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Old 06-07-2017, 01:55 PM   #21
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For the past few years we have been able to get 6%-7.25% on ST cd's ( in local currency) with less than 3% inflation. Because of the appreciation in the Dollar it did not make sense to buy them. Lately, we have seen the dollar stable
at a lower level and I am considering moving out of RE and into CD's for a good chunk of money.
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Old 06-07-2017, 02:24 PM   #22
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Why do you say this? Through a large portion of the 80s and 90s, interest rates available on accounts and CDs was frequently higher than inflation, sometimes by a comfortable margin.



Ha


I think people forget this, Ha. I remember in late 90s around 1998 getting a sweet 8% CD. As late as somewhere around 2006 I got a 6% CD. These were rates above inflation. But economy was humming along and banks needed the deposits, locally anyways..
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Old 06-07-2017, 02:28 PM   #23
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Reminds my of years ago (1976) when we were being transferred to Cincinnati on a company relocation. A friend of mine had just moved to Cincinnati and told me he had to pay 18% to get a mortgage. We ended up buying a new home from a local builder who must have had a great connection with his bank. We got a great deal on a mortgage at 8.5%. Most we ever paid for a mortgage. That was back in the days of Jimmy Carter gas rationing when you got gas only on certain days, based on your birthday or address or license plate number or something like that. High interest rate period. My folks also had 8 and 9 % CD's. Oh, the good old days!
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Old 06-07-2017, 06:15 PM   #24
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Idnar--
If your memory is good enough to recall those 13% MM rates, I'm sure you'll remember the general Economic Climate back in the early 80's also.

The rampant inflation of that time (anybody save Gerry Ford's Whip Inflation Now buttons ??). Mortgage Rates were also 12 - 13% and the Housing Sector was stagnant. As I remember it, the Auto Industry was in the doldrums too as Detroit couldn't react to the gas shortages with efficient vehicles. When 2 of the major pillars of the Economy were staggering......there's not much to be hopeful about.




Yes I remember my company relocated in 1984 when mortgage rates were 13.5 %. The only way they could get employees to move was to pay down 5% points. And I remember spending lunch hours waiting in line to buy 5 gallons of gas. And then they would put out the "out of gas" signs. IIRC stations were also closed on Sunday.
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Old 06-08-2017, 05:37 PM   #25
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I just got an email notice form Goldman Sachs Bank (Formerly GE Capitol Bank) that they are raising their online savings rate from 1.05% to 1.2%. Not Bad.
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Old 06-08-2017, 07:18 PM   #26
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I just read that the projected inflation for 2017 is 2.1 %, so at 1.2 you lost 1 %, then minus the taxes you pay on the 1.2 % interest and its worse.
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Old 06-09-2017, 05:32 AM   #27
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Idnar--
If your memory is good enough to recall those 13% MM rates, I'm sure you'll remember the general Economic Climate back in the early 80's also.

The rampant inflation of that time (anybody save Gerry Ford's Whip Inflation Now buttons ??). Mortgage Rates were also 12 - 13% and the Housing Sector was stagnant. As I remember it, the Auto Industry was in the doldrums too as Detroit couldn't react to the gas shortages with efficient vehicles. When 2 of the major pillars of the Economy were staggering......there's not much to be hopeful about.
Right. I'm NOT hoping for higher interest rates! Especially with a non-COLA pension as part of my mix.
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Old 06-09-2017, 03:02 PM   #28
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In order to see the rates going back to normal, we need to see a booming economy with thirst for investments. Since 2008 we see only "great talk of expansion" while actual growth is very modest as huge debt, deficit and most importantly hugely negative trade deficit drugging down the growth.
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Old 06-09-2017, 08:08 PM   #29
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I think they'll go back to low-mid single digits in time, but not for years. More likely get to about 2% and hold there for a while.

Remember, a big driver of the bull market has been lack of anywhere else to put cash (especially after the RE bust) to grow money. Make it even a bit attractive to put your money in a good CD ladder or MM savings account, and the balance tips again. If you could make 6% with no risk in the bank, why put it in an index fund for a chance at 7%. The markets shudder at the thought of capital fleeing.


Isn't the market average 7% after inflation?
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