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CNET
27-05-2025
- Business
- CNET
Wait! Don't Move Your Retirement Fund From the Stock Market to a CD Before Reading This
Yes, CDs are safe. But that comes at the cost of higher earning potential. LordHenriVoton/Getty Images Last month's stock market drop was scary, especially if some of your retirement savings are in stocks. And while the market may have recovered, many investors are still shaken. If you're wondering whether you should pull your money out of your 401(k) or other retirement account and put it in a certificate of deposit, it's understandable. But before you make any drastic moves, consider what the experts have to say. "CDs can feel like a safe haven in this kind of environment because they offer predictability, which is appealing when everything else feels shaky," says Taylor Kovar, certified financial planner and CEO of 11 Financial. But, he warns, "there are some trade-offs." Here's what you need to know before you upend your investment strategy. Read more: The Simple $1 Trick Helped Me Pay Off Debt and Retire on My Terms. Here's How It Works If you have decades before retirement, stick to the plan Stock market swings are stressful, but a smart investing strategy factors in the dips. The S&P 500 has historically delivered around a 10% annual return for investors who keep their money there for decades. If you have many years before retirement, you can afford to ride out the waves and grow your money over the long term. "One of the biggest retirement risks is getting too conservative too soon," said Noah Damsky, CFA, principal of Marina Wealth Advisors. "Retirement can last for over 20 years, so get too conservative too soon, and you risk prematurely depleting your portfolio." Keeping some of your retirement savings in low-risk assets is wise, but the amount depends on a number of factors, including your age and risk tolerance. A financial adviser or robo-advisor can help you create the best strategy for you. If retirement is near, low-risk assets like CDs make more sense If you're close to retirement -- or are already retired -- you have less time to recover from stock market dips. So, your priority should be less on growing your nest egg and more on preserving it. In this case, allocating more of your savings to low-risk, fixed-income assets like CDs and bonds can be a smart move. Again, a financial adviser can help you determine your best route. Don't let emotion derail your retirement plan Whatever your age and investment goals, don't let the economic headlines scare you into making any drastic changes to your retirement strategy. "For investors rattled by the recent dip, I'd say this: Don't make emotional decisions in response to short-term volatility. Step back, review your timeline, and make sure your investments match your goals and risk tolerance today, not what they were five years ago," said Kovar. "A well-balanced plan usually includes both stocks and CDs, one for growth, the other for peace of mind."
CNET
23-05-2025
- Business
- CNET
Thinking of Moving Your Retirement Savings From the Stock Market to a CD? Read This First
Don't let temporary market dips upset your investment strategy. LordHenriVoton/Getty Images The stock market has always had its ups and downs, but last month's plummet was enough to spook any investor. While the market has recovered, many people are still shaken from seeing their portfolios decimated overnight -- especially if a chunk of their retirement fund is in stocks. And with the economy still shaky, some are wondering if they should move their nest egg into lower-risk assets like certificates of deposit. Not so fast, experts say. "CDs can feel like a safe haven in this kind of environment because they offer predictability, which is appealing when everything else feels shaky," says Taylor Kovar, certified financial planner and CEO of 11 Financial. But, he warns, "there are some trade-offs." Here's what you need to know before you make any drastic moves. Read more: The Simple $1 Trick Helped Me Pay Off Debt and Retire on My Terms. Here's How It Works Is retirement a long way off? Stick with your current strategy Stock market swings are scary, but a smart investing strategy factors in the dips. The S&P 500 has historically delivered around a 10% annual return for investors who keep their money there for decades. If you have many years before retirement, you can afford to ride out the waves and grow your money over the long term. "One of the biggest retirement risks is getting too conservative too soon," said Noah Damsky, CFA, principal of Marina Wealth Advisors. "Retirement can last for over 20 years, so get too conservative too soon, and you risk prematurely depleting your portfolio." Keeping some of your retirement savings in low-risk assets is wise, but the amount depends on a number of factors, including your age and risk tolerance. A financial adviser or robo-advisor can help you create the best strategy for you. Nearing retirement? Moving more money into a CD could make sense If you're close to retirement -- or are already retired -- you have less time to recover from stock market dips. So, your priority should be less on growing your nest egg and more on preserving it. In this case, allocating more of your savings to low-risk, fixed-income assets like CDs and bonds can be a smart move. Again, a financial adviser can help you determine your best route. Don't give in to panic Whatever your age and investment goals, don't let the economic headlines spook you into making any drastic changes to your retirement plan. "For investors rattled by the recent dip, I'd say this: Don't make emotional decisions in response to short-term volatility. Step back, review your timeline, and make sure your investments match your goals and risk tolerance today, not what they were five years ago," said Kovar. "A well-balanced plan usually includes both stocks and CDs, one for growth, the other for peace of mind."
CNET
21-05-2025
- Business
- CNET
Should You Move Your Retirement Fund From the Stock Market to a CD? Here's What Experts Say
A smart investing strategy balances risk and reward. LordHenriVoton/Getty Images Yes, the stock market has recovered from last month's freefall, but plenty of investors are still shaken. Watching your portfolio plummet overnight is scary for anyone, but if most of your retirement fund is in stocks, it can be especially terrifying. With the economy still far from settled, should you consider pulling your retirement savings from the stock market and putting them into lower-risk assets like certificates of deposit? That depends, experts say. "CDs can feel like a safe haven in this kind of environment because they offer predictability, which is appealing when everything else feels shaky," says Taylor Kovar, certified financial planner and CEO of 11 Financial. But, he warns, "there are some trade-offs." Here's what you need to know before you make any drastic decisions. Read more: The Simple $1 Trick Helped Me Pay Off Debt and Retire on My Terms. Here's How It Works Is retirement a long way off? Stick with your current strategy Stock market swings are scary, but a smart investing strategy factors in the dips. The S&P 500 has historically delivered around a 10% annual return for investors who keep their money there for decades. If you have many years before retirement, you can afford to ride out the waves and grow your money over the long term. "One of the biggest retirement risks is getting too conservative too soon," said Noah Damsky, CFA, principal of Marina Wealth Advisors. "Retirement can last for over 20 years, so get too conservative too soon, and you risk prematurely depleting your portfolio." Keeping some of your retirement savings in low-risk assets is wise, but the amount depends on a number of factors, including your age and risk tolerance. A financial adviser or robo-advisor can help you create the best strategy for you. Nearing retirement? Moving more money into a CD could make sense If you're close to retirement -- or are already retired -- you have less time to recover from stock market dips. So, your priority should be less on growing your nest egg and more on preserving it. In this case, allocating more of your savings to low-risk, fixed-income assets like CDs and bonds can be a smart move. Again, a financial adviser can help you determine your best route. Don't give in to panic Whatever your age and investment goals, don't let the economic headlines spook you into making any drastic changes to your retirement plan. "For investors rattled by the recent dip, I'd say this: Don't make emotional decisions in response to short-term volatility. Step back, review your timeline, and make sure your investments match your goals and risk tolerance today, not what they were five years ago," said Kovar. "A well-balanced plan usually includes both stocks and CDs, one for growth, the other for peace of mind."
CNET
07-05-2025
- Business
- CNET
The Fed Paused Rates Again. Here's What That Means for CD and Savings Account APYs
Rates remain elevated, but don't wait too long to snag a good one. Skyhobo/Getty Images Key takeaways The Federal Reserve paused rates at its May meeting. Banks tend to follow the Fed's lead when setting their deposit account rates. Today's best CDs and savings accounts earn up to 5% APY. To no one's great surprise, the Federal Reserve paused interest rates again today, keeping them at a target range of 4.25% to 4.5%. It's the third time the Fed has paused rates this year. In its post-meeting statement, the Fed noted that "Although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace." Holding rates steady allows the Fed to continue monitoring the economy before making adjustments to its monetary policy. That means you still have time to score an attractive rate on a certificate of deposit or savings account. Top CDs and savings accounts continue to offer annual percentage yields as high as 5%. But if you want to maximize your earnings, it's wise to act now. "CD rates may remain unchanged in May, but they should drift lower by June," said Noah Damsky, CFA, Principal of Marina Wealth Advisors. "I think it's a coin flip [whether the Fed] cuts rates in June. However, I am confident the Fed will cut rates by July. This all means that rates will head lower." Here's what you need to know about how the Fed's latest decision affects your savings -- and what you should do to maximize your money now. Read more: Fed Meeting Keeps Interest Rates High. Here's Why That's a Big Deal for Your Finances How the Federal Reserve influences deposit rates The Fed meets eight times a year to assess the health of the US economy and vote on the federal funds rate, the rate banks use to lend and borrow money. While the Fed's decision to change rates doesn't directly affect savings rates, changes in APYs typically follow. The changes can take several weeks or even months to take effect. Although some banks set their deposit account APYs according to the direction of the federal funds rate, timing and specific rates may vary. "Some big banks are swimming in deposits and they don't need to pay up to bring in more," said Greg McBride, chief financial analyst at Bankrate. As such, there may be dramatic differences in account interest rates from bank to bank. "People should shop around, and they shouldn't just shop around today; they should shop around a week from now, a month from now and three months from now," said Gary Zimmerman, CEO of MaxMyInterest. The Fed paused rates. Now what? Jordan Gilberti, senior lead planner at Facet, recommends preparing for the worst-case scenario when thinking about strategies for growing your savings, whether you're setting aside cash for an emergency or building a vacation fund. With rates paused for now, purchasing a CD or moving your money to a high-yield savings account as soon as possible is the best way to maximize your interest earnings. "Banks are already adjusting [rates], and we've seen a few of the high-yield savings accounts take a step back," said Taylor Kovar, CEO of 11 Financial. "It's not panic mode or anything, but if you've got cash sitting around, now's a good time to check where it's earning the most and make sure it's still competitive." You can also consider building a CD ladder, suggests John Buran, CEO of Flushing Financial, the parent company of Flushing Bank. This strategy allows you to take advantage of still-high interest rates in the short term, but also lock in rates for the long term in case APYs drop. The best savings accounts to open now Understanding the pros and cons of each deposit account type can help you make the best choice for your needs. High-yield savings account A high-yield savings account is an interest-earning account often offered by online banks, credit unions and other financial service institutions. Unlike traditional savings accounts, whose APYs can be as low as 0.01%, the best high-yield savings accounts offer up to 5% APY. Pros Some high-yield savings accounts earn more than 10 times the national average. Your money is easily accessible when you need it. If your account is held at an FDIC- or NCUA-insured institution, it's protected up to $250,000 per person, per institution if the institution fails. Cons Availability can be limited. These accounts aren't offered by all banks or credit unions. Many accounts are provided by online-only banks with no physical branches. You must be comfortable with an entirely digital banking experience. Variable rates can change at any time. Certificate of deposit A certificate of deposit is a deposit account that offers a fixed rate for a specific time, or term. In exchange for fixed growth, you agree not to withdraw your money before the term ends. The main benefit of a CD is that your money grows over time at a predetermined APY. Top CDs currently earn APYs as high as 4.5%. Pros A fixed rate applies to the CD's entire term. CDs are widely available at most banks or credit unions. If your account is held at an FDIC- or NCUA-insured institution, it's protected up to $250,000 per person, per institution. Cons Your money is tied up for the duration of the CD's term. Early withdrawal penalties reduce returns if you need to take out money before the term ends. No-penalty CD A no-penalty CD is a specialty CD that offers a fixed rate for a specific term, like traditional CDs. This deposit account doesn't impose an early withdrawal penalty if you need to access your money before the term ends. These CDs are generally less widely available, and the APYs are lower, but the additional flexibility can be worth a slight drop in rates. Pros A fixed rate applies to the CD's entire term. Withdrawals before the CD matures don't incur penalties. If your account is held at an FDIC- or NCUA-insured institution, it's protected up to $250,000 per person. Cons No-penalty CDs aren't widely available at most banks or credit unions. These CDs generally earn a lower APY than a traditional CD. Tips for finding the right savings account or CD Keep in mind that larger, brand-name banks with bigger marketing budgets may not offer the most competitive rates on savings accounts and CDs. Community or regional banks, credit unions and online-only banks often offer higher rates on deposit accounts to attract new customers. The best high-yield savings accounts continue to offer APYs up to 5%, low fees and no minimum balance requirements. The best CD rates are as high as 4.50% APY. When evaluating a savings account, note any fees associated with opening or maintaining the account. CDs offer a safe, fixed rate of growth -- as long as you can leave the funds in the account until the maturity date to avoid early withdrawal penalties. Terms can last anywhere from three months to five years or more. Additionally, confirm that your deposit is insured by either the FDIC (for banks) or the NCUA (for credit unions). This protects your money for up to $250,000 per person, per institution if the bank fails. You should also compare APYs and how easily you can access your money before making your decision. Elevated savings rates are still available With interest rates currently paused, there's still time to maximize your earnings with a high-yield savings account or CD. But the sooner you act, the better. Experts expect the Fed will resume rate cuts later this year. If you're not already earning a competitive interest rate on your savings, consider locking in one of today's best CD rates or moving your funds to a high-yield savings account to boost your earnings.
Yahoo
30-04-2025
- Business
- Yahoo
7 Ways To Repair Your Finances in 5 Minutes
Overhauling your finances might be easier than you think. Financial woes can feel daunting, but a few quick changes could make a huge difference. Whether you're looking to find more room in your budget, pay off debt or save more money, you can be on the path to achieving these goals in a matter of minutes. Try This: Learn More: Keep reading to learn seven ways to mend your financial situation in just five minutes. Scan your credit card statements for recurring transactions and really think about whether you're using all the streaming services you're paying for, said Noah Damsky, chartered financial analyst (CFA) and principal at Marina Wealth Advisors in Los Angeles. 'If you think you may still need it, cancel it and give yourself the opportunity to resubscribe if you find that you have to it,' he said. For You: Check the price, deductibles and limits of your insurance policies, Damsky said. 'Find a trusted, local insurance broker who isn't affiliated with only one brokerage firm,' he said. 'Shop your coverage every couple of years so you're getting competitive rates.' Insurance policies are designed to fit your needs, so this is an opportunity to make sure your coverage is still appropriate. 'Given inflation over the last few years, evaluate whether you need to change deductibles or raise limits, such as on dwelling coverage on your home,' he said. If your inbox is bombarded with emails from retailers offering discounts and promoting their latest products, Damsky said to unsubscribe. 'These emails are meant to get you to spend money on things you don't really need,' he said. 'Unsubscribe to declutter your inbox and save yourself from unnecessary spending.' You can't be tempted to spend if you don't know about these promotions. It's easy to tell yourself you'll save what's left in your account at the end of the month, but it can be much harder to actually have money left over. Paying yourself first can be a game-changer. 'Automate your savings to occur right after the direct deposit from your paycheck hits your account,' said Filip Telibasa, certified financial planner (CFP), owner and planner at Benzina Wealth in Sarasota, Florida. 'This way, it comes out first before any frivolous expenses.' 'Open a high yield savings account and keep at least three months of expenses in it for an emergency fund,' Telibasa said. 'If you have this in place, you are less likely to accumulate debt, as you have funds set aside for a rainy day.' Not only will you be financially prepared, you'll also be racking up interest payments. 'Focus all your resources — cash flow — on paying down high interest rate debt — anything with a rate above 10%,' Telibasa said. 'This means turning off other savings, if needed.' Paying off high-interest debt may take years, but creating a plan to do so can be done quickly and easily. 'The idea is that you cannot earn more than the 10% you are paying on the debt consistently, so you are losing money overall,' he said. 'Consider how long you will use an item you purchase as a consumer,' Telibasa said. He said to think about whether it makes sense to pay a little more upfront, if it means being able to use the item for a longer period of time. This can save you money in the long run, because you won't have to quickly replace an item that was cheap in more ways than one. More From GOBankingRates 5 Types of Vehicles Retirees Should Stay Away From Buying 6 Popular SUVs That Aren't Worth the Cost -- and 6 Affordable Alternatives 4 Things You Should Do if You Want To Retire Early 10 Genius Things Warren Buffett Says To Do With Your Money Sources LinkedIn, 'Experience | Noah Damsky, CFA.' LinkedIn, 'Filip Telibasa, CFP®.' This article originally appeared on 7 Ways To Repair Your Finances in 5 Minutes Sign in to access your portfolio
