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CD Ladder with 20k

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Money Talk > Investing, Stocks and Bonds

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wyclef
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CD Ladder with 20k  Reply with quote  

What would be the best way to set up a CD Ladder with 20k?
Post Sun Apr 23, 2006 2:37 am
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Rolo
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You are young, why are you so conservative/risk-averse?

"Expect me when you see me."
Post Sun Apr 23, 2006 3:43 am
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wyclef
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Because I am self-employed and my income is hardly consistent and most of the time very low.
Post Sun Apr 23, 2006 1:40 pm
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Rolo
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Correct me if I am wrong, but I remember your being conservative with your SEP IRA as well.

Do you distinguish between cash reserves (for the 'feast or famine' income) and retirement?

"Expect me when you see me."
Post Sun Apr 23, 2006 2:49 pm
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efflandt
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If you do not already have a Roth IRA, your best bet would be to open a regular account at a discount broker that does not charge any annual or monthly fees, then a Roth IRA, and transfer the allowable annual contribution to that. Then you could keep some in money market funds, ladder some into CD's if they pay more, and maybe a mutual fund in the Roth.

In a pinch, any "contributions" can be pulled back out of the Roth IRA with no tax or penalty, and gains will grow untaxed if you do not pull them out until qualified. You can also pull out up to $10k of gains for 1st home purchase.

That would allow you to still have your emergency fund, and start compounding tax free gain if not needed.

Something to consider for short term CD's (1 yr or less) vs money market funds, is that those CD's are based on annual APY paid at maturity vs. MM rising interest compound daily (until rates stop rising). For example Fidelity Select Money Market (FSLXX) went from 4.43% 7 day yield compounded to 4.53% for the month as of 3/31, to 4.51% compounded to 4.61 4/21. While their are some CD's paying 4.8-5% for 6 mo to 1 yr or more, you would probably be lucky to get a CD more than 4% from a big bank. For example BoA is 2.48% for 6-11 mo and 3.21% for 1 yr for under $10k CD, and Chase is 4% up to 3 yrs (except 4.6% 7 mo $10k min. special).
Post Sun Apr 23, 2006 3:18 pm
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wyclef
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so about the cd-ladder...
Post Sat Apr 29, 2006 3:31 pm
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jwhite622
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quote:
Originally posted by wyclef
so about the cd-ladder...


My wife and I just went through our credit union for her IRA--

They gave us a 6 month @ 4.95%--pretty hot deal, but the IRA was through the bank (roth)--so they gave us their IRA CD deal--I agree with the post earlier--smaller banks(CU's)=higher interest rates...

They told us they could get us a 3 month @ 4 % when we broke the 25000 mark on her account...(currently 9.4)--which can equate to 16% over a year if the bank is willing to work with you, but their might be some laws against that...???
Post Sun Apr 30, 2006 12:40 am
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anthonygodsen
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Have you thought about investing in stock market with 10% to 20% return every month?
Post Sun Apr 30, 2006 8:11 am
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wyclef
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I know very little about stocks. Wouldn't know where to begin.
Post Sun Apr 30, 2006 4:49 pm
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jwhite622
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quote:
Originally posted by wyclef
I know very little about stocks. Wouldn't know where to begin.


That's doesn't bode well for you...do you not believe in educating yourself???

Well...the first place I would start is "How to Make money in Stocks" by Oneil... or One up on the market by Lynch...then I would probably look into Technical Analysis by Michael Kahn...next I would have to say study candlesticks...steve nisson is pretty concise and simple to understand...

Don't allow the unknown to keep you from immense profits!

J
Post Sun Apr 30, 2006 6:05 pm
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efflandt
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jwhite622, is that really 4% in 3 months? Or more likely 4% APY (per year), which is really only 1% each 3 months?

I heard on the radio last weekend that 6% CD's are available now, but I did not catch where (I think a credit union), or details (time frame or minimum deposit).
Post Tue May 02, 2006 12:32 am
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anthonygodsen
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wyclef, stocks and deriatives are not as difficult or risky as most of people think. the most important things is dicipline.

to start, u just need to open an account with a broker, eg interactivebrokers.com. Then fund some money (min. $2k), then u can start trading.
Post Tue May 02, 2006 10:51 am
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