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Why would anyone tie up money for ten years

mogley98
With monthly CD's FDIC insured paying as much as 2.3% why the heck would anyone tie money up for ten years at 2.63-3%?

Some things I don't get and that is one of them.
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Comments

18 comments

Date Votes
  • select-fire
    No interest at those rates..
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  • He Dog
    I am getting 3.2 on a two year note. Most is in stocks and bonds.
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  • remingtonoaks
    An intelligent person diversifies his investments with not only unsecured investments (high-yielding) but with secured investments (low-yielding) so that they have a hedge against a crash like in the great depression. And in of the great depression that lasted 10 years, people would have then thrilled to get even 1% on their investments...

    You don't think the great depression can happen again??? Well it damn sure came close through the last administration, and if Hillary would have got in... Let's hope we don't get a Democratic leader next time. Otherwise you might be begging for an investment opportunity such as you speak of

    Next question
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  • fordsix
    just when rates started 2.5 at 19 month.. told bank i will move after expire they said maybe work something out[:0]they dont want me to leave with ill goton gains[:D] not sure about online banks that pay more,,,,, but local for now last chase jp morgan was a .85/ 5 year[:o)][8]
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  • mogley98
    3% or better keeps you just ahead of losing money with inflation, that is cool I read that the ten year is 2.65, no way would I tie up at 2.65 for ten years if I can get 2.5 for 6 months. 3.1 or better maybe a year but since eventually rates will go up I would rather do short term ladders over and over until you can lock up a nice return.
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  • Brookwood
    I paid cash for my last house. I hope to be around another 10 years and moving is not on my list of things to do!
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  • jwb267
    I don't invest I bury[:D]
    the government need not know my funds, or the nursing home taking it when I am admitted
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  • chiefr
    quote:Originally posted by mogley98
    With monthly CD's FDIC insured paying as much as 2.3% why the heck would anyone tie money up for ten years at 2.63-3%?

    Some things I don't get and that is one of them.


    Consider the rate they are taxed =s your income on redemption, they pay less than that.
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  • droptop
    In my case it was because I've been paid 6% + on the money invested for over 25 years plus appreciation, tax free, so far.
    bp_dividend.JPG
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  • 4205raymond
    3.75% at Navy. I am a Army vet but went Navy this time.
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  • roswellnative
    For mere security
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  • Rocky Raab
    It makes at least as much sense as a person asking financial questions on a gun forum.
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  • grdad45
    I had a CD mature at 2.2% at my credit union, they offered to roll it at 2.4% for 2 or 5 years. I declined and my insurance agent offered me a 5 year CD at 4%. I took the 4% offer because I didn't need the money right away. What I am saying is everyone needs to shop around to find something that fits their needs when investing.
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  • lkannes
    I just got 2.85% apt for 18 months.
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  • gruntled
    I am getting 2.2% on my on-line money market acct & they are now offering 2.8% on one year CDs. Bad news is that the Income tax takes 22.5% of that. (12% plus the tax on our Social Security) Bottom line is the return is less than inflation. It would be even worse if we had to pay Kalifornia State Income Tax. There is some benefit in being poor folks.
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  • Brookwood
    quote:Originally posted by Rocky Raab
    It makes at least as much sense as a person asking financial questions on a gun forum.


    Yup!! I only come here for MEDICAL advise![:D]
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  • wpage
    Bring a knife to a gun fight. Get your financial data right here!

    I like pork bellies.
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  • dlrjj
    quote:Originally posted by mogley98
    With monthly CD's FDIC insured paying as much as 2.3% why the heck would anyone tie money up for ten years at 2.63-3%?

    Some things I don't get and that is one of them.


    I have very little interest in CD?s, but the long term concept is not as silly as it seems since they can be canceled at any time.

    The two examples given had rates of 2.3% monthly and 3%(probably calculated monthly) yearly for 10 years, which would make the 10 year appear to be rather foolish as a long term rising interest rate and/or available funds risk, but you need to check the contract terms and just how the APY is calculated.

    The CD?s I have seen had early withdrawal penalties of 3 to 6 months worth of interest, which would not be fun to absorb, but it could be easily well worth the risk and cost, depending.

    A maximum 6 month penalty on 3% for early withdrawal would cost 1.5% total, but the 3% CD is earning .7% more than the 2.3% per year, so any CD held for more than just over 2 years would be ahead in total earnings, even with the penalty.

    A 3 month penalty CD would be ahead of the game in just over 1 year.

    I ignored compounding, since it would be the same for each.

    Any variation in APY calculation would yield the same ?time? results, as long as each is treated the same.

    There are better investments than CD?s, and higher rates than 3%, but the penalty concept holds at all rate differentials.
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