CD's vrs. Savings Accounts Which is Better? (1 Viewer)

[Glenn Overholt]

I have a ton of spec sheets with different percentages on them, but I am having trouble understanding it. Why are there so amny options and what should I look for to get the best return? I had thought that the longer the 'bank' keeps your money and you can't get at it, the higher the return would be, but the charts don't agree with my twisted mind.
Help!

Glenn

 

[Jonathan Smith]

The longer the term on the CD, the higher percentage you should get at the same bank. A different bank may have different rates altogether. CDs should have higher percentages than savings accounts (again at a given bank). Rates can differ substantially between banks, so maybe that has something to do with your confusion?

 

[Paul D Young]

CD's vrs. Savings Accounts

Well due to my purchasing too many CDs, I have nothing in my savings account. Since I enjoy my CDs everyday though, I'll have to go with the CDs.

 

[James Q Jenkins]

I prefer a Money Market account to either a CD or a Savings account.

 

[Glenn Overholt]

Phew! I see why I'm getting confused now. I've got Money Market available with the savings accounts, and those rates are better than the regular ones.

The CD ones aren't tied to Money Market. I'd guess that this rate goes up and down with something, but if it's the stock market forget it!

Glenn

 

[DaveF]

"Better" depends on your needs and financial situation. CDs generally provide higher interest rates than a regular savings account and can be better than a money market account. The trade-off is you can't withdraw the money (without penalty) until the CD is mature. The longer the term of the CD, the higher the interest rate.
And unlike buying stocks or bonds, CDs are risk-free since they are FDIC insured, like savings accounts.
I think CDs are just one part of an overall savings and investment plan. And if you're just starting out, but do have a healthy savings account, they are a good next step.
Of course, I'm just some guy on the web, so take what I say with a grain of salt

 

[SteveA]

Right now, the interest rates are pathetically low on savings accounts, money markets, AND CDs - so don't expect a high return on any of them.

That being said, I prefer a money-market account because the interest rates are higher than regular savings accounts, you are allowed to write checks against the account (3 a month), and there's no penalty for withdrawals. And the accounts are FDIC insured to boot. Unless you're definitely going to be locking the money away for a long time, money market accounts are the way to go. If you're definitely not going to touch the money for 5 years or so, you should think about a more aggressive investment, such as (gasp!) stocks or mutual funds.

Anyone else think that now is a GREAT time to buy stocks? I certainly do.

 

[John_Kiger]

I agree with DaveF as to the safety of CDs vs. outside investments. A savings account can offer immediate access without penalty, however, beware of service charges on low balance savings accounts. The norm around here is a service charge monthly for savings balances under $100. When rates are 1/2%, who cares about rates anyway. Sometimes a 0% no frills account is the best way to avoid service charges.

--service charge hater
John

 

[Josh Lowe]

It is an excellent time to buy stocks.

A certain biotech company recently announced it had an HIV vaccine in 3rd stage FDA trials, with initial results coming early next year. I bought several shares of this company at $5.65 each. This was before the market did its ugly little nosedive last month. I ended up selling them at $6 something and did OK. I just checked that company today and their stock is now at _$9.53_. If I had held I would have made a killing. And I am a complete amateur when it comes to picking stocks - all you need to do is be observant, patient and do your homework and you can profit nicely even in this "bad" market.

 

[MikeAlletto]

And I am a complete amateur when it comes to picking stocks

If you are in it for the quick buck you shouldn't be in the stock market...go to vegas or something, it'll be more fun. If you believe in the long haul then open a Roth IRA or something like it and contribute to it each year.

 

[Philip Hamm]

Anyone else think that now is a GREAT time to buy stocks? I certainly do.

Totally agree. But like some others I prefer the Money Market accounts. They are as safe as savings, but with generally higher interest rates, and the money is avaiable without penalty in case of emergency.

 

[DaveF]

Anyone else think that now is a GREAT time to buy stocks? I certainly do.

I think this is a decent time to buy a broad variety of stocks (e.g. mutual fund) since the market is down so low and seems to be near bottoming out. But it's a bad time to buy individual stocks since the recession may yet linger or "double dip" and many companies may still tank.
But if you're just starting an investment routine and don't have a lot of disposable cash, this is a bad time to buy stocks. Better to start with savings, money market, and CDs as the original poster asked. Interest rates suck currently, but they are still positive (unlike with many stocks :frowning.
Another option is to open an account with a Credit Union. They tend to have slightly better rates than Banks and are still FDIC insured.
And don't forget that the single best investment has been owning a home. It's not a guarantee but in general homeowners have had much better investment returns on the house than on their stocks. (so says a jealous apartment renter )

 

[Todd Hochard]

If you are in it for the quick buck you shouldn't be in the stock market...

I believe this also, but check this out-
I'm looking over my abyssmal performance (same as everyone else's) from the last two years. I decided to break it out into categories- my short term "trades", and my long term investments. The trades were quick-buck things, and the investments (largely mutual funds, with some individual stocks) were meant for the long term. My trades (over 40 in all for past two years) have made several THOUSAND dollars, while, of course, the investments have lost as much and more.
So from my point of view, the market still has way better odds than Vegas.

As a long term investment, the two best bets are your home, and stocks.

Todd

 

[James Q Jenkins]

And don't forget that the single best investment has been owning a home. It's not a guarantee but in general homeowners have had much better investment returns on the house than on their stocks. (so says a jealous apartment renter )

Not to mention the tax benefits of mortgage interest payments.