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How Much Can You Really Earn With the Best CD Rates?

This caught my eye from NerdWallet Finance about CD Rates and investments.

Let’s face it; today’s interest rates are pretty ho-hum across the board. They’re so low that you may be wondering if moving your money to another investment is worth the trouble. Even at current rates, small differences in earned interest really add up, especially if your investment is sizable and you’re willing to give it some time. Are high-yield CDs still your best option, and if so, how much can you realistically expect to earn?

Comparing the averages

For those who can live with the risk of losing some of their initial deposit, investments such as stocks present the chance for the highest potential gains. Many of us just don’t have the stomach for that kind of risk and volatility, however. If your risk tolerance is low, high-yield CDs are your best alternative, offering the highest interest rates of all types of government-insured investments. Even though these rates are currently on the low side, CD returns are still outpacing inflation in many cases. Here’s how the national average annual interest rates for various types of investments stack up, according to the FDIC:

  • Money market account: 0.08%
  • Jumbo money market account: 0.13%
  • Savings account: 0.06%
  • Checking account: 0.04%
  • 12-month CD: 0.20%
  • 12-month jumbo CD: 0.21%
  • 24-month CD: 0.33%
  • 24-month jumbo CD: 0.35%
  • 60-month CD: 0.76%
  • 60-month jumbo CD: 0.77%

Keep in mind that these figures represent national averages for rough comparison purposes and you’ll be able to find individual products in all categories offering substantially higher interest.

What do all these figures really mean to me?

At first glance, these interest rates seem disappointingly similar. However, you might be surprised at the difference your investment choice will make over time.

Suppose you start out with $20,000 and you deposit it all in a money market account at your local bank for the national average rate yield of 0.08%. Assuming you don’t add any additional funds, at the end of a year you’d have earned $16 in interest, bringing your total balance to $20,016. Wait another year and your total balance would only reach $20,032. Even if you somehow forgot about your account for five years, by the end of that time your total balance would have only grown to $20,080. In other words, you’d have to wait about five years just to earn enough interest to pay for a fancy dinner date!

If that same $20,000 investment sat in a regular savings bank account paying the national average interest yield of 0.06%, the story is even sadder. You’d end up with a total balance $20,012 after a year and $20,060 after five years.

The picture begins to change as you explore CD earnings. For example, $20,000 invested in a 12-month CD at the national average interest yield of 0.20% would earn $40 in interest by the end of one year. Not much, but it amounts to more than three times what you’d earn if your money remained in an average savings account that year.

If you were willing to wait five years for your CD to mature, you’d really see a difference in your gains, with your balance at maturity totaling $20,761 at the national average 60-month CD yield of 0.75%. That’s over $700 more than you’d earn if you’d left that money in an average bank savings account for the same period of time.

Today’s best deals

With a little homework you’ll soon discover that you don’t have to settle for national average returns. While individual bank offers vary, you’ll find some of your best deals with online banks, since they don’t carry the same overhead costs as traditional banks. Top 12-month CD offers currently range from about 0.95% to 1.07%. At 1.07%, your $20,000 investment would be worth $20,214 after 12 months.

For those willing to shop around, a five-year commitment brings even better rewards, with the best deals on high-yield CDs paying between 2% and 2.23%. At 2.23%, that $20,000 investment would be worth $22,331 when it matured at 60 months. That’s over $2,000 more than if you left your money sitting in an average savings account!

Protect your earnings

Although you’ll earn the highest interest on longer-term CDs, The Wall Street Journal reports that the majority of Federal Reserve officials believe that the government will begin increasing interest rates in 2015. If you lock in your investments for too long, you may miss out on some much better opportunities next year and beyond.

Experts recommend a laddering approach when investing in CDs. Laddering provides a balance between always having some cash ready for better investments and to protecting your portfolio’s growth should interest rates fall. To find out about the best current deals on high-yield CDs, visit NerdWallet’s CD rate comparison tool.

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Mapping the Cheapest Cities to Teach Abroad

Cost of Living

From Citylab on The Atlantic, finally I can figure out what it costs to teach abroad

… when wanderers wonder if their salary might stretch further in Barcelona or Milan, why not direct them to the experience of their peers? That’s the premise of Expatistan, a user-generated cost of living index designed by web developer Gerardo Robledillo.

After studying various reports from the United Nations and national governments, he devised a survey featuring several dozen common indicators of the cost of living — the price of a monthly transit pass, a pint of beer, a house cleaner, and so on. (National indicators alone, Robledillo says, were not so useful as source material: "The differences between a capital city and a smaller city are way bigger than different capitals from different countries.")

Since Expatistan launched in January 2010, users have entered more than 600,000 points of price data. Each individual question factors into one of six categories — like Transportation, or Housing — which then produce a final comparative judgment: "Cost of living in London is 8 percent more expensive than in New York City," or "Cost of living in Paris is 132 percent more expensive than in Budapest."

Since no government data goes into these calculations, the figures reflect the biases of the users. …..

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Top 10 Life Regrets

regret

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100 TED Talks

From LifeHacker: You Can Easily Learn 100 TED Talks Lessons In 5 Minutes Which Most People Need 70 Hours For

The other week the author watched 70 hours of TED talks; short, 18-minute talks given by inspirational leaders in the fields ofTechnology,Entertainment, and Design (TED). They Watched 296 talks in total, and went through the list of what they watched, weeded created a list of the 100 best things they learned !

This article isn’t entirely about productivity, but you’ll learn a thing or two. Here are 100 incredible things they learned watching 70 hours of TED talks last week!

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Traveling For Christmas

I used to travel a lot for Christmas Vacation, here and there, getting to see all the family.  When my children were small I stayed home more at Christmas to create a family memory and a shared bond of togetherness.  And now I am back to traveling again, here and there.  Mint.com released an Infographic summarizing the hustle and bustle of the Christmas Holidays and travels and with some of my family and my own children traveling this year, I took a look at it.

How-do-American-Travel-During-the-Holiday-Season

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Replace or Repair: Dropped Galaxy SIII

I dropped my Samsung Galaxy SIII another time, easily in the double digit numbers, and broke the glass for the second time.  The question I pondered this morning was: replace it with a Galaxy SIV or repair it by replacing the front panel?  Balancing the need to remain up to date with the fact that the phone has not left me feeling like I am behind even for a day.  Magnifying the concern over not wasting the phone I am also aware that I might like the Note III and I would love to consider the Nexus 5 although it isn’t out.

810zyYQ9Q4L._SL1500_I have chosen to replace the front assembly which will also remove all the nicks and scratches.  I purchase the IFIXIT.com assembly and finally have chosen a protective case.  I purchased a Samsung Protective Plus Bumper Case for it.  Don’t ask why I didn’t have one from Day 1.  I think it was wanting to get a good price on a good looking protective case.  Now I think I should have my head examined, next time I will buy a case every time I want a new one and remember it is cheaper than the product at all times.

This will be what I am doing this weekend.

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Skype Problems

The other day I was having problems with Skype, the individual at the other end was having troubles with Google Hangouts and we finally got FaceTime to work, although they had difficulty finding the app, despite it ringing.

But it isn’t an individual problem, it occurs to all of us, all the time, so much so that Rob Cottingham hit the sweetspot of my thinking with this infographic.  I hope Rob actually puts creating this as a wheel to spin on Kickstarter, I know I would buy one as a desk toy.

Click on the image for all his useful tips including his quick troubleshooting guide to ensuring a crystal-clear Skype call:

  1. Make sure you aren’t using your Internet connection for anything demanding, like downloading large video files or sending a three-line email message.
  2. Don’t run your microwave oven during your call if you’re on WiFi. Maybe you should unplug it. You know what? Give it to someone who lives at least three kilometres away.
  3. Are you wearing anything metal? Take it off. Surgical implants? Dental fillings? A pacemaker? Lose ‘em.
  4. Write up a transcript of your side of the call beforehand, and send it to the other participants. Ask them to do the same. Hey! Now you don’t need to call. So easy!

 

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