Certificate of Deposit: Yay or Nay??

[JaCkaL829]

Hello:

I`d like to get some of the economist`s opinion on whether or not I should put a majority of my savings account into a certificate of deposit (CD)? I know pretty much nothing about economics and today`s economy, so i`m a little unsure if its a wise decision or not. I am one of the people at the bank who only deposits, never withdraws from their savings account. I had though of doing it a year ago, but since I was going to buy a car, decided aganist it. Now that I have my car, and don`t see myself needing money from account for quite some time, i`m wondering if nows a good time to put it in a CD. I do keep hearing from people that the market will eventually jump, which could really screw me up if my money is at a fixed interest rate.

So any advice on this topic? My one friend was telling me to put it in a mutual fund, but I`m not to sure on how they work. I`m not looking to get rich of the CD, just a little extra. I definately want the safest route, i`m not at a point where I can "gamble" with my money.

I think i`m going to sit down at the bank either tommorow or Friday, but until then any information on the topic would be greatly appreciated. :2thumbs:

[Spilchy]

Well, when do you need the money (it`s maturation date)? If this is money that will be used to buy a home, pay for school or buy a car, then I guess it`s ok because it`ll be "safe". But, you can "lose" if you`re fixed at a crappy interest rate.



If this is money for retirement or to draw upon decades from now, at your age, it`s pointless. You`re better off with a well diversified, solid performing Large Cap mutual fund or an Index fund (better choice) that mirrors the S&P for example. You re-invest your dividends allowing it to compound. Over years, the returns will destroy that of a CD.



Do you have an IRA? If not, use the money to open one with a mutual fund(s) and contribute to it each year



Don`t sell yourself short on a CD because you`re not knowledgeable. The safest route as you want doesn`t mean you overlook the stock market. That would be foolish at your age.



Do your folks / grandparents have a financial advisor? If so, talk to him or her. Knowledge = profitable decisions.

[ntoddalbert]

Seth gave you good advice, if its short term ( maybe your buying a house soon) check out ING direct, 3.8% with no commitment or tying up your money. Plus if you let me refer you I get 10 bucks, and you get 25 for opening the account. :grinno:



If your looking long term, your a young guy, take Seth`s advice. Its not how much you make or even how much you save, if you start young it really adds up. Don`t watch the market so much, over time you will do well.



If you can buy a house, the tax benefits and ability to build wealth for your future cant be beat with a house. As will Rodgers said, "Buy land, they ain`t making any more of it"



A few years back my dad offered me a 9 family he owned, he has a lot of rental properties, he was going to hold the mortgage, I said I was too busy with my career. He sold that property this past December for 1.1 Mil. He offered it to me for 299K. I haven`t made that much working in a highly paid aviation job over the same amount of time. Not to mention he cleared 45K a year in profits on that property every year. Im still kicking myself over that, I thought it was overpriced at 299.



When I was 17 I thought my dad was the dumbest guy on earth, now that im 37 I can say he has learned quite a bit...lol

[Setec Astronomy]

Wow, start with Will Rogers and finish with Mark Twain, not bad!

[kompressornsc]

Seth gave you good advice, if its short term ( maybe your buying a house soon) check out ING direct, 3.8% with no commitment or tying up your money. Plus if you let me refer you I get 10 bucks, and you get 25 for opening the account. :grinno:

So how is ING with fees? I was looking at another HY savings account, and they just nailed you on fees-like $30 per transaction, in or out. Just checked my local bank, and they`re paying 90 points. Whoopee! I can make more interest putting it under my mattress.

[Mike-in-Orange]

So how is ING with fees? I was looking at another HY savings account, and they just nailed you on fees-like $30 per transaction, in or out. Just checked my local bank, and they`re paying 90 points. Whoopee! I can make more interest putting it under my mattress.

I`ve had an ING Orange Savings Account for a couple of years now and love it - no fees of any kind. Check them out at www.ingdirect.com as they also have CD accounts with even higher yields, also with no fees/minimums, and 6 to 60 month terms.

[JaCkaL829]

Thanks for the replies, all this talk reminds me why I`m not to fond of economics.



To clarify my situation, I`m a young guy (21) and don`t see any big purchases in the next couple (3-4) years of my life. I was only planning on putting my money in a CD for like 1-2 years. I think I will look into the ING account though. I know some distant family members and friends involved with banking, I guess it would be wise to try to get their opinions also. I don`t want to commit to anything just yet without hearing a decent amount of opinions.



Thanks so far!

[ntoddalbert]

If your want to do some resaerch here is a good link http://ibankdesign.com/index.php





ING is great, another good choice is Emmigrant now they have 4% interest and like ING no fees of any kind