effort to find out how this coiuld be accomplished. A great deal of lost opportunities in our boomer generation.
i do have to state, I spent a lot of my free time reading very dry articles on investing, saving, where to get highest cd rates, best credit cards, and just understanding macroeconomics, market terms, risk vs reward, and dozens of other principles. I assume you had to discipline yourself to do research and read what were probably, fairly boring articles and numbers.
 
retiredtraveler said:
Good for you! I started investing about 40+ years ago, all on my own (with the definite help of Money, Kiplinger magazines, Wall Street Journal, library books, brochures handed out from brokerage firms, personal finance articles in various magazines). It wasn't until relatively recently we all had PC's and could instantly find info.
I've always had difficulty understanding why people could not see that wealth could be created in the markets, and why they didn't put in the time and effort to find out how this coiuld be accomplished. A great deal of lost opportunities in our boomer generation.
i do have to state, I spent a lot of my free time reading very dry articles on investing, saving, where to get highest cd rates, best credit cards, and just understanding macroeconomics, market terms, risk vs reward, and dozens of other principles. I assume you had to discipline yourself to do research and read what were probably, fairly boring articles and numbers.
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for more than 30 years i never put more than 30 seconds a week in to investing .

i have been using the fidelity insight newsletter growing money using plain ole fidelity funds . if you had put 100k in their growth model in 1987 today it is 2.70 million . that is through wars , crashes ,recessions and the great recession . we get an e-mail every friday as to any changes and done!

it is so easy to follow that without me my wife can manage things perfectly .
 
mathjak107 said:
for more than 30 years i never put more than 30 seconds a week in to investing .

I have been using the fidelity insight newsletter growing money using plain ole fidelity funds . if you had put 100k in their growth model in 1987 today it is 2.70 million . that is through wars , crashes ,recessions and the great recession . we get an e-mail every friday as to any changes and done!
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Then you started out knowing far more than I did. I couldn't define a stock or bond, or talk about the upside/downside, or distinguish between a value fund or large cap. I started in the 70's, long before PC's, and had to take a notebook to the library, and spend some money at the copier, to understand the concepts. There is no way I would use your technique -- taking someone else's word for it (newsletter) without a full comprehension of what I was reading. You may have had that --- I had to study for years.
Took me a number of years to actually be able to talk to someone else and be able to give them facts and numbers off the top of my head in order to help them (or myself), make a decision on where to invest. We all have our differing techniques. Part of the 'fun' was stock trading, which I didn't do until the mid 80's. Used to go to the library weekly looking at ValueLine. By then, I could understand all the charts and graphs. I'm a nerd --- I have to understand how things work.
Anyway, DW and I retired on investments at 56 and 54 respectively, no bene's of any kind. So I did something right.
 
i started out knowing little other than this :

i grew up in a nyc housing project and i KNEW going back with my own family was never going to be an option . being poor was not an outcome i would let happen .

so i knew a penny saved is a penny earned but i learned early on it will always be a penny unless my money works for me while i work for my money . kind of a double team .



so like anything that is important to us we learn a bit and we learn who the smart people are who we can learn from .

i discovered a newsletter that makes up portfolio models and you just mimic them . done! it is so easy my wife can take over , my kids do it and nobody needs to know a thing.

people spend so much time researching cars , refrigerators and even travel plans . yet the things that are life altering like their financial growth not only don't they learn a bit but they do not even research to see who does know and can show them
 
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I thought this topic was about how CDs remain useful.
That topic has been usurped by those who disagee.

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perhaps except to hold some of the current years spending money they are not useful at all or have very limited use . especially when rates are rising .

you will generally have those who have no real financial knowledge or pucker factor proclaiming their benefit as an "investment " , but in my opinion it is more like the emperors new cloths than really something that should be used just to hold some short term money
 
i didn't see any trolling kill the topic . i saw financial education tell the truth about the topic as to the fact they are really not very useful at all . sorry if you don't want to hear it but i am sure others got something out of it they may not have realized .

just because a topic has a name like cd's remain useful despite low yields -does not mean they are , nor does disagreeing with facts make it trolling .

the last 50 years cd's have resulted in a negative real return more often than not causing a loss in purchasing power . on the other hand a 50/50 mix of diversified funds HAS NEVER LOST money in any 10 or 20 year time frame when we take the worst time frames we had . which one was the bigger risk ?

it is important for those running on mis-information or parroting false beliefs , to learn ,so they can have a better informed decision as to why they want to do or not do do something

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I haven't seen anything that strayed from the topic. The OP said CDs are still useful but it seems most posters disagree. It is not trolling to disagree and giving opinions about what someone thinks is a better option is what forums are all about.

The first time I entered the stock market I lost money because I got scared and pulled out. I didn't have much and was afraid I'd lose it all. Since then I have done very well. My account is not well balanced because I have much more in stocks than in mutual funds but by studying the market and following politics it has worked well for me.
 
rkunsaw said:
I haven't seen anything that strayed from the topic. The OP said CDs are still useful but it seems most posters disagree. It is not trolling to disagree and giving opinions about what someone thinks is a better option is what forums are all about.

The first time I entered the stock market I lost money because I got scared and pulled out. I didn't have much and was afraid I'd lose it all. Since then I have done very well. My account is not well balanced because I have much more in stocks than in mutual funds but by studying the market and following politics it has worked well for me.
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I lost money in my first attempts too because I was trying to be a get rich quick player and not an investor.

Once I gained a little knowledge, experience and maturity I started making better choices that gave me steady gains over time.

I still like to keep a fair amount of cash on hand. I'm not really concerned about how much it costs me in lost opportunities or if it makes sense it just makes me feel better, LOL!!!

We each need to find a way to manage our finances that feels right for our own situation and hopefully carries us comfortably to the grave.
 
key words though are "informed decision " carries us comfortably to the grave.
to many hurt themselves by believing myth and mis-information from other mis-informed people and they hurt themselves . so many hear you can draw 4% and have the money last forever , but that is not true of fixed income , which has failed way to many times already to make sense .

so the more "correct info" you have ,the better informed the decision can be that you have to make .

to me it makes little sense to work so hard to accumulate a sizable retirement savings , but then use only fixed income and in order to maintain a high success rate be very limited to what i can take as a pay check .

so each asset class , including cash instruments have a roll to play that they do best , but taken away from that roll they become much to risky ,only few realize it .
 
Trolls have killed this topic.
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The topic ran it's course. A percentage of people believe CDS's are useful. Some of us don't believe a CD is an 'investment' at all (it's a savings vehicle) and think they're 'worthless' bercause their return is below that of inflation. There are 'true' investments that can yield returns, with little risk (not zero risk), to help ensure you have a steady income for your lifetime.
So, no, CD's are not 'useful' in a general, personal-financial sense as inflation causes them to have a negative return. Only slightly better than money under the mattress.
 

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