[ScoopLV]

Originally Posted by ddrhazy

It is a risk based investment. Not a guaranteed return like a CD. You cannot guarantee that the mutual fund doesn't tank.

You cannot guarantee the CD, either. It is insured by the NCUSIF. But in the scenario that I have described where in order for me to lose everything on my index fund, 3,000 of the strongest companies on the planet would have to simultaneously declare bankruptcy, what good do you think a credit union is going to do?

I think people should quit hand-wringing and play the financial game to win. It's all Monopoly money anyway.

[ddrhazy]

I can only think of the depression as a time where a CD might have been destroyed where as mutual funds have had plenty of opportunities to reach nil. It's disingenuous to not acknowledge that the CD rate the OP posted is good even though it's capped. If you dislike CDs as investments that's fine. But to compare CDs to stocks is pointless, they are different types of financial instruments.

[ScoopLV]

It's not that I don't like CDs as an investment. It's that I think that a CD isn't an investment at all. Our inflation rate is currently hovering at 2% and our buying power is in the toilet. Why do you expect me to be interested in a 3% real rate of return when I can invest in traditionally safe funds that triples that on a bad year?

And if traditionally safe funds tank, it's a "guns, ammo and fresh water" economy anyway. So who cares?

[ddrhazy]

A mutual fund does not guarantee protection of the principal amount. No historical data you show me for any mutual fund will negate this fact.

[ScoopLV]

That's great. Enjoy your $250 return on a $5,000 investment. I have better things to do. I do not care about guaranteed protection of principal. Not one bit. The sort of financial crisis that will wipe out my investments will wipe out society as we know it. So really, who cares?

I wish you would answer my question instead of endlessly talking about useless guarantees.

[ddrhazy]

I already indirectly answered your question several times over. Your mutual fund does not guarantee your money will still exist this coming month/year/5 years from now. I haven't heard of any FDIC investments going nil as long as the individual invested the allowable limit. If you don't like CDs, that's fine. They're not for everybody. 5% is a fantastic rate though and that credit union is probably losing money by offering that deal but they're obviously doing it for customer satisfaction.

[clutchcargo777]

It's not one or the other. You can do both. Diversity is important in any healthy financial plan.

I have backups for my backups. A 5% return on liquid funds beats the heck out of some of my backups.

[skugelstadt]

Originally Posted by clutchcargo777

It's not one or the other. You can do both. Diversity is important in any healthy financial plan.

I have backups for my backups. A 5% return on liquid funds beats the heck out of some of my backups.

Yup, I'll take 5% all day. Stocks have taken a beating lately. I think it goes without saying not to tie up money you might need in an emergency. Always keep cash reserves you can get to in a hurry.

[ScoopLV]

Originally Posted by ddrhazy

5% is a fantastic rate though and that credit union is probably losing money by offering that deal but they're obviously doing it for customer satisfaction.

There is no way they're losing money on the deal. There are too many investment instruments that pay considerably more than 5%. Investments which as so safe as to be considered essentially risk-free. There really is considerable risk in "safe" investments. Playing it safe is a big risk in itself.

[MadManofBethesda]

Originally Posted by ScoopLV

Playing it safe is a big risk in itself.

You really ought to stick to answering questions on subjects where you have a modicum of knowledge. Your investment/personal finance posts, especially those in this thread, are beyond horrific.