Interest Rates

Was there a recent drop in interest rates for money market savings accounts.

 

You mean it can go down from.01%

 

Yep it sure can.

See Germany and negative savings rates.

 

Well, I hope we're a ways from that, obviously holding cash(real cash) would be the move then. I do realize the govt is trying to eliminate that too.

 

After I saw how much my money market savings account just wasn't doing any good for me in the bank, I took a look at the online banks and moved my money over to Ally. Their .99% APY isn't a lot, but it's much better than the .01% my local bank gave. I still keep an account with the local bank open so I can have quick access to cash since it takes about 3-4 days to move money out of my Ally account though.

 

we have a rewards checking account that pays 2% up to the first $50K
beats most MM or CD rates and is a liquid as can be

 

Rates are biased upwards right now but there is going to be some pressure on money markets for the next year or so as some of the new SEC regs post-financial crisis start going into effect (including gates). So depending on the bank, especially if it manages a lot of sweep accounts for brokerages, you can see rates drop as bigger clients move out of them into new products without gates (like super short-term bond and commercial paper funds).

 

Rates have been theoretically biased upwards for about 4 years now.

I'll believe it when I see it.

 

Ha, true. Should have said biased upwards by the Fed. The bond market has been a lot less optimistic.

 

Government cannot afford to pay expenses and interest with rates this low. They will never substantially increase until the world flees the dollar. Currently, Japan and Europe isn't doing much better so the Fed can get away with this scheme. Sucks for savers and seniors.

 

So tell me how even though I have deposited $5K over the last year my monthly interest paid is half what it was one year ago.

 

When we retired 14 yrs. ago cd's were paying pretty decent interest,gave us a lot more money to play around with . Luckily we were able to do a lot of traveling etc . in those days. Today I play it a little more closer to the vest . My solution for picking up a few xtra fun bucks is my pt job. I honestly dont mind going to work a day or two because it's not really what I call work and I work with a good crew of other seniors ,we have a lot of laughs and get paid half the time for just riding in a van back to our starting point. I know work is a dirty word for a lot of retired guys but I honestly dont mind it.

 

I'm sure your bank lists their interest rates somewhere on their site, it sounds like it's gone down, either that or maybe they're dinging you with some monthly fee's that are eating into your interest.

 

A suggestion...Try GE I Plus they pay a "whopping" 1.05%, but not FDIC insured. It operates like a checking account.
Also, GE announced they were selling off all of their financial businesses, so maybe all that will also change.

 

One may want to spread what they they typically purchase in CD ladders over several dividend paying firms across different industries to earn a decent rate (whether you reinvest or keep the dividends to spend), you pay a lower tax rate for stocks held over a year, and you have some upside vs. a bond or CD which only decreases in value (at least in this environment) due to inflation.

For example, I've been a long term investor in Anheuser Busch, which became InBev several years ago after being purchased by the Belgium firm which owns Stella Artois and Becks, among other brands. You pay foreign tax on these particular dividends, but they are deductible as long as you don't hold them in a retirement account.

Pick companies with a solid balance sheet and have a solid dividend history (continuous and growing dividends over decades).You can invest in your local utility and have the dividends cover your utility bills.