Rate Roundup: Where to Save?
While the current rate environment has proven a homebuyer’s dream, it’s been a challenge for savers looking to outpace inflation.
With unemployment still hovering around 8%, Federal Reserve Chairman Ben Bernanke hinted last week at increasing efforts to stimulate the economy by driving interest rates even lower. Such a move might mean opportunity for those in the housing market but challenges for savers.
The Fed will meet this week and likely announce measures to inject money into the economy by buying mortgage-backed securities. Operation Twist, a similar plan that began in 2011, proved unsuccessful in spurring consumer spending but has driven interest rates to record lows.
Rates on 30-year fixed mortgages ticked down to 3.51% last week. Other rates stayed relatively flat. The average 1-year CDs yielded .75% last week and checking accounts just 0.57%.
As fall approaches, consider an “autumn cleaning,” or season review, of your portfolio. A balanced portfolio can curb the threat of rising inflation. But if you’re looking to secure your principle investment, consider savings accounts with online banks or credit unions, where yields are typically higher – with some online banks offering up to .95% interest with no minimum requirements. You can also purchase liquid CDs. They have on average lower yields but also fewer penalties, allowing you to stay flexible in an uncertain environment.
Photo Courtesy,Victor1558
