Online Savings Accounts - High Rate CD Accounts | Saving Money for Kids » Retirement Planning

How a High Rate CD Account Can Dramatically Alter Investment Portfolio Risk

M.Sage — Tue, 24 Nov 2009 02:11:59 +0000

Did you know that a high rate CD can be an important part of your retirement portfolio? Did you know that combining a high rate CD with your retirement stock portfolio can substantially improve the risk/return profile of your holdings? Adding a High Rate CD Account Reduces Risk It’s true. Adding a low/no risk fixed income asset like a fully insured high rate CD (or portfolio of smaller CDs to ensure they have FDIC coverage) can dramatically alter the shape of your risk/return profile of your retirement nest egg. The beauty of adding a fixed income high rate CD (sponsored CD link) is that it sets a base-line return for a zero risk investment – which when combined with a portfolio of risky assets (stocks, ETFs, mutual funds, etc.) it creates a flat sloped line between zero risk (the risk free asset) and your optimized / efficient portfolio of risky assets. A typical portfolio of risky assets (even when perfectly / efficiently balanced) will have a long curve which typically ends somewhere around 6-8% standard deviation (risk level – meaning 95% of the time your portfolio results will be X +/- 12-16% – 2xStandard deviation). Given that typical stock market [...]

How a High Rate CD Account Can Dramatically Alter Investment Portfolio Risk is a post from: Online Savings Accounts - High Rate CD Accounts | Saving Money for Kids

High Rate CD vs. S&P 500

High Return Savings Account — Thu, 29 Oct 2009 01:15:37 +0000

I was wondering how high rate CDs performed against the S&P 500 the other day (yes I have too much time on my hands) and decided to take a look. In truth what really prompted me to start doing a little digging was the stock market nose-dive in March followed by the run-up in prices later in the year this year. In all honesty I picked an arbitrary start date based on the first web page I ran across with any historical data. That page had data as far back as 1993 so I figured, “Why not start there?” What was not arbitrary was the ending date. I took the ending date as year end 2008, which excludes the recent euphoria and rebound made via the easy monetary policy of the Fed and the Government Stimulus spending program. I thought that rather than cherry pick the best high rate CD for the period I figured I would just take the average 6 month CD APR from the Federal Reserve databank and compound it into an equivalent annual rate. These days I have been very strong in favor of short term investing, and each day the S&P 500 rises I grow [...]

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High Return CD | Where to Put Money in a Low Rate Environment

High Return Savings Account — Wed, 02 Sep 2009 16:07:11 +0000

I was looking for a high return CD the other day. Rates have been ridiculously low thanks to the horrible economy and awful business mismanagement by corporate executives but I still wanted a place to sock away at least some money in an interest bearing account. I honestly hadn’t had a lot of luck finding a high rate CD that was worth the holding period. Then it occurred to me… if I can park my cash in a decent yield liquid account until rates start rising again I won’t have my money caught up and destroyed by inflation. It Just Doesn’t Pay to Have Money Locked Up in a Low Rate Environment Putting your money into a high return CD can be a risky place for your money if the bank you give you money to is in danger of insolvency. Many bank advertisements online these days are trying to attract investors to buy their high return CD products. What I have been noticing in these ads is that at least a few of the higher rate CD offers are coming from banks that are either financially stressed or have already received TARP money. Why does that matter to you? [...]

High Return CD | Where to Put Money in a Low Rate Environment is a post from: Online Savings Accounts - High Rate CD Accounts | Saving Money for Kids