Dunnan on Dollars Personal Finance Tips from Nancy Dunnan CDs? Corporate Notes? Dividend Stocks?
Options for Savers March 21, 2008 - Well, they did it again. The Fed, that is. They cut interest rates earlier this week. In order to contain the credit crisis, the Federal Open Market Committee cut the federal fund rate (the rate banks charge one another for overnight loans) by three-quarters of one percent, to 2.25%. This is the sixth cut in seven months.
So where's a fellow to go now to get a decent yield? It's not easy. And the higher yields come with higher risks. But we've rounded up several fairly safe possibilities. Please realize, however, that by the time you read this, these yields may have declined a bit. Bank CDs o Two federally insured banks are paying 3.85% on their 6-month CDs: Corus (800-989-5101) and Excel National (888-392-5265). o Discover Bank (800-347-7000), also federally insured, is paying 4.18% on its 5-year CD. Taxable Money Market Funds o If you have $25,000 to invest, the Dreyfus Basic Money Market Fund (800-782-6620) is yielding 3.54%. o If you're looking to stash $5,000 somewhere, then Morgan Stanley's Active Assets Money Fund (800-869-6397) is paying 3.52%. o With a minimum of $3,000 you can get 3.29% in Vanguard's Federal Money Market Fund (800-662-7447). o Manager's Money Market Fund (800-548-4539) requires only a $2,000 deposit and on that you'll earn 3.25%. o It takes only $1 to open a money market account at PayPal (http://www.paypal.com/). However, your money will not be federally insured. Savings Account o The ING Direct Savings Account (http://www.ingdirect.com/) has no minimum requirements, no fees and no penalties. It is currently paying 3%. Corporate Notes o General Electric is paying 3.75% on its GE Interest Plus Corporate Notes for amounts under $15,000 and 4.05% if you invest more than $50,000. Your money will not be federally insured, so you're counting on GE being solidly run and profitable. Details: http://www.geinterestplus.com/. o Ford has a similar offering and pays slightly more. Why more? The company has a lower credit rating than GE. On investments of less than $15,000 you will earn 4.15%. On amounts over $50,000, it's 4.45%. Details: www.fordcredit.com/interestadvantage. High Dividend Paying Stocks We've discussed the "Dividend Achievers" in previous columns. These are companies that have increased their dividends every year for a minimum of ten years. The top three currently are: ExxonMobil (NYSE:XOM) with a 1.66% yield General Electric (NYSE:GE) with a 3.48% yield Procter & Gamble (NYSE:PG) with a 2.07% yield. - Nancy Dunnan
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Tapping Your 401(k) If you want to suggest a column topic for Nancy, drop her a line.
Like what Nancy has to say? you might be interested in the new edition of her book:
How To Invest $50 To $5,000: The Small Investor's Step By Step Plan for Low-Risk, High-Value Investing |
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