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I disagree with this. If you are semi-retired like me, you need to have enough cash on hand to weather a market downturn of 1-3 years. That way you are not sell
by hwstar 11y ago
I disagree with this. If you are semi-retired like me, you need to have enough cash on hand to weather a market downturn of 1-3 years. That way you are not selling stocks at fire sale prices to keep a roof over your head and food on the table.
- icebraining 11y agoWho said anything about the stock market? Short term CDs usually have a fixed rate, you don't ever sell them at a firesale price.
- hwstar 11y agoCD's are terrible investments at the moment. A 1 year CD doesn't offer a much better rate than a FDIC money market account, and I certainly would not invest in a longer term CD at the moment. When interest rates tanked, I moved all of my CD's to money market accounts when the term was up. What is key is to only open a money market account at an institution with a long term track record of staying above average on rates compared to thier competition. You want to avoid the institutions which constantly raise and (and then lower) thier rates. Bankrate.com is a good way to research these.
- ac29 11y agoA 1 year CD is a terrible investment, but a lot of 5 year CDs have very generous early withdrawal penalties. Unless you are making over 2% in your FDIC-insured money market account, a 5 year CD is probably a better investment.
- hwstar 11y agoThe withdrawal penalties can be anywhere from 6 to 30 months interest for a 5 year CD. 6 months seems pretty rare with only a few institutions offering it.