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3 MONTH CD'S
Old 01-31-2006, 07:23 PM   #1
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3 MONTH CD'S

Hello everyone, I have been reading these posts for some time and have learned and enjoyed all the banter back and forth. I have a few minutes and wanted to know if you were to take out a cd for 4% for 3 months and when it came due, reinvested again the same way for the next 3 months , for a year total, would that be in effect a16% return. I have many other questions to posts however I don't have time right now but will do so in the near future. Thanks and nice meeting you all.
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Re: 3 MONTH CD'S
Old 01-31-2006, 07:25 PM   #2
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Re: 3 MONTH CD'S

Nope, the 4% is an annualized return. You'd get an effective ~1% for your three months.

You can get 4% from a lot of money markets at credit unions and brokerages like vanguard. Vanguard in fact has several paying over 4%. You can also link a money market shop like ing direct or emigrant direct to your checking account and electronically transfer funds between them. Those are paying in the 4% range.
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Re: 3 MONTH CD'S
Old 01-31-2006, 07:29 PM   #3
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Re: 3 MONTH CD'S

Crabby Jerry,
The annual return would be 4+%. not 12%. Don't post your other questions.

I think this question point out that you need to read and learn about investing.
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Re: 3 MONTH CD'S
Old 01-31-2006, 07:31 PM   #4
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Re: 3 MONTH CD'S

Would you not get 4% of the amount that you put in or would it be 25% 0f the 4% . I would think that if they say 4% for 3 months for instance if I put in $10000.00 in 90 days I would get back $10400.00 right?
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Re: 3 MONTH CD'S
Old 01-31-2006, 07:40 PM   #5
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Re: 3 MONTH CD'S

You would receive 1/12th of 4% of the amount every month, either added to the value of the cd or deposited into your checking/savings acct; which way is your choice. If added, it compounds. Thats why you see some cd's show two rates, one slightly higher. The slightly higher one is the effective rate if you compound the interest into the cd.

If you took a cd for 10000 @ 4% for three months you'd have 10000 plus ((10000 *.04) / 12 * 3) in interest.

Do a google for "certificate of deposit calculator". You can plug in the amount, the term, the rate and so forth and it'll give you an 'amortization table' of the amount you'll get, by month and year.

Note the cancellation terms of the cd as well. Some have you forfeit a lot of interest...or all of it...if you cancel the cd before the term expires. Some only take a month off a 1 year or 6 months off a five year if you close it. That can make a big diff if you need the money for an emergency.

Except for 3+ year terms, a money market makes more sense.

You may go ahead and post any questions you want. Somebody will probably take the time to answer them more or less politely.
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Re: 3 MONTH CD'S
Old 01-31-2006, 07:50 PM   #6
 
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Re: 3 MONTH CD'S

Quote:
Originally Posted by CRABBY JERRY
Would you not get 4% of the amount that you put in or would it be 25% 0f the 4% . I would think that if they say 4% for 3 months for instance if I put in $10000.00 in 90 days I would get back $10400.00 right?
All interest rates are quoted as Annual Percentage Rate (APR) - You would only get back $10400 if you had your CD invested for the full 12 months.

Since, it would only be for 1/4 of the 12 months, you would get back $10,100.

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Re: 3 MONTH CD'S
Old 02-01-2006, 03:45 AM   #7
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Re: 3 MONTH CD'S

Thanks, I guess the fine print of annual percentage is what I over looked. Why would anyone be interested in locking in if as Cute and Fuzzy Bunny said, you can get 4% in most big fund families. Thanks also Cute and Fuzzy about the above poster telling me not to post. I read a few other forums and I'd expect a comment like that there.Funny how if I told him what I've saved and invested in my 41years he probably would have a little more respect. I've always listened to older people and tried to learn from them and often had to deal with other people's jealously of what I have. Nobody gave me any of it and comments such as remind me of a fella years ago. I asked him why something broke the way it did, and his response was" curiosity* killed the cat". I guess he didn't want me to learn what he new.I'll never forget that, and for that reason if I don't know something, I'll ask and not be ashamed. Thanks again guys.
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Re: 3 MONTH CD'S
Old 02-01-2006, 07:18 AM   #8
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Re: 3 MONTH CD'S

Quote:
Originally Posted by CRABBY JERRY
Why would anyone be interested in locking in if as Cute and Fuzzy Bunny said, you can get 4% in most big fund families.
Probably the biggest reason you might want to lock is is if you think rates will fall in the future. So you can get 4% risght now on short term money, but in a year you might only get 3% or 2%. Of course, you might also get 5% or 6%...

The other reason is that you might be offered higher rates to lock in. So you can get 4% on short term money or 5.75% on 5 year CDs at PenFed. Is that enough to prompt you to lock in for the longer term? That's up to each investor.
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Re: 3 MONTH CD'S
Old 02-01-2006, 09:27 AM   #9
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Re: 3 MONTH CD'S

Yeah, well, Dex is under a lot of pressure right now. He's hanging from a rock face or something somewhere and doesnt wanna move.
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Re: 3 MONTH CD'S
Old 02-01-2006, 10:55 AM   #10
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Re: 3 MONTH CD'S

Quote:
Originally Posted by CRABBY JERRY
I've always listened to older people and tried to learn from them
CRABBY JERRY: You're o.k. in my book.

If my adult children had your philosophy, I wouldn't have a complaint in the world.

Any time you have a question about anything, feel free to give us a buzz.

Take Care, Jarhead



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Re: 3 MONTH CD'S
Old 02-01-2006, 10:59 AM   #11
 
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Re: 3 MONTH CD'S

CRABBY JERRY, there is no such thing as a stupid question.?

Keep 'em coming.
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Re: 3 MONTH CD'S
Old 02-01-2006, 02:11 PM   #12
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Re: 3 MONTH CD'S

Thanks guys, I knew that the reply from Dex was not the norm on this forum.* I'll keep reading and learning from the best group, a bunch of people that are out here making it happen and not a bunch of talkers.* You guys have a great night.* Talk to you soon.



P.S. CFB I called local branch bank that offered the above 3 month CD and the lady there said that you do get 4% at the end of 3 months. I asked how much I would get back on $10,000 and she said about $10,100. I explained as you did that that is not 4% for 3 months, it is for a year. She was totally baffled and didn't understand what I was saying. You were right, it is 1/12 per month which comes out to the $100 for 3 months. So I guess the bank people aren't sure of what they sell.
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Re: 3 MONTH CD'S
Old 02-01-2006, 02:20 PM   #13
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Re: 3 MONTH CD'S

You're gonna have to get a lot less nice if you're gonna warrant that nickname...

By the way, some of us might be dogs or 15 year old girls from missoula.

A few of us might the same guy that keeps logging in under different names.

Maybe theres really only one or two of us out here.



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Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
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Re: 3 MONTH CD'S
Old 02-01-2006, 02:24 PM   #14
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Re: 3 MONTH CD'S

So your saying that's not really you on the left of my screen!

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Re: 3 MONTH CD'S
Old 02-01-2006, 02:40 PM   #15
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Re: 3 MONTH CD'S

Oh, that's really him... :P
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Re: 3 MONTH CD'S
Old 02-01-2006, 09:36 PM   #16
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Re: 3 MONTH CD'S

I'm afraid not Jerry. Thats the inspiration the keeps ME from getting crabby.
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