Loaning someone money today at 5% when reported inflation is 7% (We all know energy and food are inflated and would bring that number in closer to 10%) is a guarantee to go backwards. Now consider this as the government launders money for Joe, I mean, provides aid to Ukraine with cash it does not have. The value of the dollar is going to go down down. So in six to 18 months that money you loaned is going to have a purchasing power of less than 1 dollar. So not only are you getting eaten by the inflation but your government is ensuring that you lose buying power tomorrow. Add on that the government is proping these banks up with all manner of aid and tax relief. CDs are a suckers game.ddbird wrote: ↑Fri Apr 26, 2024 5:48 pmThis. Only money that has plans in the next few years are in CDs. But a guaranteed 5% for short term is nothing to poo pooFatMan wrote: ↑Fri Apr 26, 2024 2:37 pmIt is all about risk profile. CDs have their place. For people who need their money in one or two years the market can be a risky game. It would not surprise me to see a market drop of 20% in the next year or two. And that could be catastrophic for some. CDs are a stupid play for those with a 5+ year horizon.
cd question
Moderator: clw54
Re: cd question
Re: cd question
So what is your recommendation for funds that will be needed in the next year or two? What is your winner's game in this case?meos1 wrote: ↑Sun Apr 28, 2024 8:23 amLoaning someone money today at 5% when reported inflation is 7% (We all know energy and food are inflated and would bring that number in closer to 10%) is a guarantee to go backwards. Now consider this as the government launders money for Joe, I mean, provides aid to Ukraine with cash it does not have. The value of the dollar is going to go down down. So in six to 18 months that money you loaned is going to have a purchasing power of less than 1 dollar. So not only are you getting eaten by the inflation but your government is ensuring that you lose buying power tomorrow. Add on that the government is proping these banks up with all manner of aid and tax relief. CDs are a suckers game.ddbird wrote: ↑Fri Apr 26, 2024 5:48 pmThis. Only money that has plans in the next few years are in CDs. But a guaranteed 5% for short term is nothing to poo pooFatMan wrote: ↑Fri Apr 26, 2024 2:37 pmIt is all about risk profile. CDs have their place. For people who need their money in one or two years the market can be a risky game. It would not surprise me to see a market drop of 20% in the next year or two. And that could be catastrophic for some. CDs are a stupid play for those with a 5+ year horizon.
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Re: cd question
Texas Hold-em
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Any objective examination of the effect of "them" has to lead you to the behavior and ideology that is now termed, "racist."
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Any objective examination of the effect of "them" has to lead you to the behavior and ideology that is now termed, "racist."
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Re: cd question
You’re only correct if you have another way for a higher, guaranteed return. You’re suffering the 7% inflation regardless it’s not like that only applies to people that hold CDs hahameos1 wrote: ↑Sun Apr 28, 2024 8:23 amLoaning someone money today at 5% when reported inflation is 7% (We all know energy and food are inflated and would bring that number in closer to 10%) is a guarantee to go backwards. Now consider this as the government launders money for Joe, I mean, provides aid to Ukraine with cash it does not have. The value of the dollar is going to go down down. So in six to 18 months that money you loaned is going to have a purchasing power of less than 1 dollar. So not only are you getting eaten by the inflation but your government is ensuring that you lose buying power tomorrow. Add on that the government is proping these banks up with all manner of aid and tax relief. CDs are a suckers game.ddbird wrote: ↑Fri Apr 26, 2024 5:48 pmThis. Only money that has plans in the next few years are in CDs. But a guaranteed 5% for short term is nothing to poo pooFatMan wrote: ↑Fri Apr 26, 2024 2:37 pmIt is all about risk profile. CDs have their place. For people who need their money in one or two years the market can be a risky game. It would not surprise me to see a market drop of 20% in the next year or two. And that could be catastrophic for some. CDs are a stupid play for those with a 5+ year horizon.
Re: cd question
There not but a few and the risk is higher. However, the stock market, real estate, and starting your own business come to mind.FatMan wrote: ↑Sun Apr 28, 2024 8:32 amSo what is your recommendation for funds that will be needed in the next year or two? What is your winner's game in this case?meos1 wrote: ↑Sun Apr 28, 2024 8:23 amLoaning someone money today at 5% when reported inflation is 7% (We all know energy and food are inflated and would bring that number in closer to 10%) is a guarantee to go backwards. Now consider this as the government launders money for Joe, I mean, provides aid to Ukraine with cash it does not have. The value of the dollar is going to go down down. So in six to 18 months that money you loaned is going to have a purchasing power of less than 1 dollar. So not only are you getting eaten by the inflation but your government is ensuring that you lose buying power tomorrow. Add on that the government is proping these banks up with all manner of aid and tax relief. CDs are a suckers game.ddbird wrote: ↑Fri Apr 26, 2024 5:48 pmThis. Only money that has plans in the next few years are in CDs. But a guaranteed 5% for short term is nothing to poo pooFatMan wrote: ↑Fri Apr 26, 2024 2:37 pmIt is all about risk profile. CDs have their place. For people who need their money in one or two years the market can be a risky game. It would not surprise me to see a market drop of 20% in the next year or two. And that could be catastrophic for some. CDs are a stupid play for those with a 5+ year horizon.
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Re: cd question
Dividend paying stock that doesn't change much. Make sure it is solid dividend company that doesn't cut dividends.
Money market where it is reasonably same as the CD interest. Fidelity pays 4.95% right now, so if looking at a 5% CD, I rather have the money market...as long as I think rates aren't going down in the near future.
Re: cd question
"Dividend aristocrats," companies that have raised their dividends for 25 consecutive years.
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Re: cd question
Last August I got in on a 5 year locked in at 5.5%
Re: cd question
No way I’d tie cash to a 5-year instrument
Re: cd question
Yep, ask MacCrimmon how 2023 Dividend Aristocrat WBA has fared in the last year. Oh, I'll help. Down 50% and cut their dividend in half. There are no guarantees even in the safest stocks. If someone needs money within a two year period stocks are not the answer. With inverted interest rates today a better place to park is in a high yield money market fund like SWVXX. Currently paying 5.14% and you can have your money tomorrow if needed.
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Re: cd question
You answered your question. Hehehehhe.FatMan wrote: ↑Tue Apr 30, 2024 6:37 amYep, ask MacCrimmon how 2023 Dividend Aristocrat WBA has fared in the last year. Oh, I'll help. Down 50% and cut their dividend in half. There are no guarantees even in the safest stocks. If someone needs money within a two year period stocks are not the answer. With inverted interest rates today a better place to park is in a high yield money market fund like SWVXX. Currently paying 5.14% and you can have your money tomorrow if needed.
Re: cd question
Most certainly better than your answer. Hehehehemeos1 wrote: ↑Tue Apr 30, 2024 6:45 amYou answered your question. Hehehehhe.FatMan wrote: ↑Tue Apr 30, 2024 6:37 amYep, ask MacCrimmon how 2023 Dividend Aristocrat WBA has fared in the last year. Oh, I'll help. Down 50% and cut their dividend in half. There are no guarantees even in the safest stocks. If someone needs money within a two year period stocks are not the answer. With inverted interest rates today a better place to park is in a high yield money market fund like SWVXX. Currently paying 5.14% and you can have your money tomorrow if needed.
Seriously? Short term money into a business? Short term into real estate? Absolutely ridiculous. Short term money is all about liquidity, of which neither of your ideas has. Both are cash flow hogs too. I know, I have owned many businesses and own plenty of real estate. Don't get me wrong, I have made plenty of money with those over years of holding. But very dumb idea for short term money. And, when rates are not inverted which is better than 90% of the time CDs create more value than money market funds. A fools game they are not. You will not get rich with a CD but they are a valuable instrument for many situations.
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Re: cd question
ThisRMan wrote: ↑Mon Apr 29, 2024 5:10 pmDividend paying stock that doesn't change much. Make sure it is solid dividend company that doesn't cut dividends.
Money market where it is reasonably same as the CD interest. Fidelity pays 4.95% right now, so if looking at a 5% CD, I rather have the money market...as long as I think rates aren't going down in the near future.
Re: cd question
Im fairly poor. Short term money is the amount of cash that comes in to pay the bills. I don't have the luxury to let the cash sit around.FatMan wrote: ↑Tue Apr 30, 2024 7:18 amMost certainly better than your answer. Hehehehemeos1 wrote: ↑Tue Apr 30, 2024 6:45 amYou answered your question. Hehehehhe.FatMan wrote: ↑Tue Apr 30, 2024 6:37 amYep, ask MacCrimmon how 2023 Dividend Aristocrat WBA has fared in the last year. Oh, I'll help. Down 50% and cut their dividend in half. There are no guarantees even in the safest stocks. If someone needs money within a two year period stocks are not the answer. With inverted interest rates today a better place to park is in a high yield money market fund like SWVXX. Currently paying 5.14% and you can have your money tomorrow if needed.
Seriously? Short term money into a business? Short term into real estate? Absolutely ridiculous. Short term money is all about liquidity, of which neither of your ideas has. Both are cash flow hogs too. I know, I have owned many businesses and own plenty of real estate. Don't get me wrong, I have made plenty of money with those over years of holding. But very dumb idea for short term money. And, when rates are not inverted which is better than 90% of the time CDs create more value than money market funds. A fools game they are not. You will not get rich with a CD but they are a valuable instrument for many situations.