This Bankrate.com article gives some predictions by financial professionals about what to expect next year for CD and money market rates. One of the experts doesn't see much change in the short term rates and recommends against locking into a long-term CD that doesn't give much of a premium over the money market accounts. Another expert thinks the Fed is done and recommends those who have been buying short-term CDs should start to consider CDs with maturities from 2 to 3 years. He also recommends people consider more stock and mutual funds to their portfolio. Another expert recommends a barbell CD laddering approach in which most of your CD maturities are concentrated in the maturities of 1-year and under and in maturities of 4 and 5 years. With inverted yield curves, it's tempting to keep all your money liquid, but if the housing market tanks, the low interest rates of 2003 could return.
As you can see from these experts, there's no clear cut prediction. As usual, the best approach is an investment allocation that's based on your goals and tolerance for risk.
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