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Thomas D
02-10-2010, 01:23 PM
I'll put this in the POTUS Place, as the CD rates might be a reflection on the current political situation.

Beating low CD rates. Setting aside the pros and cons of CD's, I have considered the following:
2 year CD is 2.0%
10 year CD is 3.5%

Putting 25k into a 10 year CD at 3.5%. Taking it out in two years and paying the penalty and reinvesting at a possible higher rate 1 or 2 year CD.

The 2 year CD would earn $1,500
The 10 year, if withdrawn at 2 years, would earn $ 2625,less a $437 penalty or $2187.

This is almost $600 more for the two year period.

Seems the only way I could get hurt is if the rates two years out are less than today.

Is my thinking correct here? Am I missing something?

subroc
02-10-2010, 01:28 PM
No financial advice here, however the 10 year is yielding 3.6...

http://www.reuters.com/article/idUSN0923557520100209

menmon
02-10-2010, 01:43 PM
Check your math on the interest earned, it is not correct, but you plan makes sense, assuming the penalty for early withdraw is 3 months interest.

menmon
02-10-2010, 01:45 PM
the other reply suggesting the 10 year treasury does not make good sense, because as interest rates rise your principal investment will be discounted accordingly

menmon
02-10-2010, 01:52 PM
You have to make your own judgement of where interest are going, but in my opinion, in 12 to 18 months rates will be considerably higher, so do the math as to what you would loose if the 2 year rate was 3% and the 5 year rate was 4.5% a year from now and you wanted to exit at 1 year.

subroc
02-10-2010, 01:52 PM
No suggesting about it, just providing information on the treasury.



No financial advice here...

TN_LAB
02-10-2010, 02:57 PM
consider build america bonds

Goose
02-10-2010, 07:23 PM
You'd be better off investing in groceries and bullets for when Obama and his keynesian pals push the dollar off a cliff. At least with groceries and bullets you'll be able to barter for other stuff. You can probably get your house painted for a can of beans or your yard mowed for a year for a box of 9mm. Swap a bag of rice for a roll of toilet paper or a candy bar for a pack of cigs:)

We live in Cuba now.

M&K's Retrievers
02-10-2010, 08:17 PM
You'd be better off investing in groceries and bullets for when Obama and his keynesian pals push the dollar off a cliff. At least with groceries and bullets you'll be able to barter for other stuff. You can probably get your house painted for a can of beans or your yard mowed for a year for a box of 9mm. Swap a bag of rice for a roll of toilet paper or a candy bar for a pack of cigs:)

We live in Cuba now.

A friend of mine who escaped from Nazi Germany always had a tremendous stash of cheap whisky and other spirits. She said in time of need, you can barter this commodity easier than anything else for what ever one needed done. Just a thought...

Goose
02-11-2010, 12:02 PM
A friend of mine who escaped from Nazi Germany always had a tremendous stash of cheap whisky and other spirits. She said in time of need, you can barter this commodity easier than anything else for what ever one needed done. Just a thought...

A great idea! Base liquors have a very long shelf life and make great barter! Stock up on the booze and you'll no doubt survive longer than most and you'll be the most popular on your block! Or cows. Raise some cows on your farm for trading with your neighbors that don't have land. Excellent investment but watch out for the cow thieves. We shoot horse/cow thieves in Texas:) Great sport!

We live in Cuba now.

TN_LAB
02-11-2010, 12:49 PM
Precious metal also has a way of being worth something when things get crazy. That's why I'm stocking up on lead. I find that you can store them conveniently in clips and magazines. :D