Why are CD rates so low? (transaction, fees, stock, investments)

[mathjak107]

Originally Posted by justNancy

Yes, that is true. However, it's better than starving or living in the street. It's not always a choice. You mean like buying real estate in 2005 or 2006? You used the words "financially ignorant." I completely agree there are people who foolishly blow money that could have been invested wisely, but most people are waiting every week for a paycheck. If they're lucky, then they are able to put away a small nest egg in an IRA. I agree that many retirees are living hand to mouth and waiting for their Soc Sec checks. But why do you think it's their fault? Could it be that they worked all their lives and made enough to pay their bills and feed their families? Maybe they wanted to send their children to college? I know a couple whose adult son was diagnosed with cancer and they're helping his family with their retirement savings. What about being the victim of a disaster? Yes, but you are crunching numbers and forgetting that there are people with real life situations behind them.

with all you typed the common answer to every situation you listed is "they have no savings to get interest on " they are spending it all just to live so what interest rates are is a moot point.

they have no real money saved to get interest on. they are far better served by what the low rates are saving them from spending. if the cost of money was higher for the companies involved then every goods and service would be priced higher if that company runs on financing.

again the fact is those that do save do it through retirement plans and little of that just goes into cash and if it does then it is their own lack of planning hurting them and nothing else.


the web and the media flood us with such bull-sh*t every day but 99% of it is just thoughtless garbage with no actual basis. it is usually slanted with an agenda that only looks at what they want to slant.

there is no financial topic pertaining to personal finance i cannot argue from both sides. you tell me which opinion you want me to slant and i can do that. but if you want me to really weigh the facts fairly there is only one right answer.

i remember once in economic class back in the 1970's when inflation was soaring the teacher drew a graph of inflation trending on the board. he then drew another graph of what people do in their spare time in times of rising inflation.

well there was a graph that mirrored the inflation graph to a tee and it was number of people going to the movies.

the teacher said "there you have it, living proof going to the movies causes inflation."

he was kidding but it was a valuable lesson that anything can be slanted to make a point no matter how far from reality it is.

i never take something for face value. sometimes you have to really think about what even experts supposidly say and see if it makes sense.

when bond expert bill gross announced he was dumping treasuries and not only that shorting them when qe1 ended i couldn't understand that move.

logic says if printing money for qe1 was inflationary then it only seemed to reason not printing it was deflationary, which is good for bonds.

bond guru jeff gundlach said the same thing but was considered out in space with that logic.


i can still show you the city data threads where i was told if that is what i thought then i am an idiot and do not unsterstand how bonds work.

really??????

well time proved bill gross was very very wrong and treasuries soared to levels beyond anything expected.

sometimes the logic of what the experts and media say have to really be questioned to see if what they are saying really makes any sense in the real world .


bill also called for single digit gains in the markets the last few years too. well looking out into the economy you can see why he said that .

however logic and math said otherwise. after the big pluinge stock valuations were very very low and logic said they have to come back to more normal levels. well bill miss-called again the biggest stock run ups in history.

don't get me wrong i think bill gross is brilliant but what he sucks at is fortune telling.

many times these articles sound good but in reality there is no basis in the real world for what they say.

it is not the fed punishing anyone like these stupid headlines proclaim , it is a poor economy world wide causing low rates. it is not somthing the fed came up with. every industrialized country in the world has low low rates some even negative rates on bonds . that is how you fight a poor economy.

that is how you give everyone more money in their pocket. by holding down financing costs of everything they buy and everything the middle class borrows since owing money is what the middle class did best.

with most americans owing more then they even have they are better served with cheaper borrowing costs since they have little savings anyway..

did you know half of americans who die have less then 10k in savings and 19% have zero ?

there are many reasons for it but the fact is it is what it is. do you really thing low rates on cd's matter.

"Nearly one in two Americans -- 46 percent -- die "with virtually no financial assets," or less than $10,000, according to a recent study by economics professors at MIT, Dartmouth and Harvard. In fact, 19 percent of Americans die with "zero" financial assets, the study found"

[DSOs]

Originally Posted by mathjak107

Interest rates are not punishing savers, a poor economy is...Low interest rates follow a poor economy...

The interest rates have been too low for dubious reasons; remember the relatively low interest rates during the 2000-2008 booming economy!? The real reason—as justNancy mentioned—is the punishment/intolerance of frugality. You guys’ are herding the decent common man into frantic monsters.

Originally Posted by mathjak107

If there is no food you have to move to where the food is.

Good advise for bulls/bison that used to live on the Dakota/Nebraska prairie.

Originally Posted by Sol Rosenberg

With my luck, we will see a 30-40% market correction now that my money is in there. Also, I don't need the principle to live off, but I would like to use the gains each year. That's why I would be content with making 35,000 off the interest from the CD's.

This person’s investment is making $35k/year, during the worse financial crisis in 80 years, & you want him/her to risk the market—what the hell is the matter with you mathjak107!? Why don’t you gurus’ invest with each other & stop preying on the elderly/simple living among us?

Originally Posted by mathjak107

The point here is that what is the safest becomes the riskist over time and the riskiest become the most reliable over time.

Yeah, when you have the FED/USGovt/Taxpayer as a guardian angel. You’re hilarious mathjak107; you’ll say anything to keep your portfolios’ solvent.

[Sol Rosenberg]

If the DOW was 14,000 back in 2000 and it's currently 13,3000, how did people make 3% + per year?

[mathjak107]

Originally Posted by DSOs

The interest rates have been too low for dubious reasons; remember the relatively low interest rates during the 2000-2008 booming economy!? The real reason—as justNancy mentioned—is the punishment/intolerance of frugality. You guys’ are herding the decent common man into frantic monsters.

Good advise for bulls/bison that used to live on the Dakota/Nebraska prairie.


This person’s investment is making $35k/year, during the worse financial crisis in 80 years, & you want him/her to risk the market—what the hell is the matter with you mathjak107!? Why don’t you gurus’ invest with each other & stop preying on the elderly/simple living among us?

Yeah, when you have the FED/USGovt/Taxpayer as a guardian angel. You’re hilarious mathjak107; you’ll say anything to keep your portfolios’ solvent.

do you read what is posted or do you just read what you want things to say.

no where did i say i wanted anyone to put their money 100%i in the market.

i said the cold hard facts are 100% equities has provided a 3-1/2% witdrawal rate with 100% success over every rolling 30 year period for 146 years through every worst case scenerio we had.

thats fact. you can dispute it as much as you want but it is fact. you can check shillers reasearch, you can go back to 1926 and look at every rolling 30 year period representing a retiree with the trinity study or just do it yourself in firecalc. but no where did i ever suggest 100% equities as something someone should do .

in fact read it again ,i also mentioned bill bernsteins suggestion of short term bonds and tips which is as safe as you can get.. did you not read that as well?

there are lots of things anyone could have done as opposed to getting zero on their long term money.

[mathjak107]

Originally Posted by Sol Rosenberg

If the DOW was 14,000 back in 2000 and it's currently 13,3000, how did people make 3% + per year?

the dow is only 30 large cap stocks. as i said earlier the indexes did not move much . the trend to indexing has them all buying the same exact stocks.

small caps and mid caps did far better.

a typical diversified portfolio should have seen about a 45% gain from 2000 to 2012 . while stocks were on the weak side ,bonds in the portfolio almost doubled in many cases.

it is not about a fund or an index it is all about the entire portfolio and how it does.


even vanguard wellesly income, which is a very very conservative fund jumped from 18 a share in 2000 to 24 a share today.

but why look only from 2000 ? that is like picking a stock at the peak and using that as a reference point. it only means something if you bought in that year.

as an example this is the fidelity insight growth model from the newsletter i have been using since 1987 up until 5 years ago when i switched to an income model now that im ready to retire.

here is the difference on a 100k initial investment that a complete portfolio working together makes vs just an index like the s&p 500.

it does not matter what the initial investment was ,the differences remain the same.

the important thing to remember is the portfolio was not 100% stock like the s&p500 and so it beat it by 343,000 bucks but did so at a lower risk. actually it beat it by even more if i figured out 2012 too.

actually if i quickly run the numbers the balance as of friday is 1,113,120.00

in 2000 the balance was 781,416.00 and today it is 1,113,120.00 so you tell me how an actual portfolio did compared to just looking at one index of large cap stocks. thats about 3.5% a year. not great but it certainly grew alot more money then just an index of large cap stocks and certainly a whole lot more then cash did.

but like i said why reference 2000 unless that is the year you bought in. if i use my reference when i bought in im up over 10% a year.

but lets stick to 2000 anyway and these funds were nothing special either. they are plain vanilla standard fidelity funds in the portfolio.

THE BALANCE IN 2000 WAS 781,416,00 , BALANCE AS OF FRIDAY 1/11/2013 IS 1,113,120.00


Date--- Growth------ S&P---- Difference
12/31/87 - $103,430- $105,089 - -$1,659
12/31/88 - $130,373 - $122,483 - $7,889
12/31/89 - $169,983 - $161,261 - $8,722
12/31/90 $162,494 -$156,250 - $6,244
12/31/91 - $228,454 - $203,862 - $24,593
12/31/92 - $264,272 - $219,444- $44,828
12/31/93 - $348,647 - $241,562 - $107,085
12/31/94 -$341,421 - $244,716 - $96,705
12/31/95 - $434,323- $336,701 - $97,622
12/31/96 - $517,605 - $413,988 - $103,617
12/31/97 - $649,300 - $552,226 - $97,074
12/31/98 - $713,379 - $710,076- $3,303
12/31/99- $920,092 - $859,454 -$60,638
12/31/00 - $820,989 - $781,416 - $39,573
12/31/01 - $768,220 - $688,576 - $79,644
12/31/02 -$636,808 - $536,416 $100,392
12/31/03 -$930,609 - $690,112- $240,497
12/31/04 - $1,046,068 - $765,316 -$280,753
12/31/05 -$1,163,652 - $802,623 - $361,029
12/31/06 -$1,345,875- $929,490 - $416,385
12/31/07 -$1,444,445 - $980,605 - $463,840
12/31/08 --$827,488- $617,771 - $209,717
12/31/09- $1,090,509 - $781,147 - $309,362
12/31/10 - $1,283,374 $898,744 - $384,630
12/31/11 - $1,260,829 - $917,402 - $343,427


if you think i pulled those numbers out of the air you can look for yourself

http://www.fidelityinsight.com/about...ce/g_perf.html

[mathjak107]

Originally Posted by DSOs

The interest rates have been too low for dubious reasons; remember the relatively low interest rates during the 2000-2008 booming economy!? The real reason—as justNancy mentioned—is the punishment/intolerance of frugality. You guys’ are herding the decent common man into frantic monsters.

Good advise for bulls/bison that used to live on the Dakota/Nebraska prairie.


This person’s investment is making $35k/year, during the worse financial crisis in 80 years, & you want him/her to risk the market—what the hell is the matter with you mathjak107!? Why don’t you gurus’ invest with each other & stop preying on the elderly/simple living among us?

Yeah, when you have the FED/USGovt/Taxpayer as a guardian angel. You’re hilarious mathjak107; you’ll say anything to keep your portfolios’ solvent.

by the way if you read the posts instead of guessing you would see im 97% not stock myself and still got over a 10% return with fixed income for 2012 with 76% less risk then the s&p 500. once again it was done with nothing special fidelity income funds that anyone could have put together themselves if they felt so inclined... all they had to do was have an interest in playing the cards they were dealt.

[DSOs]

Originally Posted by mathjak107

no where did i say i wanted anyone to put their money 100%i in the market... i said the cold hard facts are 100% equities has provided a 3-1/2% witdrawal rate with 100% success over every rolling 30 year period for 146 years through every worst case scenerio we had.

I have my reasons for assuming that what you say & what you mean can be 2 different things. Also, some of your colleagues have come to the conclusion that being 100% in Stocks is necessary in today’s market!

Originally Posted by mathjak107

in fact read it again ,i also mentioned bill bernsteins suggestion of short term bonds and tips which is as safe as you can get.. did you not read that as well?

You just don’t understand where I’m coming from—the financial apparatus has put the Midas-curse on everything it touches. Example: I like the concept of immediate annuities; the problem is it will NEVER operate in fairness to the policyholder—the 666 page prospectus will make sure of it!

Originally Posted by mathjak107

by the way if you read the posts instead of guessing you would see im 97% not stock myself and still got over a 10% return with fixed income for 2012 with 76% less risk then the s&p 500. once again it was done with nothing special fidelity income funds that anyone could have put together themselves if they felt so inclined...all they had to do was have an interest in playing the cards they were dealt.

See the above quote about the Midas-curse.

What about your previous posts’ stating that investors “didn’t sign up for this amount of volatility” & “this unprecedented volatility is the new normal”; what about gold, cash & bonds not behaving normally? You are under the FED/USGov’t/Taxpayer umbrella insurance policy. Only time will tell if this bullsh*t will continue.

Finally, as I said before, leave us inferior savers alone & stop using our money (ref: MF Global, quasi-demand deposits) to keep your parents (financial apparatus) solvent!

[mathjak107]

I think you better do some homework on immeadiate annuities. There is no 600 page prospectus or hidden anything. It is like buying a cd. The entire deal is the withdrawal rate you sign on for.

All i can say is it would benefit you to stop complaing about things and learn to utilize them to stay ahead of the curve.

As far as volatility ,yep the volatility today is far greater and the swings for a given mix can be greater .

So ill say it again ,everyone needs to find their comfort zone and find a way to meet their goals.

There are very low volatility ways of getting returns or bullet proofing.

I would recommend vanguards wellesly income any day of the week as an example.

[Sol Rosenberg]

Originally Posted by mathjak107

I think you better do some homework on immeadiate annuities. There is no 600 page prospectus or hidden anything. It is like buying a cd. The entire deal is the withdrawal rate you sign on for.

All i can say is it would benefit you to stop complaing about things and learn to utilize them to stay ahead of the curve.

As far as volatility ,yep the volatility today is far greater and the swings for a given mix can be greater .

So ill say it again ,everyone needs to find their comfort zone and find a way to meet their goals.

There are very low volatility ways of getting returns or bullet proofing.

I would recommend vanguards wellesly income any day of the week as an example.

I am currently in Vanguard, but don't know if it's called wellesly. It says Prime market fund. Do you know the difference?

[mathjak107]

prime is a money market, it is a place for keeping the money you make from buying actual investments. it i not an investment. a money market is a holding place for money awaiting investment or money you want to pull out of the risk pool.

wellesely has ben a wonderful conservative investment for decades now.

it contains risk but for a retiree with a stomach for some risk it is highly recommended.

my advice to you is you really need to educate yourself before doing anything. if you are putting money into things and you don't even know what they are that is not good.