Do you think 5.5% guaranteed interest per year on a CD from a bank is a good deal?

[davidsonj73]

Why or why not?

 

[Dr.Suave]

Im getting more than 11% on my bank if Im not mistaken.

 

[davidsonj73]

Im getting more than 11% on my bank if Im not mistaken.

Which bank?

 

[Dr.Suave]

Which bank?

HSBC

 

[BackInTheGame78]

No because I can get that same rate on an online savings account and not have to tie my money up for any length of time.

 

[jaygreenb]

Why or why not?

Getting 5.5% on cash is good right now considering it is essentially no risk and is immediately liquid or close to it. Would just look for shortest period that needs to be locked up for, if any at all. Several avenues that include savings accounts, t bills, money market and cd's. Depending what your needs are you can adjust to when you need it available. Personally would need a low risk, high upside asset with a much greater chance of return to consider putting in another asset class. I place a large premium on the low risk and liquidity for this current period of time.

 

[jaygreenb]

Im getting more than 11% on my bank if Im not mistaken.

USD? can't be. If another currency you have to factor in inflation rate as well

 

[Divorced w 3]

If you think interest rates have peaked and you intend to keep that money in cash for the stated length of time then yes it’s a good idea to lock it because a savings account will drop the second interest rates start to drop where your cd will be sitting there collecting interest.

buy this through a brokerage account so that your cd is marketable. If rates drop you can capitalize on the open market if you want to turn them in. If you own the cd directly at your bank they’re actually going to make you forfeit your interest if you go to break.

 

[FlirtLife]

Im getting more than 11% on my bank if Im not mistaken.

That sounds like corporate junk bonds, which have a higher risk of -100% return. There is no chance the risk of your bond is the same as the risk of a US Treasury paying 5%.

In the US, bank accounts are FDIC insured, so a 5% safe interest rate is reasonable. Comparing to corporate junk bonds is not.

 

[Robert28]

If it’s a short term cd absolutely. I have been rolling over a 9 month cd at my bank twice now becsuse the interest keeps increasing everytime it matures and it’s only 9 measly months. I just put $10,000 in it though, I wouldn’t go dumping an amount of money you’ll think you’ll need in one. I can tie up $10,000 and not worry about it though.

 

[CAPSLOCK BANDIT]

Investment is based off of one thing, like everything else, supply and demand.

Confidence is very important in the financial world; for example, if you read the fine print of most bank accounts, you'd see that purely from a legal stand point, they are only responsible for 60-70% of your total balance, meaning they could legally "Lose" 30-40% of your money and face zero consequence for it legally, however where the hit will be taken is in confidence.

So why would these banks offer a high rate? Well, you have to understand where your money is going once it's in the bank... It simply gets invested, so if they are offering you 5.5% on your money, how much money do you think they are getting on their investment using your money? Obviously higher than 5.5%.

Confidence in certain stocks right now are absolutely rock solid, some people due to inflation are broker than they have ever been, while others are richer than they have ever been.

Will your money get lost in the bank? Highly doubtful, but are you losing money by putting it into the bank? Yes.

If you can afford to let the money sit, why play safe?