Financial Question

[Darco76]

i have a cd that is maturing next month.... yet i have another ammount of moneys that i want to put in a cd as well..

Im the kind of person who likes to have everything combined, because these moneys are in my 'buy a house fund' that is a few yrs away..

but should i wait to combine, or just go ahead and put it in at a year *hopefully the interest rate will be better in a year*


i like my moneys in my local bank, and not giving it to a online bank *ie. fadility ect.*

interest rates suck..so im screwed no matter what, but anythigns better than savings..


20k in matureing one next month

wanting to put 20k in a new one and/or combine..

*if this doesnt make sence, im sorry.i have a dog that is crying because she needs to go outside*

 

[AARONHARRISON]

i have a cd that is maturing next month.... yet i have another ammount of moneys that i want to put in a cd as well..

Im the kind of person who likes to have everything combined, because these moneys are in my 'buy a house fund' that is a few yrs away..

but should i wait to combine, or just go ahead and put it in at a year *hopefully the interest rate will be better in a year*


i like my moneys in my local bank, and not giving it to a online bank *ie. fadility ect.*

interest rates suck..so im screwed no matter what, but anythigns better than savings..


20k in matureing one next month

wanting to put 20k in a new one and/or combine..

*if this doesnt make sence, im sorry.i have a dog that is crying because she needs to go outside*

Ha ha ha why is your pup crying? Poor doggy.

I would combine.....higher interest.

 

[vic305]

Well, there are much more attractive vehicles of investment than CDs, as they yield much higher returns. However, most of these do come with a risk of loss of principal.

Considering your investment horizon is over one year, I would say that investing in a dividend-focused mutual fund would be an excellent idea. However, I must restate, there IS the probability of loss of principal. It is my view that at this point, high dividend stocks do not have much downside left, and they offer much higher yields (upwards of 4%) than a CD.

Then again, if you're investing $20k then the annual return of a good dividend-focused mutual fund would probably be around $1k, being neither optimistic nor pessimistic (If you were to be highly optimistic you could expect a return of $6k or more). Probably not worth risking your principal over a $800 differential, but I am a risk taker so I would do it. It's up to you though.

As for your original question, In order to tell you whether waiting or lumping is better, I'd have to know what rate is offered for 1yr CD at your bank, what rate you could get if you invested the extra money right now, and how much extra money is being invested. To give you a guideline of how to answer your own question:

Assume you invested your new money right now. If "x" is the amount of interest money your new money can accrue from now until the old CD expires, if "y" is the amount of interest your new money would accrue from the moment your old CD expires until the moment your new CD expires, and if "k" is the amount of money your new money would accrue over one year IF it were invested at the going rate for a 1yr cd, then:

y - k > x --> wait and lump them together
y - k < x --> invest the new money right now

It's difficult to present a solution in such abstract terms, hope you can understand. If not, just give me the rates and I can tell you what's better. Considering it's already jan 20th, waiting and lumping will most likely be better.