3 MONTH CD'S

[CRABBY JERRY]

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.

 

[cute fuzzy bunny]

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.

 

[dex]

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.

 

[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?

 

[cute fuzzy bunny]

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.

 

[Cut-Throat]

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.

 

[CRABBY JERRY]

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.

 

[brewer12345]

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.

 

[cute fuzzy bunny]

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.

 

[Jarhead*]

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

 

[Howard]

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

Keep 'em coming.

 

[CRABBY JERRY]

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.

 

[cute fuzzy bunny]

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.

 

[CRABBY JERRY]

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

 

[HFWR]

Oh, that's really him...

 

[cute fuzzy bunny]

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