Savers, what are you doing to beat low interest rates?

[Mort Stevens]

My point is the low interest rates that CDs pay are so ridiculously low that it makes even a CD person like me unable to buy. So I guess Uncle Sam is getting savers to spend instead of saving more.I have 18 certificates of deposit (CDs) at 4-5% for 36 months. They mature every other month over the period of 3-years. The last few months I elected not to renew at ~2% (or less) and put them into a savings account short term thinking that interest rates may go up... well they haven't and rates continue to decline. As inflation runs 2.5 to 3.5%, any less return than that and my money losing its real purchasing power and slowly devaluing. And now Fed says they will keep rates near zero for next two years. Is this their way of forcing everyone into the market... Genius idea! Let the banks borrow at nearly nothing. Let the people who invest their money make nearly nothing. Force them into the market for any type of decent return. Two days of big losses on the Dow. Money vanished. Good way to grow the economy of you ask me.What are you doing ith your savings?

[Paul Cohen]

Gold
208938

[Myk Rian]

We got out of CDs also. At .4%?
I saw this coming 10 years ago, invested in gold, and told everyone I knew to do the same.
I don't think anyone listened to me.

[Charles Goodnight]

gold, refinancing my mortgage to 4%, and NOT paying it back any faster than I have to. Gold and silver are going up long term, but its a scary ride. You can lose 25% over night, and take 3 months to make it back. That said, I have had a positive annual return on my gold investments for 10 years running. This year could still end up negative, but I wouldn't bet on it, and next year I strongly suspect will give a positive return.

[dennis thompson]

If you want no risk to your principal you probably have to stick with CD's. You could look at a GNMA fund, the Fidelity one has returned 6.7% YTD, (7% for the full yr. 2010) and the Vanguard one 6.5%YTD, (6.9% in 2010). You are subject to principal risk with these. I happen to know these returns since I'm investigating them for myself now. Morningstar is a good place to do research.
Dennis

[David G Baker]

Buying gold ten years ago was a good idea but investing in gold in this market in my opinion is risky. Isn't the goal in investing, buy low and sell high. The gold feeding frenzy has been going on for quite a while and the possibility of a lot of $ lost exists. I checked out Vanguards GNMA fund and liked what I saw. Thanks for posting the info Dennis T. I am out of stock and am waiting for a serious drop in the S&P500 and may buy back in when that happens. I took a big hit back in November of 2008, didn't loose any principal but lost a lot of earnings. If a person can refinance their mortgage at a lower interest rate and not take a hit on the up front loan charges it is like earning interest at the rate of what you are saving over the old loan rate.

[Michael Weber]

I purchased a small amount of gold bullion several years back but not for an investment. Its' been a fun ride watching it go up but it's dropped 300 bucks in the last couple of weeks.:eek: For anyone looking to buy gold or silver bullion I can recommend a place in Portland, OR called Affordable Jewelry and Precious Metals. They have a web site AJPM.com, and they have been around a long time.

[Dave Ogren]

If gold would have kept up to inflation from it's high of about $850 in the '80's it would now be at $2450

[Phil Thien]

I sorta believe that, at any given time, there is a bubble. We've had housing, tech stocks, real estate, and other bubbles.

And if I'm correct, it sure would seem that the current bubble is gold.

[dave toney]

I believe gold and silver still have quite an upside, and will continue to do so until this "recession" is over.
The type of people who buy gold have already made the move, the rest have been saying gold and silver are overpriced since it started going up and will never make the move.
I have heard this ever since gold hit $500.
Dave

[Gary Hodgin]

There's no way to avoid low interest rates without more risk. It's risky to invest in anything that has outperformed the overall market for a significant time, but it doesn't follow that it would be better to invest in something that has underperformed the market for a significant time. I have a mixture of stocks, bonds, and CDs. Of course, I wish I'd put in all in gold a few years back. Hindsight is 20/20.

[Jason Roehl]

May as well spend it on tools that will help you feed and heat yourself in the the long run.

http://en.wikipedia.org/wiki/File:Components_of_US_Money_supply.svg

[Ted Calver]

There are a number of high quality stocks that pay dividends. AT&T(T), Verizon(VZ) and Vodaphone (VOD) in the communications sector are above 5%, DuPont (DD) is close to 4%, Sanofi (SNY) above 5%, many others at or above 4%. Diversify and look for solid dividend payers. Reinvest the dividends and watch it grow.

[Stephen Tashiro]

If you have money to "save", it might be better used to pay off any high interest debts that you have, such as credit cards or student loans.

[dennis thompson]

High dividend stocks are another alternative, but most likely will have more principal volatility (both up & down) than a bond fund like a GNMA. An advantage of the dividend stocks is that the dividends paid are taxed at 15% (for now at least, the tax rate on dividends might go up in the future) while interest on bonds & CDs is taxed at your ordinary income tax rate.
Dennis

[David Larsen]

I am buying tools. My shop is full. When I die, my family can auction it off if they want and walk away with the money. It may not be the best investment on the planet, but it sure is fun for me while I am alive!

[Mort Stevens]

If you have money to "save", it might be better used to pay off any high interest debts that you have, such as credit cards or student loans. Thanks for the suggestions.I'm 45, retired, not married, no kids. I have no mortgage, car loans, or credit cards. I own all the property I'll ever need and have way too many tools and other toys that I don't need to sink anymore money into.My father started buy me 1oz gold Krugerrands, one per week, back in the late sixties and continued up through the 80s - and have at this point amassed all the gold I ever want to own.I also have a good number of US Bonds, but with the change to 3 per year limit a few years back, which is going to be reduced to 1 per year this January(?), it becomes very difficult to put a lot into bonds at this point. And realistically I probably have enough in bonds, I figured the first ones will mature when I'm 50 and currently continue right up until I'm 75. CDs were the perfect place to put a lot money for me, as long as I was ale to beat the rise in cost of living, I have them spread out over several banks to avoid the FDIC insurance limit and felt this was the only 100% safe route.

[Ted Calver]

Mort...We should all have your money problems :) :) :)

[Brian Ashton]

Thanks for the suggestions.I'm 45, retired, not married, no kids. I have no mortgage, car loans, or credit cards. I own all the property I'll ever need and have way too many tools and other toys that I don't need to sink anymore money into.My father started buy me 1oz gold Krugerrands, one per week, back in the late sixties and continued up through the 80s - and have at this point amassed all the gold I ever want to own.I also have a good number of US Bonds, but with the change to 3 per year limit a few years back, which is going to be reduced to 1 per year this January(?), it becomes very difficult to put a lot into bonds at this point. And realistically I probably have enough in bonds, I figured the first ones will mature when I'm 50 and currently continue right up until I'm 75. CDs were the perfect place to put a lot money for me, as long as I was ale to beat the rise in cost of living, I have them spread out over several banks to avoid the FDIC insurance limit and felt this was the only 100% safe route.

Gold is certainly an interesting investment but the problem is cashing it in. I had about 15 Krugerrands in the early 90s and thought everything was good as gold was on its way up rapidly... Until I tried to sell them. I had plenty of buyers willing to give me the face value for them, all of $20, but not the $450 gold price. I was lucky in that I kept the receipt and found the old seller and sold them back. I was very lucky because he was done for double selling 600oz silver bars about a month later. Had a bunch of Royal Bank 1 oz and 10 oz bars also. I was able to sell them back to the bank but they were somewhat reluctant. I wouldn't be too sure the bank would buy them back if things go really pear shaped - like now; after all there's no law that says they have to buy back. The way I figure it, gold isn't as good an investment as people think as the gold will only be worth what someone will be willing to pay you. Which may not be much at all. Or you will have to wait till the economy is back in positive territory before you may get market value.

And then there's the other avenue of buying paper gold... Heard all sorts of stories and nearly got caught in one scheme where the sellers were selling to more than one buyer.

In this market I'd be looking at investing in gold and or silver mining company stocks.

[dennis thompson]

If you want to invest in precious metals & don't want to hold the physical product you can invest in ETF's which trade like stocks & can be sold any day the stock market is open, I've done it for both gold & silver. The gold ETF symbol is GLD, the silver symbol is SLV & the precious metals ETF (a combination of gold,silver, platinum & paladium, it's mostly gold & silver) is GLTR. There is even a gold miners ETF,symbol is GDX. If you look over the past year on Yahoo Finance gold is up about 22% while the miner ETF is down a couple of percent. Also if you look at the price of the gold miner ETF over the last year it's a pretty wild ride up & down. While I've bought both gold & silver ETF's I've found them to be too volatile for me, I'll stick with high dividend , high quality stocks & GNMA funds. Vanguard does have a couple of dividend ETF's, one called Dividend Appreciation (VIG) & one called High Dividend Yield (VYM). These allow you to get more diversification than buying a few individual stocks with high dividends. For example the High Dividend Yield ETF owns 430 stocks & the Dividend Appreciation holds 127 stocks. I currently own the Dividend Appreciation ETF.
Finally I'd suggest you might want to speak to a "fee only" professional financial advisor/planner, who would know a lot more about investing ,than a bunch of woodworkers, whose main concern is how to cut a perfect dovetail.:)
Dennis

[Rich Engelhardt]

Thanks for the suggestions.I'm 45, retired, not married, no kids
No problem!

We can work out the adoption details later - dad!
;)

If you aren't interest in adopting a 59 year old son (if I shave my beard off and color my gray hair & lose some weight, I can pass for much younger ;) ), then how about a 56 year old daughter!
I'll go wake up my wife and tell her she's moving to Hawaii. (she doesn't have to shave her beard off BTW, :D & she actually could pass for a teenager w/out too much efffort).

[Phil Thien]

Hey Mort, are there any good investment real estate deals available in Hawaii? I'm not sure if you guys have suffered the same downturn in real estate as the rest of us. If inflation hits hard, real estate is a great hedge. And real estate in Hawaii might be even better than real estate on the mainland.

[Steve Griffin]

Pay off debt is the ONLY thing we are investing in.

[David Weaver]

I am in the market, just mostly plain lower-cost target date funds. I think the idea that there is a substantial real return anywhere with reduced risk is not true, the market is starving for such a thing (its yield would be ironed out quickly by increasing prices). To have something like that, you have to have underlying real economic growth and projected underlying real economic growth.

Gold is too volatile for me to consider as anything other than a short term hedge, or a small portfolio part. Great for those people who have ridden it this far, but appreciation in the long term is too dependent on a long-term negative economic outlook and the assumption that in a true economic meltdown, the government won't ban ownership of it again, or confiscate it at a reduced price.

Fixed assets....well, let us know the bond values when interest rates go up again. May be a while, but the results will be predictable when they do.

So, for me, target date funds for lack of anything else. If you can't tolerate volatility in this market, I don't know where you can get any return. Getting into low-yielding fixed assets and paying taxes on returns that are below the inflation rate (which shouldn't occur, anyway, nominal positive returns and negative real returns isn't an appreciation of anything) is hopefully something people will only do if they may absolutely need the money in the short term.

[jared herbert]

Buy farmland. Rent it out, this can be done through a farm manager. You get income every year, from the rent which could be 3 to 5 % plus a high probability of appreciation. Farm land has out performed the dow jones for many years. It has its ups and downs but you can go out and kick the dirt if you want. Much better investment than gold. I am a farmer, have been for 40 years. Jared

[Kevin Groenke]

I was just looking for a place to put some cash... pretty slim pickings. Seems late to get on the precious metals bandwagon. Been chasing "high yield" checking accounts for a few years: it was good for a while (4 accts, 50k@~5%) but it's pretty slim pickings now (3 accts, 50k@~3%). Many conditions need to be met to get the maximum yield.

Pretty good info at:
http://www.depositaccounts.com/

http://www.fatwallet.com/forums/finance/

I (http://www.depositaccounts.com/)f you find something simple and safe, please share.

-kg