CDs & Investing
The year 2008 could be challenging for savers and investors. A quick review of 2007 shows a housing debacle and credit crunch that helped slow the economy and strong-armed the Fed into cutting short-term interest rates. The American bull market showed its age and investors responded by plowing more money into global stocks, especially any stock that sounded remotely Chinese. Top it off with a falling dollar that shows no sign of bottoming and it's no wonder that many consumers are concerned about getting lower returns on their savings and taking on more risk in the stock market. Here are some ideas that may help your bottom line stay profitable:  | | Profitable tips | | | |
High yields -- don't settle for less
Getting the best returns on your investments means that even your savings account has to work hard. There is no reason to settle for the low-yield savings or money market accounts that are the standard offerings at banks across the country.
Bankrate's spring 2007
survey of passbook and statement savings accounts shows that the average annual yield paid by banks on a statement savings account is 0.35 percent, while a passbook account earns 0.44 percent. That 0.35 percent mean's $35 interest for leaving $10,000 in a statement savings account for a year. Thanks a lot.
Online banks are usually your best bet for high-yielding savings and money market accounts. Bankrate's
high-yield database can help with your search. Throughout most of 2007 you would have had no problem finding banks that were paying 5 percent or better on high-yield accounts. That's $500 for that $10,000 deposit; a $465 improvement over the traditional accounts.
Certificates of deposit are another area where a little time spent
shopping rates will result in significantly better returns. For most of 2007, the average annual yield for a one-year CD was approximately 3.77 percent, which equates to $377 in simple interest on that $10,000 deposit. Again, the highest-yielding accounts were paying 5.50 percent or better; a $173 difference in interest earned.
Unless the economy suddenly ratchets into high gear, prompting the Fed to do an about-face and raise short-term rates, expect lower yields on your short-term accounts throughout 2008. Nevertheless, you should seek the highest yields available on your savings account and CDs. Offset the falling dollar's effect on your retirement
The U.S. dollar has fallen and shows no sign of getting up. Too often we think about how a weak dollar hurts us overseas, but consider how it can set us back at home, too.
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