[ft_chief]

Navy Federal Credit Union has a special promo going on now that offers a 5% yield on a 1 yr CD. The maximum deposit is $5000. If you are a member or are eligible, take advantage of this special. They have 2 branches in Las Vegas area.

[oeccscclhjhn]

4.88% dividend rate, min $25, max $5,000.00.

[ScoopLV]

While I'm glad that banks are starting to offer interest again, parking $5,000 in that account only nets the investor $250 annually. That's better than nothing, sure.

But that's $5,000 that could be invested elsewhere for a much greater return. And let's face it, CDs have so many early withdrawal penalties that it's not exactly fair to consider them a liquid asset. They're "more liquid." I have an index fund that is mopping the floor with 5%, and it's actually a little easier to get money back from it than a CD.

There is more risk with index funds. But in order for me to lose my investment, more than 3,000 companies would have to go bankrupt simultaneously. If that happens, the $5,000 parked at a credit union isn't particularly safe, either.

My US Index Fund Is Smacking S&P 500 Funds - Forbes

[ft_chief]

If you check out Bankrate, the best 1 yr CD pays 1.12% with a min of $25k deposit.

[ScoopLV]

Originally Posted by ft_chief

If you check out Bankrate, the best 1 yr CD pays 1.12% with a min of $25k deposit.

Yes, that's AWFUL. It's not even worth the hassle of having money locked in a CD. May as well stuff it under a mattress and let inflation slowly eat away at it.

5% is still nothing to be happy about. 5% is merely "bad" instead of awful. I'd open an index fund instead and plow the dividends back into the fund. I do not hold any CDs because there is no point in doing so. Banks are merely a vehicle for parking ones wages while we find better things to do with that capital. The index fund that I like did three times better than that CD in 2008, and last year it did six times better.

Zero risk and $250 return or little risk and decent returns. It's all just Monopoly money, anyway. May as well play the game to win.

[ft_chief]

Originally Posted by ScoopLV

Yes, that's AWFUL. It's not even worth the hassle of having money locked in a CD. May as well stuff it under a mattress and let inflation slowly eat away at it.

5% is still nothing to be happy about. 5% is merely "bad" instead of awful. I'd open an index fund instead and plow the dividends back into the fund. I do not hold any CDs because there is no point in doing so. Banks are merely a vehicle for parking ones wages while we find better things to do with that capital. The index fund that I like did three times better than that CD in 2008, and last year it did six times better.

Zero risk and $250 return or little risk and decent returns. It's all just Monopoly money, anyway. May as well play the game to win.

I just had money sitting in my MM account so this will allow me to earn a little extra.

[ScoopLV]

It will. But you could take that same money, park it in an index fund and grow it to the point that it's useful when it comes time for college tuition. I know that has to be something that you're thinking about. It would weigh heavily on my mind.

CDs are insured. I completely get that. You will not wake up one morning and see that the Stock Market has imploded, and all that digital money is worth diddly squat. My point is that if that happens, a CD isn't going to be worth diddly squat, either. The only things that will have any value at that point are food, water, medicine, information, raw materials and ammo.

So, assuming that this whole wretched system doesn't go belly-up in our lifetimes, there are better ways to invest $5K.

[ddrhazy]

5% is VERY good for a no hassle investment.

[ScoopLV]

Originally Posted by ddrhazy

5% is VERY good for a no hassle investment.

Try to take your money out early and then tell me how it's "no-hassle." I've had money in both CDs and Index Funds. The level of hassle is similar.

The only difference is the amount of taxes that the investor is going to pay on the dividends -- not the percentage, the amount -- because Index funds PAY considerably more than CDs.

Seriously, please read this. And then read the associated links. Especially anything that has the name "John Boegel" on it. This is not get-rich-quick. But it IS get-rich-slow. CDs are NOT "get-rich-fast-or-slow-or-ever." I keep hoping we create a society where everyone does well.

Index Funds | Index Mutual Funds | Investing in Index Funds

[clutchcargo777]

If I recall, the last CD I had with NFCU the interest penalty for early withdrawal amounted to 3 months. So you would only lose principal if you left it there less then 3 months.

It's promotional to get more members. Kinda weird as they are the largest credit union in the US already. Which is also weird as they are one of the more difficult CU's to qualify for.

ETA. Its for existing and new members, but it will definitely attract new members.