johnnymk

I got a 90 day CD which just expired. I am considering a 5 year CD because I believe that within a year or two we will be in a recession and rates will be heading southward during that time. It appears that the Fed will be raising rates at least for the next six months.

It also appears that long term CDs may have peaked in spite of the increased Fed rates. I use bankrate.com as a reference.

Should I lock in now or wait for another six months, buy a couple more 90 day CDs and hopefully get a higher 5 year CD then?

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MikeD

Not sure why you think this. The economy may slow, but a recession? Multiple quarters of negative growth? I don't see that happening...

I would stay short term and see how things play out. If things start heading south, you can move to the longer term CD.

As always, my advice is to do what makes you comfortable. You gotta be able to sleep at night.

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smeakim

Here are some rates from a Bank in Chicago. My parents bank through them. Pretty good 7month rate if you have 10K. But for a lower amount put it in ING, then if something comes up you have direct access to the money. 10K for 7 months at 3.94 nets you about 158 after taxes. 3.15% at ING in a savings account nets you 126. That is 32 dollars. It all depends on if you want your money tied up. My thought is 32 does not make or break me, so I would rather have access to the money without having to worry about penalities or fees for trying to take out the money early. 15K at 60 months at 4.43 2531.29. 15K at 60months at 3.15 1,742.57. You are letting them hold your money with out easy access for a net value of 65 a year. I think stay with the short term even with lower rates or put it in ING. No mins and you get 3.15%. Most banks require a large min on a 5 year CD. Almost forgot.... The economy is not going to go into a recession.

http://www.lasallebank.com/cds/rates.html

docsoc

I really think that locking your money away for five years is a bad call right now. If you think a recession is two years away, I would wait a bit before locking in. Rates are very likely to go higher before they go lower.

I wouldn't do the ING thing either though. There are plentry of banks with much higher interest rates. Some almost as good as a 5 years cd. 1 has a 4.50% rate for the first three months (Everbank). Presidential just raised their rates too. Now 3.82% or thereabouts.
Good lists can be found at bankrate.com or on bestcashcow.com (which focuses in solely on the shorter term stuff, but covers it quite well-I think.)

InfiniteNothing

Interest rates are on the rise. IMHO invest liquidly.

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As for our common defense, we reject as false the choice between our safety and our ideals.

johnnymk

Rising interest rates, high energy costs resulting in inflation, housing price bust and its after effects, increasing unemployment, high trade deficit, passage of CAFTA, low savings rate, pension systems going bust.

Pick one or pick them all. People just won't have the money to buy things with cash or credit, causing a severe recession or worse.

smeakim

I am supposed to transfer and transfer and transfer my money back and forth for $70 bucks then if you look at everbank you have to have 100K for 2.26% again ING less up front but better overall. Presidential bank looks better but I would rather have my money with someplace that is very reputable and been around longer that 1995. JMO. We are not going to go into a recession until the point at which all the people who have interest only loans try to refinance or their arms come up. Then you will see the market flooded. Again housing is not a short term investment. You should look at you first home as a place to live and for the tax break. If you don't make any money you don't. If you do great. Any other property must be looked at as an investment and when those arms and interest only loans have to be refinanced in a few years watch out.

brainsmile

stay liquid.

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