My bank offers 1-7 year term IRA Certificates with a rate of 4.88, and an APY of 5.00% for the 7 year cert. Im new to investing. Should I just get a money market account, or commit 2000 to this certificate thing?
2007-06-20 23:43:36 · 3 answers · asked by PieBalls 3 in Business & Finance ➔ Investing
If you have $2000 you do not need for 7 years, you will earn closer to 10%-12% by buying SPY or DIA tracking stocks. Since 7 years is probably long enough to ride out market ups & downs, why take the risk your money will only grow 5%? Since inflation is running at 2-3%, that means your money will be worth LESS in real dollars when the "certificate" matures! What sense does that make?
Buy a Growth & Income mutual fund instead, something with very low expenses. You will fair FAR better...
2007-06-21 00:04:05 · answer #1 · answered by Anonymous · 0⤊ 0⤋
A lot depends on your age.
If you're fairly young, avoid CDs. Over time, you can do MUCH better.
Look closely at opening an IRA at a brokerage like Fidelity.
Easy to do, good service, safe, easy online access.
As a novice investor, I'd stick with index funds. They mimic the performance of an index such as the Dow, etc.
My favorite is the Vanguard Total Stock Market Index Fund Investor Shares (VTSMX). VSTMX is the ticker symbol.
Depending on the brokerage, they may have something similar.
Call a couple of the online brokerages and talk to the reps.
Don't settle for such a measly return of 5%. Over time, it makes a BIG difference.
Good luck!
2007-06-21 06:57:08 · answer #2 · answered by ckm1956 7 · 0⤊ 0⤋
How does it fit with your "asset allocation" plan? What is the timing and "plan" for this cash? It would be unwise to get an specific answer for this question from people you don't know, that don't know you, whose qualifications can't be checked. Whose motives can't be checked.
You are your best adviser. Learn about "asset allocation" and you'll have a great foundation to invest upon.
2007-06-21 07:35:49 · answer #3 · answered by Common Sense 7 · 1⤊ 0⤋