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Author: activeREinvestor Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35357  
Subject: Re: CDs? Bonds? Notes? - Where should my money g Date: 3/1/2005 4:41 PM
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I agree that when you start talking about 6, 7 or even 8 figures the slight difference in interest can buy something real or significant.

My larger point is people should consider how they value their time. If their time has marginal value there are two suggestions. Do something that really matters in their life. Or find investments that they do not already understand that they could master if they invested time.

If someone has $400,000 invested in what is essentially CD rates I have a hard time understanding the logic.

1. They could not spend it in the short term so not all of it is needed for living expenses. They might not want to take risks but holding it at CD rates is a bit of an extreme solution.

2. There must be something that will spread out the maturity, provide similar short term cash access and help shift up the returns on the cash not needed now.

I can suggest a few things I like that pay much better. That becomes a red herring and people argue if returns that I earn are realistic (my earning them makes them realistic in some fashion so the question is really something else like can another person earn such returns).

I completely agree that retired people should take less risk then someone who is 30. At the same time someone who is 65 and only earning CD rates will have inflation kill them financially before they actually die based on today's average lifespan.

Having a debate about this or that CD rate and how to get 0.5% better on an annual basis is really the tail wagging the dog.

Bottom line. I am arguing that people need to really continue their retirement horizon and think about how they invest their time educationally. Chasing marginal differences in liquid investments vs. learning how to produce a range of returns that are risk adjusted for their situation and education is a better use of time IMHO. Sorry if I appear not to be so humble.

John
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