Comments on: “Should I invest in CDs or a Roth IRA?”

By: Ramit Sethi

Ramit Sethi — Mon, 05 Jan 2009 16:09:52 +0000

Because many people don’t just want investing to be “easy,” they want to make as much money as possible. CDs are nice and secure, but over the long run, equities provide far higher returns.

By: Jim777

Jim777 — Mon, 05 Jan 2009 15:52:19 +0000

How can a CD be bad? You cannot loose money with a CD however with stocks, mutual funds, etc. we have all seen what happened in 2008. Sure stocks go up but they also go down and the fees and complexity of stocks make them a challenge for the average person.

A CD however is SO EASY to invest in.

If I had $800,000 today, I would invest all of it into a Single 4% 1 year CD. Then I would just sit back and collect my $32,000 guaranteed profit in 1 year when it comes due.

Then, after collecting my check for $32,000 I would simply shop around and reinvest the original $800,000 into another 1 year CD with a good (4% or higher) rate of return for another year.

I would then (with a massive smile on my face) live off the $32,000 for the year, budgeting to make it last.

I could EASILY live off $32,000 a year in my area and my living situation. Sure, there would be some income tax on that but no more than with a regular job.

HOW could life get any easier??

By: E

Tue, 29 Jul 2008 19:26:45 +0000

I’m 59 1/2 and my 401k is in the dumps, can I cash it out and put the money in cd’s without a penalty?

By: Dave

Dave — Thu, 26 Jun 2008 04:06:43 +0000

Hey Ramit im only 17 n got 2 more months till ill b 18. N most of this stuff is very fucking confusing 2 me but i want 2 learn it cuz as soon as i turn 18 i plan 2 put money in2 some kind of investment. The problem is i dont have much money at all i just want 2 get started right away 2 start making money n hope i can get in2 the bigger bucks from their. So if u would please help me out n let me know what would be my best investment 2 start off with 2 get me 2 the big bucks the fastest? idc if its confusing cuz ill learn all i need 2, 2 no what im doing 2 get their. So can u give me your best advise 4 me 2 do this? n make something of my life?

By: personal finance 1 « f r a n k

personal finance 1 « f r a n k — Sat, 14 Jun 2008 19:32:09 +0000

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By: Ramit Sethi

Ramit Sethi — Thu, 05 Jun 2008 14:17:07 +0000

Rusty, I hate fees. Many of the best firms (Vanguard, TIAA Cref, Fidelity, etc) have extremely low-cost funds. As for your friends, if they were investing in equities for the short-term, that was a mistake.

In a technical sense, there’s no problem investing in fixed income for short-term investments (1-5 years), but for most people, an online high-interest savings account simplifies their life and provides comparable results.

Go try explaining what “fixed-income investments” are to a random co-worker and you’ll see what I mean. Their eyes will glaze over in 30 seconds.

By: Rusty

Rusty — Thu, 05 Jun 2008 13:28:34 +0000

You would rather someone go into a target-date fund (with it’s fees) for simplicity? Fidelity has got to be loving you. I agree that youngsters should focus on equities for the most part, but to not buy fixed-income investments for short-term goals and as a guaranteed return when markets drop and low positions make liquidity a bit tight is irresponsible. A few years ago, my 20-something friends were all into equities. Now, a lot more of them are very happy with boring fixed-income and non-volatile preferred stock. It takes getting burned only once to change your tune.

By: Ramit Sethi

Ramit Sethi — Thu, 05 Jun 2008 03:33:00 +0000

Jonathan: Or…a lifecycle (aka target-date) fund? It’s the only investment you need to get started.

By: Jonathan F.

Jonathan F. — Wed, 04 Jun 2008 20:45:16 +0000

So your argument against CDs is that they are so difficult to understand, they discourage people from investing all together and therefore should be avoided? Instead open a brokerage account and invest in the those less confusing securities, like mutual funds, ETFs, and stocks? Please, enlighten me.