I'm a member of a credit union, and am interested in getting a CD on some "petty" cash (Very roughly, more then 2k, less then 10k)
I want to make my money work for me instead of it all sitting in a savings account during my deployment.

The rates are here
The loan adviser indicated that I qualify for the Bonus rates instead of the regular rates (.25% better), and that Dividends are paid monthly. 2.5% per month? That's not bad at all in my eyes, but what do I know? I think she also indicated that the APR was on the final amount after the CD was up?


I was thinking of doing 18 month CD's with increments of around $500? That way, if I would "really" need some quick cash, I could liquidate one and not be too bad off.

Is there a better way to have idle money make money right now with everything the way it is? I dont want to risk loosing a huge chunk of change, I've already lost enough in the stock market to make me wonder why I even bothered (I am 19, I know I'm not the biggest looser, but it still sucks)

So, is a CD a good way to safely make money work, or am I better off doing something else with it?
Also, I saw the best "value" in the 18 month CD, that's what I would go with if I were to do it. Is there a better option?

Thanks for the advice, I really appreciate it.

__________________
95 Honda Shadow ACE 1100.
1999 Plymouth Neon Expresso. 2.4 swap, 10.5 to 1 comp, big cams. Autocross time attack vehicle!
2012 Escape, 'hunter" (5 sp 4cyl)

CDs are safe. I've used them in the past, but don't own any now.

The problem is that if you let them automatically roll over, you get whatever new interest rate that they have at the time which may be much lower than what you had. There are no promises there. You have like 10 days to withdraw it before it rolls too.

I don't understand what you mean by 2.5% per month. That is an unreal interest rate.

For APR on the final amount, you're thinking of APY, Y for yield. That's a typical advertised figure, which assumes that you reinvest the interest automatically. In that case, the APY will exceed the APR, but the APR figure is really what matters if you're comparing to other investments.

The loan officer said the dividend were paid monthly, and the current rate (for 18 month CD) is 2.52%


I was referring to the APY. I looked up the meanings, and I'm slightly confused.

~Nate

__________________
95 Honda Shadow ACE 1100.
1999 Plymouth Neon Expresso. 2.4 swap, 10.5 to 1 comp, big cams. Autocross time attack vehicle!
2012 Escape, 'hunter" (5 sp 4cyl)

You can also stagger the starting dates of the CDs (every 3 or 6 months) if you are concerned about having to get some of your cash.

Are you in the military?

__________________
1998 C230 330,000 miles (currently dead of second failed EIS, yours will fail too, turning you into the dealer's personal human cash machine)
1988 F150 144,000 miles (leaks all the colors of the rainbow)
Previous stars: 1981 Brava 210,000 miles, 1978 128 150,000 miles, 1977 B200 Van 175,000 miles, 1972 Vega (great, if rusty, car), 1972 Celica, 1986.5 Supra

Interest is 2.5%/year not 2.5%/month?

Safety:Inflation could hurt you, nothing is completely safe.

Roughly divide that rate by 12 and that's how much they pay out each month. 0.20% So on $5000, that would be like $125 a year and they will pay you about $10 a month

There's always the high yield online banks like ing and emmigrant. They are paying 1.3% and you remain fairly liquid.

__________________
85' 300D

I assume that the CD's you're looking at have a penalty if you cash them out before the end of the 18-month term. If the penalty is too much, you may want to secure shorter-term CD's for at least part of your money.

Nate -- go talk to your finance folks about Thrift Savings Plan contributions. If you're collecting combat pay, the rules tip in your favor (or did when last I looked into it). If you're not taking advantage of the TSP already, I would look into it ASAP. You might consider keeping that petty cash in your savings account and contributing as much of your military pay as you can to your TSP if it looks like it'll suit your needs.

__________________
1992 300D 2.5T
1980 Euro 300D (sadly, sold)
1998 Jetta TDI, 132K "Rudy"
1974 Triumph TR6
1999 Saab 9-5 wagon (wife's)

Nate,
You may find some useful insights here on general deployment advice.

http://forums.military.com/eve/forums/a/frm/f/28300770713

Financial advice on OD forums, as said many times before, is worth what you are paying for it. That said, stagger maturities a bit. If you are deploying for 12 months, you might get the itch to burn some cash when you get back home. Tying all or most of it up in an 18 mo CD will mean lost interest if you cash in one CD for money before 18 mo. maturity.

The Fed. is probably going to do all it can to keep rates down for the next year or so is my guess. So, you don't have much to worry about in losing interest. Rates/yields should remain stable for that term.

Good luck soldier.

I wouldn't recomend a CD because the returns suck these days since interest rates are so low.

But since your in the military and will be on deployment for awhile they are probably a good place to store your money. They are totaly hands off which is what you need, and pay slightly better than a bank account.

__________________
1999 SL500
1969 280SE
2023 Ram 1500
2007 Tiara 3200

Yes, I am in the military. I also have an ongoing TSP contribution. This is a retirement program, not a savings program. There are harsh penalties for withdrawing under age 65... If I get the itch to burn some cash, I'm leaving enough in a savings account for that.

I want something hands off, low risk, and (obviously) want some results.

There is also a program that I've enrolled in called the savings deposit program, and It gives better rates then a CD, but, it has a cap on the amount to be deposited. Once I reach said cap, I would use other funding for CD's or something else.

Again, low risk, hands off, and as good of results as possible. I'm not looking to make huge bucks, I just want to accumulate interest on funds that will be sitting idle for a while. The deployment is a 13 month thing, unless the POTUS changes that.
Thanks for the advice everyone
~Nate

__________________
95 Honda Shadow ACE 1100.
1999 Plymouth Neon Expresso. 2.4 swap, 10.5 to 1 comp, big cams. Autocross time attack vehicle!
2012 Escape, 'hunter" (5 sp 4cyl)

Did you look into the benefits of combat and incentive pay contributions to your TSP? I believe that while you are deployed, you can add extra. Well worth a check, I would say! Are you using USAA for insurance? I use them, and they have an excellent financial advising service (free for members). I told them what I wanted to do, and what I could afford to invest, and they made several suggestions from which I could choose.

Good luck making your decision, by the way!

__________________
1992 300D 2.5T
1980 Euro 300D (sadly, sold)
1998 Jetta TDI, 132K "Rudy"
1974 Triumph TR6
1999 Saab 9-5 wagon (wife's)

You sound pretty smart for being 19 (translation: I am old). The best financial advice I can give you is join USAA right away. www.usaa.com Best company in the world. You can bank there, and get your credit card and get car and life insurance. Nobody can beat their car insurance rates. They have full investment services available and you can talk to a financial planner for free. I am always amazed when I find a military person who does not belong to USAA.

__________________
1998 C230 330,000 miles (currently dead of second failed EIS, yours will fail too, turning you into the dealer's personal human cash machine)
1988 F150 144,000 miles (leaks all the colors of the rainbow)
Previous stars: 1981 Brava 210,000 miles, 1978 128 150,000 miles, 1977 B200 Van 175,000 miles, 1972 Vega (great, if rusty, car), 1972 Celica, 1986.5 Supra

Me too. I have been nothing but pleased with every aspect of their service.

__________________
1992 300D 2.5T
1980 Euro 300D (sadly, sold)
1998 Jetta TDI, 132K "Rudy"
1974 Triumph TR6
1999 Saab 9-5 wagon (wife's)