MATH . . . $20,000 in a 5.25 CD = $1,050 [20,000 * .0525] . . . $20,000 in a $20 bank stock (1,000 shares) that pays $0.92 Dividend per share a year = $920 . . . and if that stock goes up $2 in price that is $2,000 in Capital Gain. [1,000 shares * 2] STRATEGY . . . Take the CD if you can't afford to lose what you already have , , , take the Dividend if you have extra cash to invest . . . BONUS , if the stock price goes up after a year (you took the Dividend) SELL and your risk is rewarded (hopefully) with Capital Gain.
This past year I took advantage of hefty CD yields. Last December took lump sum pension and put 90% in monthly laddered CD's. Did lock in a couple 18 month CD's @5.50%, and one 2 year CD @ 5.40%. Rate yields lately been dropping like a rock. Basically 60/40 split, and will nibble back into solid dividend stocks in 2024.
Non-Callable CD's are great when you don't have 20 years to watch the markets go up and down. I have 5 CD's and 2 fixed index annuities.. Plenty happy with those when we continue to see an unstable market.
So high yields are ephemeral? How about stock prices? Lol. A desperately indebted government must offer attractive yields or deal with high inflation. Stocks are at nose bleed levels. The chances of a 50% plus crash is very real. Not so much with short duration high quality fixed income. I will only buy equities based on fundamentals at bargain prices. That is prudent risk management.
Wow, no bot comments yet introducing some non-existent advisors. A small miracle
Much deserved shout out from Clark Howard (podcast) to Christine Benz this past week.
MATH . . . $20,000 in a 5.25 CD = $1,050 [20,000 * .0525] . . . $20,000 in a $20 bank stock (1,000 shares) that pays $0.92 Dividend per share a year = $920 . . . and if that stock goes up $2 in price that is $2,000 in Capital Gain. [1,000 shares * 2]
STRATEGY . . . Take the CD if you can't afford to lose what you already have , , , take the Dividend if you have extra cash to invest . . . BONUS , if the stock price goes up after a year (you took the Dividend) SELL and your risk is rewarded (hopefully) with Capital Gain.
This past year I took advantage of hefty CD yields. Last December took lump sum pension and put 90% in monthly laddered CD's. Did lock in a couple 18 month CD's @5.50%, and one 2 year CD @ 5.40%. Rate yields lately been dropping like a rock. Basically 60/40 split, and will nibble back into solid dividend stocks in 2024.
Non-Callable CD's are great when you don't have 20 years to watch the markets go up and down. I have 5 CD's and 2 fixed index annuities.. Plenty happy with those when we continue to see an unstable market.
So high yields are ephemeral? How about stock prices? Lol. A desperately indebted government must offer attractive yields or deal with high inflation. Stocks are at nose bleed levels. The chances of a 50% plus crash is very real. Not so much with short duration high quality fixed income. I will only buy equities based on fundamentals at bargain prices. That is prudent risk management.
You never talk or discuss MYGA's with binds or CD's