Pros and Cons of Investing in a CD

I’m looking at possibly saving up some money to invest into a CD so I thought I would look up a few pros and cons of the investment.

Here are the pros of investing in a CD rather than other investments.

Your money is in a safe place with higher interest than it would get in a savings account. While there isn’t much of a chance of making big money, it is a safe investment.

The FDIC (Federal Insurance Deposit Corporation) insures CDs up to $100,000 so you can be assured that you will get the money back when the CD matures.

You can take a loan out with a lower interest rate than the normal bank interest rate.

The cons of investing in a CD would be:

There is a lower risk, so therefore lower yield. While you can be assured that your initial investment is safe, you don’t have the possibility of earning greater amounts of money that you may earn with higher risk investments.

The CD is susceptible to market fluctuations. While the economy is doing well, interest rates will be higher. There isn’t a need for the government to encourage people to borrow. If the economy isn’t doing as well, interest rates will decrease, allowing people to borrow money less expensively and put that money back into the economy by shopping, adding an addition to their homes, etc.

There is a penalty charged (unless you have a brokered CD) if removing the money earlier than the term of the CD.

The jury is still out on my decision but at least all the facts are on the table.

Empty!

I came to the realization this weekend that my banking accounts are empty. It’s not totally a bad thing because the reason that they are empty is I paid off a ton of debt last month. None the less its still a scary thought that my savings is gone and I am back to square one (the same position I was in when I started this blog) but the difference this time is that I have learned that through discipline and some common sense I can build my savings back up again just in time to make another lump payment towards my debt. So goes the cycle.

Wheels in Motion

On the heels of paying off a $1,700.00 debt a few weeks ago I applied today to take out a loan from my 403(b) account to pay off yet another $1,700.00 credit card debt. I’ll be paying myself back at 9.5% interest but it sure beats the 20% I’m paying to the credit card. Plus the interest goes back to me and I should be able to pay it off pretty quickly.

The application will go out tomorrow and I should have the money in my account within 10 business days after that. This will result in me paying off over $3,400.00 in credit card debt in about a month.

I’m still a ways off but I can almost smell freedom!

I Did It!

After a few months of saving today I was able to pay off a $1,760.00 debt. I have to admit that it was hard to part with that much cash after working to hard to save it but it also feels great to have the first phase of my plan to get debt free accomplished.

Next up is a credit card that has about the same balance on it ($1,700.00). I’m working from my smallest debts up to my largest. My goal is to have this next one paid off by the end of the summer.

Back From Nowhere!

I had to take a break from blogging because things were really getting bogged down for me. I do have some exciting news to share though. This month I am going to pay off a $1,700.00 debt which will bring the amount of debt paid off since starting this blog to $2,700.00 and when you consider my normal monthly debt payments I could easily be at $3,000 in reduced debt by the end of the month.

The other thing I’ve done over my blogging break is invest in the stock market. I’ll admit that I have absolutely no clue what I’m doing yet but I’m learning. I set up an account with OptionsXpress and invested in the cheapest stock I could find (IDSM.OB).

I’m still figuring it all out so I have a very minimal investment right now. If I decide I like it and it works for me I’ll invest more and if I don’t like it or then I haven’t lost much. Right now I’m down about six cents per share.

Your Retirement Account

There are two types of retired people in the world. There are those who planned and saved and have the ability to enjoy retired life by traveling and living comfortably and then those who didn’t.

I don’t know about you but I want to be the former not the latter. So, what needs to be done to get there? You’ve seen the commercials and have heard the terms now it’s time to select your account. Like getting out of debt building a secure retirement takes vision and discipline.

Once you determine where you want to be financially and what you are willing to sacrifice to get there the next step is deciding which type account you want.

IRA - An IRA is a tax-advantaged retirement account into which an investor may contribute a portion of his/her earned income. The "I" stands for individual, which is important in that these programs are arrangements individual investors make for themselves - not through an employer- sponsored flexible spending account or a payroll-deduct retirement plan.

A Traditional IRA is available to those under age 70 ½ who have earned income. Traditional IRA earnings grow tax-deferred until withdrawal. Withdrawals are required beginning at age 70 ½ and are taxed. Contributions made to this IRA may be deductible, depending on certain factors.

A Roth IRA is a nondeductible IRA. Depending on certain income limits, taxpayers are able to save for retirement in such a way that allows the savings to grow tax- free. Taxes are paid on contributions, but qualified withdrawals are not taxed at all.

A 403(b) retirement plan, also known as a Tax-Sheltered Account (TSA), is designed exclusively for employees of non-profit institutions such as public schools, colleges, nonprofit hospitals, and other tax-exempt 501(c) organizations.

Employees make contributions into a 403b plan by making pre-tax payroll deductions. Depending on your 403b plan, you authorize pre-tax payroll deductions to be invested in a tax-sheltered annuity (TSA) contract or in a custodial account made up of mutual funds offered by your employer. Dividends and investment earnings grow tax deferred until they are withdrawn after age 59 1/2 at which time the withdrawals will be taxed as income. Withdrawals prior to age 59 1/2 usually incur an additional 10% penalty. However, most 403b plans allow investors to take out a loan.

There you have it. Don’t wait to long either before you start saving. Remember, the longer you save the more you will be able to enjoy your retirement.

Financial Resources for Small Business Owners

Owning your own business can be daunting and sometimes down right expensive. With the need for a good credit score along with the need for start up capital outside help is often required.

That’s where companies like Premier General Finance come into play. No one likes going into debt and obviously making money is the point behind starting a business but when help is needed it’s important to find someone you can trust.

Merchant advances are sometimes needed to improving your credit score could be vital to the survival of your business. If your business is suffering debt you need help. I’m not saying that Premier General Finance is your answer because you will want to shop around and find the best solution for you but it is a start.