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

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 Interest Savings Account Online Makes Sense

High Return Savings Account — Thu, 19 Nov 2009 21:13:40 +0000

Having a high interest savings account with an online bank these days just makes sense. I don’t particularly care whether you choose a money market account, a savings account, or even a high rate CD for that matter. Whatever account type suits your needs, you are far more likely to earn a respectable rate of interest on your deposits. Online High Interest Rate Savings Accounts Keep Up with Inflation The nice thing about using an online high interest savings account is that the competition for deposits is so high that online banks are forced to quickly adjust their interest rates to market conditions. If rates suddenly start rising at other banks, your online bank is going to follow suit in order to remain competitive. Given that savings account interest rates rise and fall with real interest rates and inflation it only stands to reason that a online high interest savings account is going to keep up with inflation. Aren’t Savings Accounts for Old Folks? The old thinking was that putting money in a savings account or CD was for retirees living on a fixed income – but I’m betting more than one 40-something year old has watched his or her [...]

High Interest Savings Account Online Makes Sense 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 [...]

High Rate CD vs. S&P 500 is a post from: Online Savings Accounts - High Rate CD Accounts | Saving Money for Kids