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Is Your "Safe" Portfolio Risky?

Wednesday, October 6, 2010 - 6:28 AM
This MintLife blog post has an interesting review of a portfolio that was put together in 2007 that was suppose to be very conservative. Out of the three investments, two of the three did OK. However, one of the three was preferred stock in Royal Bank of Scotland. This turned out to be much more risky than expected. The dividends stopped and the stock is down by 31% since the stock purchase.

One minor issue with the article that I noticed was its review of brokered CDs. It stated that brokered CDs are callable. While some brokered CDs are callable, I don't think all of them are.
5
Ken TuminKen Tumin5,469 posts since
Nov 29, 2009
Rep Points: 125,077
1. Wednesday, October 6, 2010 - 8:38 PM
The author states,

"First, brokered CDs are callable. That means that the issuer can, on a whim, give you back your principal and yank back its CD. This is likely going to happen at a time when you have to reinvest the money at a much lower interest rate, and that means the high rate on a brokered CD is essentially fictional."

The notion that all brokered CD's are by default callable on a whim, as the author (who by the way is primarily a food author) suggests, is 100% wrong.  Ludicrous.  Ridiculous.  Callable CD's must and always do state themselves as such, with details and call terms included.

Ken, you are not clear about this?
2
andybujiandybuji11 posts since
Jan 26, 2010
Rep Points: 49
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