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| trixiezzz |
 Posted: Fri Feb 11, 2005 12:53 pm Post subject: How long of a bank CD term do you recommend for savings? |
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Investing Manager
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| I plan to need some money in about 3 years for a major purchase. In the meantime I'd like to park it in a bank CD for a while. Does a 3-yr one make sense or should I put it in shorter term ones and renew them? |
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| WeareMom |
| Posted: Sun Feb 20, 2005 8:04 am Post subject: |
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Investing Associate
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| Try to find a CD that will allow a few deposits and/or withdrawals over the life of the CD, no matter what the length of the CD. That way if you have an emergency and need the money, you won't pay a penalty. |
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| bigdave |
| Posted: Sun Feb 20, 2005 8:29 am Post subject: |
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Investing Sr. Associate
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I would setup a CD rotation so that you have one renew every year.....
Meaning buy a 1 yr 2yr 3yr 4 yr and 5 yr then when your CD's come due renew them for 5 yrs and the rotations will continue to have one come available every year.... |
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| trixiezzz |
| Posted: Sun Feb 20, 2005 10:34 am Post subject: |
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Investing Manager
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| Wow, that's a great solution I had never thought about. Thanks! |
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| bigdave |
| Posted: Sun Feb 20, 2005 11:09 am Post subject: |
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Investing Sr. Associate
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Glad i could be of assistance. This is great plan as once you start this up you can always purchase a 5 year cd and get that great rate!! This is something me and my wife will be starting this year  . |
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| fladoozle84 |
| Posted: Mon Feb 21, 2005 5:13 pm Post subject: |
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Investing Sr. Associate
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| jasonr114 |
| Posted: Sun Mar 13, 2005 7:57 am Post subject: |
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Investing Associate
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The cd rotation metioned above is often referred to as "CD Laddering". In today's rate environment it will be difficult to find a 3-yr CD that offers a very competitive rate.
ING Direct has very easy procedure for setting up a CD ladder.
I would look into a savings account like Emigrant Direct that earns 3.0% interest and has ALL the liquidity of a savings account. |
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| tylr |
| Posted: Sun Mar 13, 2005 3:02 pm Post subject: Re: How long of a bank CD term do you recommend for savings? |
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Investing Associate
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| trixiezzz wrote: | | I plan to need some money in about 3 years for a major purchase. In the meantime I'd like to park it in a bank CD for a while. Does a 3-yr one make sense or should I put it in shorter term ones and renew them? |
It depends on the amount of fund here. In this period of rising short-term rate, some unconventional options to consider include bump up CDs and floating rate CDs. Although note that the CD rates at most banks currently lag some of the more competitive MMs and checking accounts due to the uncertainty of the economic environment and current banks' assets.
Compare the best CD vs. MM rates at www.bankrate.com although don't forget to check out your local banks whose promotional offers sometimes only are reserved for local residents and are not available nationwide. |
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