CDs about to mature; what's my next move?

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irvinesinglemom_IHB

irvinesinglemom_IHB

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I have a couple of CDs in different banks that are set to mature in a few weeks. This is not retirement money; it is the money that I intend to use when I purchase a house in 2009 or 2010. Given the high likelihood of Greenspan puts coming soon from Helicopter Ben, my original plan to get another couple of 12-month CDs may not be the best move for me. I'm thinking that it might be wise to lock my interest rate up for 24 months instead of 12. The only downside that I can think of would be that if the market tanks faster than we expect it will, and a house that I love becomes affordable for me during the next 24 months. However, that seems unlikely to occur, and also, I kind of have my heart set on the OH neighborhoods that are planned to attend Northwood HS and I doubt they'll be building houses there until 2010 and beyond. Also, Countrywide is advertising 5.75% for 12 months, which is very tempting given that I keep my balances below 100k. (I am convinced that Countrywide in its present form won't be around much longer). Any advice from the brilliant minds on IHB what my next move should be? Thanks!
 
If the FED lowers interest rates, it will be very inflationary, so you will see short term rates decline below the level of inflation. It is a war on savers, and you won't want all your money in a bank. If interest rates really do start coming down, I would look to bonds or stocks to overperform as the extra money pumped into the economy looks for a place to go -- it won't go into real estate.





If the FED does not lower rates, everything other than cash will do poorly.





Personally, I would just keep rolling over into short-term CDs. It will give you the flexibility to move money around if you need to.
 
<p>ISM -</p>

<p>Have you considered trying something like <a href="http://www.hsbcdirect.com/1/2/1/offer?code=PPYL020000&WT.srch=1">HBSC</a> or other online savings accounts? I personally have ING and I know that I can get better rates elsewhere, but I'm too lazy to switch and the extra 1% is not worth the effort to me (especially after taxes).</p>

<p> But, I do need the money in an account that I can freely withdraw whenever I need to.</p>
 
I am willing to give up liquidity in order to secure a great, safe interest rate. That's why I think it might be smart to lock in a high CD rate now for two years, before interest rates start to go down. I don't need the flexibility to use the money, although it might be wise to have the flexibility to move the money to a better investment...hmmm
 
<p>irvinesinglemom, effen gave out this great website to find the top CD rates:</p>

<p><a href="http://www.fatwallet.com/forums/messageview.php?catid=52&threadid=682884&highlight_key=y&keyword1=cd">http://www.fatwallet.com/forums/messageview.php?catid=52&threadid=682884&highlight_key=y&keyword1=cd</a></p>

<p>Just scroll down to the bottom of the page for the listing of CD rates. Good luck!</p>

<p> </p>

<p> </p>
 
irvinesinglemom,





I have been thinking more about your situation. I think you would be well served by locking in a longer term CD. If interest rates go lower and stocks and bonds take off, it is still going to be risky and volatile. You will have less stress if you lock in your good CD rate for as long as possible.
 
Irvinesinglemom,





May I ask if you chose the CD at Countrywide? I also have some CDs maturing and was thinking of going with Countrywide. I figure, as long as I keep within FDIC limits, does the choice of banks really matter?





Thanks!
 
Hi patientlywaiting,





Well I have to admit that I put the cash into my low-yield saving account and have been agonizing over what to do with it...I am leaning more and more toward putting it all in Euros because I'm so scared of the dollar's future, but then I swing back over to the safety of what I know, which is good ol' U S of A dollar CD's.





Meanwhile, during this atypical (for me) period of indecision, my cash is losing ground to inflation as it languishes in savings account purgatory...
 
<p>Just for the hell of it, short the Chinese with a grand or too. Now, which other thread was that in???</p>

<p>Seriously, your euro idea is excellent. </p>
 
<p>The Euro Central banks have been cutting their rate and a CD in Euros is running about 3%.</p>

<p>You can get CDs in other currencies through Everbank (note, I've never used them. )</p>

<p> http://www.everbank.com/001WorldCurrencyCD.aspx?referid=12149&gclid=CLaw5sKt1o8CFSBeagod_zL28w</p>
 
I don't think it's good to get locked into Euros unless you have the ability choose when you can get out of them. You may lose if the dollar appreciated while you held your Euro denominated investment or you'll be stuck holding Euros.





I think a CD is the best way to go. Some banks have a liquid CD which helps you avoid costly penalties. Longer terms don't always have higher yields. 5 and 6 month CD's have higher yields than 12 month CD's. If it's a rate you are comfortable with than it is the best (safest) way to go.





I don't think you are going to be missing any smokin hot real estate deals within the next 12-16 months.
 
I have similar situation with IrvineSingleMom. I sold my house 5 months ago and keep 550K in CDs (risk-free CD, 5.0 %) at Bank Of America. This money I shall use to buy house in late 2009. I am really afraid the U.S. dollars continue to lose value and I don't know where to put money now besides CDs. I am afraid to put money in stocks or mutual funds since the stock market is so volatile and risky now. A month ago, I planned to buy gold but I did not buy since I thought the gold price was too high, but gold price has continued going up. Now, I don't know where to park my money besides CDs. Should I put my money in other currency like euro? bonds? Any advice? Thanks for any feedback.
 
<p>I don't know what to do either. But I do know that strange things are afoot, economy wise. Make sure your money is safe and accessible - who knows what is coming? (ex. job losses)</p>

<p>The Coming US Consumption Slowdown that Will Trigger an Economy-Wide Hard Landing</p>

<p>http://www.rgemonitor.com/blog/roubini/226072</p>
 
<p>CD's, but I've put mine in a longish term CD (2 years) a while back. The interest rate at that time was 5.75% with fidelity with interest paid out monthly. Of course each cd is at the maximum. I say CD's while you aren't beating inflation by much at least you are not exposing yourself you alot of risk. For me, its worth a little bit extra.</p>

<p>-bix</p>
 
<p>I had a couple of short -term (6mos.) CD's mature recently and noticed the rate on high yield money market was either the same or better. </p>

<p>At Citibank and WaMu I was getting 4.75%, I moved them to Indymac money market at 5.20%. At the time E-Trade was offering a similiar yield on their mm account. Looking back I'm glad I didn't go with them. Hopefully, nothing happens to Indymac.</p>
 
Awgee....yes many money market accts have exposure to MBS and ABS. One reason why BAC has put almost 600MM into reserve funds to protect the integrity of those accts.



I think someone pointed out a few months ago that money market accts are really a safe way to protect your money. The yields are not much better than a CD but the flexibility to move money in an out is much easier. Anyways, I tend to try and find the CDs with the shortest duration and highest yields. This way I can just keep rolling them over and I might only sacrifice a few bps.
 
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