Why are people buying fixed interest CD's in this market?

[alphatarget1]

I won't be surprised if ING starts to give 4% on their savings account by the end of the year. The price of gas is going to drive inflation up a lot and possibly ruin the economy. But then it's only my intuition, I'm no economist. I like to calculate beam deflections instead 😛

 

[alphatarget1]

Originally posted by: acemcmac

Originally posted by: alphatarget1
Do a 5 year CD when the interest rate is 10%, then the inflation goes way down and $$$$$ profit.

Idealized, of course. I wasn't even in existance when the inflation was crazy...

Exactly. 🙂 The trick there is that it is extreemly difficult to have liquidty to sacrafice under those market conditions (in a middle class family) to really be able to capitalize.

But the market conditions are dead opposite currently. The economy is awash in excess liquidity thanks to Washington's assinine policies and inflation/interest rates are starting a stead foreward march. Yet people still comit to long term CD's....

Playing currency can be fun too. I told my parents to buy some Euros when they were bottomed out. They didn't. If they did it would've been like 40-50% more $$$.

 

[acemcmac]

Originally posted by: alphatarget1
I won't be surprised if ING starts to give 4% on their savings account by the end of the year. The price of gas is going to drive inflation up a lot and possibly ruin the economy. But then it's only my intuition, I'm no economist. I like to calculate beam deflections instead 😛

engineers++

I doubt it will "ruin" the economy so to say.... I read a report on retailers yesterday that said it was signifigantly hurting discount retailers and made a huge dent in walmart's earnings <shrug>

The problem (IMHO IMHO IMHO) is that there is no huge productivty boom waiting to cure the economy of all-it's-ills like the dot-com boom erasing Regan debt... IMHO.... please feel free to critique

 

[acemcmac]

Originally posted by: alphatarget1

Originally posted by: acemcmac

Originally posted by: alphatarget1
Do a 5 year CD when the interest rate is 10%, then the inflation goes way down and $$$$$ profit.

Idealized, of course. I wasn't even in existance when the inflation was crazy...

Exactly. 🙂 The trick there is that it is extreemly difficult to have liquidty to sacrafice under those market conditions (in a middle class family) to really be able to capitalize.

But the market conditions are dead opposite currently. The economy is awash in excess liquidity thanks to Washington's assinine policies and inflation/interest rates are starting a stead foreward march. Yet people still comit to long term CD's....

Playing currency can be fun too. I told my parents to buy some Euros when they were bottomed out. They didn't. If they did it would've been like 40-50% more $$$.

I was going to do just this.... if you get accounts within the same bank.... I was thinking CitiJapan, CitiUSA and CitiEuro, you get free EFT's between accounts with no currency converting charges... When I realized that I'd actually have to call Tokyo and Paris to set up these accounts though, the thought of my long disatance phone bill scared me out of it 🙁

 

[alphatarget1]

Originally posted by: acemcmac

Originally posted by: alphatarget1
I won't be surprised if ING starts to give 4% on their savings account by the end of the year. The price of gas is going to drive inflation up a lot and possibly ruin the economy. But then it's only my intuition, I'm no economist. I like to calculate beam deflections instead 😛

engineers++

I doubt it will "ruin" the economy so to say.... I read a report on retailers yesterday that said it was signifigantly hurting discount retailers and made a huge dent in walmart's earnings <shrug>

The problem (IMHO IMHO IMHO) is that there is no huge productivty boom waiting to cure the economy of all-it's-ills like the dot-com boom erasing Regan debt... IMHO.... please feel free to critique

Fvck walmart. It'd be nice if gas raises to 4 bucks a gallon. Walmart will then be broke, muahahhaa. I'll be broke in the process.

Productivity is excellent, we're doing more work with less people. We're an oil economy and if indeed peak oil is near, then the economy is not going to do so well until we have converted to a different system. It's not just energy. All the plastic you use come from oil and stuff. I guess if they all started making non-thermosetting plastics (what's the other called... don't remember) we can recycle a lot of it.

What we need is nuclear energy in the transition & cut down on unnecessary consumption. I read something about the new technology where they put the uranium or something in a graphite ball and it's impossible for a meltdown to occur, really cool stuff. K I'm getting off topic here but methinks energy and the economy is inheritantly (sp?) linked together.

 

[acemcmac]

Originally posted by: alphatarget1

Originally posted by: acemcmac

Originally posted by: alphatarget1
I won't be surprised if ING starts to give 4% on their savings account by the end of the year. The price of gas is going to drive inflation up a lot and possibly ruin the economy. But then it's only my intuition, I'm no economist. I like to calculate beam deflections instead 😛

engineers++

I doubt it will "ruin" the economy so to say.... I read a report on retailers yesterday that said it was signifigantly hurting discount retailers and made a huge dent in walmart's earnings <shrug>

The problem (IMHO IMHO IMHO) is that there is no huge productivty boom waiting to cure the economy of all-it's-ills like the dot-com boom erasing Regan debt... IMHO.... please feel free to critique

Fvck walmart. It'd be nice if gas raises to 4 bucks a gallon. Walmart will then be broke, muahahhaa. I'll be broke in the process.

Productivity is excellent, we're doing more work with less people. We're an oil economy and if indeed peak oil is near, then the economy is not going to do so well until we have converted to a different system. It's not just energy. All the plastic you use come from oil and stuff. I guess if they all started making non-thermosetting plastics (what's the other called... don't remember) we can recycle a lot of it.

What we need is nuclear energy in the transition & cut down on unnecessary consumption. I read something about the new technology where they put the uranium or something in a graphite ball and it's impossible for a meltdown to occur, really cool stuff. K I'm getting off topic here but methinks energy and the economy is inheritantly (sp?) linked together.

I think the answer to recycling is nuclear powered centrifuges 😉

 

[GeneValgene]

you can ladder your CDs at different maturaties so you don't sacrifice liquidity as much (i'm sure you're pretty familiar with this, as it is pretty common).

for example, take $20,000. divide it by 5 sets of $4000, and invest each in one a different CD, or rung. i.e., $4000 in a 1 year, $4000 in a 2 year, and so on. as the one year CD matures put that money in the now vacant 5 year slot, always pushing it to the furthest rung. this way, you have your money maturing at different times and you aren't lockin gup everything for 5 years

i agree that CDs aren't exactly high yield investments. but sometimes it is good to keep a portion of yoru savings in fixed income investnements that aren't affected by the volatility of the market.