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Lesson For Investors: Don't Think You Know More Than You Do

Monday, September 5, 2011 - 11:32 AM
From Yahoo Finance:
The more moves you make in the face of this uncertainty, the more chances you have to get it wrong, and do yourself financial harm.
Rather than try to dart in and out of different asset classes, you're better off investing in a broadly diversified retirement portfolio of stocks and bonds that matches your time horizon (how long the money will remain invested) and your tolerance for risk (how large a loss you can take before you panic and sell). And then stick with that portfolio through the markets ups and downs.

In my opinion, the same can be said of CD ladders. Instead of trying to guess future interest rates, it's best to stick with your standard CD ladder.
Ken TuminKen Tumin5,473 posts since
Nov 29, 2009
Rep Points: 125,800
1. Monday, September 5, 2011 - 2:30 PM
"Some recommend that savers look for one year and two year CD rates that are reasonably high now, but provide a way to roll the CDs over into longer term products in a couple years when the economy is on the right track and yields are higher."

And, obviously, some don't recommend. Count me among the "some" that "don't." En Attendant Godot, Samuel Beckett. I guess you know where I found the quote.
BozoBozo137 posts since
Feb 14, 2011
Rep Points: 944
2. Monday, September 5, 2011 - 7:02 PM
The Fed will implement "Operation Twist" at it's next meeting. Buying long-term bonds in order to depress long-term interest rates. Lock in a 7-year certificate of deposit yielding 3% or more while you can immediately. It will beat a 30-year Treasury Bond for years to come by the time the Fed does it's damage.
ShorebreakShorebreak2,700 posts since
Apr 6, 2010
Rep Points: 14,636
3. Monday, September 5, 2011 - 8:11 PM
If one has the bulk of their CDs maturing in 2012 and it will cost thousands of dollars in early withdrawal penalties to cash them in for newer ones is this prudent?  Thanks!
paoli2paoli21,406 posts since
Aug 10, 2011
Rep Points: 6,152