high yield savings accounts rates
Wall Street Vs Your Bank: are Online Savings Accounts the Way to Go?
In today’s economic situation, the stock market may be looked at in two distinctly different lights. First, this may be the best time since the end of the great depression to buy stocks at a deeply discounted price. Many stocks are down 60% or more from their highs of 2008.
On the flip side, the market is very volatile and other major declines are certainly possible. If an investor cannot stand risk, the stock market might not be the proper investment at this time.
When looking at the stock market, there are some rules for the prudent investor that should be followed. Invest only in companies that are making money. Making money means that a company is in the black and looks to be for the foreseeable future.
If a company is making money in a recession, even though not as much as in a healthy economy, they will be poised to make the most when the economy recovers. Be sure to check out a companies debt. Some companies have to borrow more than normal in a recession. If a company is debt laden look for another. Two companies that meet these requirements are Johnson and Johnson and Microsoft.
Another strategy in investing in the stock market is to look at the above suggestions and then factor in yield. Some yields of great companies are in line with current CD yields, which gives the stock a strong income component and also the prospect of appreciation. Exxon-Mobil is a good example of high yield stock with the prospect of strong gains.
We now have to look at stocks that have been hammered in the current crisis, that could be diamonds in the rough. They could also be stinkers. These stocks have been caught in the middle of the credit and housing crisis and are risky at best. Investors must remember that with risk sometimes comes reward. On the other hand, there is a reason these stocks are selling at bargain basement prices. Two companies to consider in this group are, AIG and CitiGroup.
If investors want to ride out the recession on the shoulders of one of the best, investing in Berkshire Hathaway Class B is suggested.
Investors wanting more security have many online savings accounts to chose from. The cardinal rule to any savings accounts or CD’s is safety. Make sure these are FDIC insured. If you are going to have over $5,000.00 in these accounts, this is a necessity. It is suggested to check with at least two local banks as to their rules and rates, as well as one online company. There are several online companies out there, with Scottrade and ETrade offering great service. Consider that local may mean friendly hometown service as well as online access as opposed to online only companies.
It is true with CD rates and online savings accounts at historically low levels the amount of money to be made is going to be minimal. It is hard to believe that on a $100,000.00 investment in a CD or savings account the investor may only see a yield of approximately $3,000.00 in a years time. This is not acceptable to many. Thus the problem, invest in the market and risk substantial losses, or invest in an insured account and only make 3% on your money.
Perhaps the solution is a combination of both. Evaluate your risk and then invest accordingly. There are many suggestions for investors as to the percentage of stocks, as opposed to other safer investments, that should be in a portfolio. The answer for each individual is different. Be careful, evaluate your risk, develop an investment strategy and stick with your plan.
Can someone help me understand why my savings APR continues to decrease but my APR on my HELOC doesn’t?
My HELOC is tied to prime and I thought my savings account was tied to it as well. The prime has not changed in a while now. The rate on my savings seems to decrease consistently each of the past two-three mnths but the rate on my HELOC has stayed put. I see that the rates on similar high yield savings accounts have seen a decline as well over the same time frame. Trying to understand why this is the case. Thanks.
By law, variable rate loans such as home mortgages and home equity lines of credit must be tied to an outside index, such as the Prime Rate or LIBOR. The Prime Rate has not changed for some time; therefore, your HELOC rate is unchanged.
There is no such requirement for an index tied to a savings account. Therefore, the bank is free to lower interest rates whenever it wants to. Right now, with so many people losing confidence in the stock market and taking the so-called “flight to safety,” banks have more deposits than they need. So, they have lowered the rates. When they need more deposits, they will raise the rates.
Until consumer confidence picks up and more people start borrowing, banks will continue to have more deposits than they need.
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