pillage2001
Lifer
- Sep 18, 2000
- 14,038
- 1
- 81
I-Bonds, series EE-Bonds, any bonds of that type would be a waste of time and money in my opinion.
PenFed offers 5.25% on a 5 year CD.
http://www.penfed.org/prodserv/certificates/index.asphttp://www.penfed.org/prodserv/certificates/index.asp
http://www.penfed.org/prodserv/certificates/index.asphttp://www.penfed.org/prodserv/certificates/index.asp
GasX
Lifer
- Feb 8, 2001
- 29,033
- 6
- 81
exerpts from a recent motley fool report:
Income is preferred
Despite the implication of the term, preferreds aren't the golden children of the investment world. However, that doesn't mean preferred stock doesn't deserve a place in your portfolio.
A favorite preferred is the US Bancorp Trust Unit IV [NYSE: USBPRC], which is trading at $25.77, giving it a solid yield of 7.13%. It isn't callable until November 2006, and it doesn't mature until 2031.
US Bancorp is a solid financial institution that has produced excellent returns on both assets and equity over the years. And this preferred represents a great risk/reward opportunity when you consider that it's backed by a bank with an A+ credit rating.
I also like DTE Energy Trust I [NYSE: DTEPRA] issued by prominent utility DTE Energy [NYSE: DTE], the parent company of Detroit Edison. DTE QUIPS (Quarterly Income Trust Securities) are trading at about $26, giving them a current yield of about 7.5%. This issue isn't callable until February 2007, and it doesn't mature until 2032.
Many other utilities are facing earnings and liquidity crises. But DTE Energy is a strong player with ample funds to cover its obligations. Despite troubles in the sector, the company has managed to maintain its investment grade credit rating of BBB-.
Janus Capital Group PINES [NYSE: SVQ] is issued by, you guessed it, Janus Capital Group [NYSE: JNS]. The company, formerly known as Stilwell Financial, had its problems when its aggressive growth and Internet funds fell out of favor with investors. But the firm is on the mend and has a BBB+ credit rating. It's trading at $25.00, yields 7.88%, and is callable at its $25 issue price in April 2007. The maturity date is 2032.
===
Pick #4 is a municipal bond fund. All you high-rolling (and high tax-paying) folks out there are going to love it. Why? Because interest from municipal bonds and bond funds is exempt from federal income tax.
Your tax savior is the Van Kampen Advantage Municipal Income Trust II [AMEX: VKI]. It's a mouthful, but worth saying. This fund has a pre-tax yield of a little over 7%. The tax-equivalent yield is a mucho grande 9.8% if you're in the 28% bracket. Fat cats paying 38% pull down a yield of 11.4%.
Shares are currently trading at a 4.92% discount to NAV. The expense ratio is just 0.65%, well below the average for this group.
===
Real estate for less than it's worth
These funds allow us to purchase a portfolio of real estate for less than it's actually worth, since these guys are trading at a discount to NAV. The ability of REITs to produce attractive total returns, with the majority coming from current income, will keep these securities in the hearts and minds of investors as well as their portfolios.
My favorite in this class is the Scudder RREEF Real Estate Fund [AMEX: SRQ]. The current yield is 8.17%, and it's trading at a 5.74% discount to NAV. Since its inception in October 2002, the fund has managed to grow NAV by 27%. Yet the shares have risen only 17%, so the discount on the shares is wider than ever.
Top holdings read like a laundry list of REIT favorites. No more than 20% of its total assets are invested in securities rated below investment grade. The fund has a reasonable expense ratio of 0.85%, and manager Karen Knudson has more than 15 years of real estate experience.
AIM Select Real Estate Income Fund [NYSE: RRE] is next in line for a solid REIT play. The fund yields 8.45% and trades at a 3.79% discount to NAV. Since its launch in May 2002, the firm has grown NAV by 12.45%. Shares have increased only 4%. There's clearly a disconnect between the performance of this company and the value of the stock.
Like the Scudder fund, AIM Select doesn't invest more than 20% in non-investment grade securities. The expense ratio is 0.9%, and manager James Trowbridge has worked with real estate investments for nearly 20 years.
Pick #7 -- the highest risk selection -- lies in the junk bond category. But, in Motley Fool Income Investor, I uncover top-drawer, collectible "junque". Try it for 30 days, with no obligation.
===
Also, junk bonds should hold up better than investment-grade bonds if interest rates rise -- which seems likely in the coming years. A stronger economy cushions firms with borderline credit.
In this space, I like T. Rowe Price High Yield [Nasdaq: PRHYX], which has a current yield of 8.51%. The no-load fund has performed well in both good markets and bad, which probably accounts for its five-star Morningstar rating. Further, the fund's expense ratio is 0.83% -- well below the 1.3% category average.
Manager Mark Vaselkiv invests mostly in single B- and double B-rated securities -- less risky than those purchased by many high-yield funds. Only 12% is invested in bonds rated below B, or not rated. Plus, the fund has 8% invested in high-quality AAA rated bonds.
High quality in any investment arena -- see what we find in Motley Fool Income Investor during your 30-day free trial.
Income is preferred
Despite the implication of the term, preferreds aren't the golden children of the investment world. However, that doesn't mean preferred stock doesn't deserve a place in your portfolio.
A favorite preferred is the US Bancorp Trust Unit IV [NYSE: USBPRC], which is trading at $25.77, giving it a solid yield of 7.13%. It isn't callable until November 2006, and it doesn't mature until 2031.
US Bancorp is a solid financial institution that has produced excellent returns on both assets and equity over the years. And this preferred represents a great risk/reward opportunity when you consider that it's backed by a bank with an A+ credit rating.
I also like DTE Energy Trust I [NYSE: DTEPRA] issued by prominent utility DTE Energy [NYSE: DTE], the parent company of Detroit Edison. DTE QUIPS (Quarterly Income Trust Securities) are trading at about $26, giving them a current yield of about 7.5%. This issue isn't callable until February 2007, and it doesn't mature until 2032.
Many other utilities are facing earnings and liquidity crises. But DTE Energy is a strong player with ample funds to cover its obligations. Despite troubles in the sector, the company has managed to maintain its investment grade credit rating of BBB-.
Janus Capital Group PINES [NYSE: SVQ] is issued by, you guessed it, Janus Capital Group [NYSE: JNS]. The company, formerly known as Stilwell Financial, had its problems when its aggressive growth and Internet funds fell out of favor with investors. But the firm is on the mend and has a BBB+ credit rating. It's trading at $25.00, yields 7.88%, and is callable at its $25 issue price in April 2007. The maturity date is 2032.
===
Pick #4 is a municipal bond fund. All you high-rolling (and high tax-paying) folks out there are going to love it. Why? Because interest from municipal bonds and bond funds is exempt from federal income tax.
Your tax savior is the Van Kampen Advantage Municipal Income Trust II [AMEX: VKI]. It's a mouthful, but worth saying. This fund has a pre-tax yield of a little over 7%. The tax-equivalent yield is a mucho grande 9.8% if you're in the 28% bracket. Fat cats paying 38% pull down a yield of 11.4%.
Shares are currently trading at a 4.92% discount to NAV. The expense ratio is just 0.65%, well below the average for this group.
===
Real estate for less than it's worth
These funds allow us to purchase a portfolio of real estate for less than it's actually worth, since these guys are trading at a discount to NAV. The ability of REITs to produce attractive total returns, with the majority coming from current income, will keep these securities in the hearts and minds of investors as well as their portfolios.
My favorite in this class is the Scudder RREEF Real Estate Fund [AMEX: SRQ]. The current yield is 8.17%, and it's trading at a 5.74% discount to NAV. Since its inception in October 2002, the fund has managed to grow NAV by 27%. Yet the shares have risen only 17%, so the discount on the shares is wider than ever.
Top holdings read like a laundry list of REIT favorites. No more than 20% of its total assets are invested in securities rated below investment grade. The fund has a reasonable expense ratio of 0.85%, and manager Karen Knudson has more than 15 years of real estate experience.
AIM Select Real Estate Income Fund [NYSE: RRE] is next in line for a solid REIT play. The fund yields 8.45% and trades at a 3.79% discount to NAV. Since its launch in May 2002, the firm has grown NAV by 12.45%. Shares have increased only 4%. There's clearly a disconnect between the performance of this company and the value of the stock.
Like the Scudder fund, AIM Select doesn't invest more than 20% in non-investment grade securities. The expense ratio is 0.9%, and manager James Trowbridge has worked with real estate investments for nearly 20 years.
Pick #7 -- the highest risk selection -- lies in the junk bond category. But, in Motley Fool Income Investor, I uncover top-drawer, collectible "junque". Try it for 30 days, with no obligation.
===
Also, junk bonds should hold up better than investment-grade bonds if interest rates rise -- which seems likely in the coming years. A stronger economy cushions firms with borderline credit.
In this space, I like T. Rowe Price High Yield [Nasdaq: PRHYX], which has a current yield of 8.51%. The no-load fund has performed well in both good markets and bad, which probably accounts for its five-star Morningstar rating. Further, the fund's expense ratio is 0.83% -- well below the 1.3% category average.
Manager Mark Vaselkiv invests mostly in single B- and double B-rated securities -- less risky than those purchased by many high-yield funds. Only 12% is invested in bonds rated below B, or not rated. Plus, the fund has 8% invested in high-quality AAA rated bonds.
High quality in any investment arena -- see what we find in Motley Fool Income Investor during your 30-day free trial.
edro
Lifer
- Apr 5, 2002
- 24,326
- 68
- 91
Can someone explain the CD return rate to me?
If a CD is a 5% return, and the inital deposit was $1000, at the end of the year, you would have accumulated $50 in interest? Then the following year, you would acculumate $52.50 in interest, then $55.12 in interest... and so on? So after 5 years:
1000 Priniciple
.05 Interest
50 Net Interest
1050
.05
52.50
1102.50
.05
55.12
1160.38
.05
57.88
1218.26
.05
60.91
$1279.17 Total after 5 years?
Am I doing that right?
If a CD is a 5% return, and the inital deposit was $1000, at the end of the year, you would have accumulated $50 in interest? Then the following year, you would acculumate $52.50 in interest, then $55.12 in interest... and so on? So after 5 years:
1000 Priniciple
.05 Interest
50 Net Interest
1050
.05
52.50
1102.50
.05
55.12
1160.38
.05
57.88
1218.26
.05
60.91
$1279.17 Total after 5 years?
Am I doing that right?
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