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CDs at a little over 2%.

Good evening, rohry. Thanks for posting the stock market wrap up.

The quote here is really misleading concerning bank CD rates. I'm getting this from the August 2002 copy of MONEY magazine, page 139:

6 Month CDs Average 1.82% Highest 3.25%

One-year CDs Average 2.25% Highest 3.30%

Five-year CDs Average 4.41% Highest 5.45%

There are banks with money-market accounts at 3%. Yet nobody is saying the prudent thing. For people nearing retirement, the money they will absolutely need is best off in bank-insured CDs. That's what I do with my Roth and SEP, and I don't have to pay taxes on the interest, and I don't risk a down year where I'm sheltering a loss...there will be a lot of that going around this year.

I really think it's unethical that brokers aren't telling people on the cusp that they really should have that 100% necessary money be 100% safe. When I signed up for my trading account last year, I got lectured and treated like an idiot because I explained my real money was bank accouts, and I was using my brokerage account for knowledge. I can't imagine the effect this attitude has on people who aren't, well, smarter in Math that fools like this broker. (yes, I complained)

On another note. For the last two weeks, I did a lot of research and kept up on prices and made some moves that I'm pleased with. I caught two stocks that were simply undersold...there just weren't buyers out there. I bought a few hundred shares of each, but I held back. Why...in the back of my mind I was thinking "Maybe there's a scandal that insiders know about". They are both up this week...but I don't like the feeling that I'm at a disadvantage because of dishonest practices.

(If anyone wants the names of those banks from Money, I'll send them via mailbox...they're as of June 4)

What a perfectly timed post! I just got off the phone with my dear mother (she is 70 and very active and very savy) and we were discussing money market accounts.

"When I signed up for my trading account last year, I got lectured and treated like an idiot because I explained my real money was bank accounts, and I was using my brokerage account for knowledge. I can't imagine the effect this attitude has on people who aren't, well, smarter in Math that fools like this broker."

Keep doing what you are doing! Don't trust anyone else to tell you what to do with your hard earned money. I tried to tell my mom to go a differnt way with her funds, and she was uncomfortable. I said, it's your money do what you think is best for you. Don't let the "wet-behind-the-ears" stock advisors belittle you. Ask them if they have ever been in a bear market, and I don't mean that little blip in 1987. Tell them that the market went nowhere from 1966 to 1882! That can and will happen again.

For people nearing retirement, the money they will absolutely need is best off in bank-insured CDs.

I have a few comments about your proposition:

1.) Interest rates most likely will rise as the credit crunch tightens. Money locked in long-term CDs will have a poor rate when compared to these high future rates. If your CD were treated as a bond, it would be losing principle in this situation.

2.) Some banks may fail - if you invest through a bank make sure the account is FDIC insured. Avoid banks offering consumer credit cards. Distribute your money across several banks.

3.) Consider short-term Federal bonds. Roll mature bonds into new issues. Almost zero risk of capital loss. Since the bonds are short-term, you will have new issues with competitive interest rates every new purchase, so you won’t be exposed to currency inflation losses as you would with a longer term fixed interest instrument.

You won't get rich investing in either CDs or Fed short term bonds, but the idea is to retain your principle during the next couple of rough years ahead.

I’m tired of seeing the Wall Street money machine steal retirement money from trusting fellow Americans. I believe in free markets and buyer beware, but when you have an ongoing conflict of interest between brokers, analysts, and the media misrepresenting the facts the average investor doesn’t have a chance.