Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 1
mollyd77 asks,

r am I thinking of that wrong? I mean, $1,000 put into a year long CD would return, say $1,050. And then I'd take the original $1,000 and reinvest the $50. If that was done every month, would that extra $600 basically equal the inflation? Or am I completely muddled in my thinking?

Right now you can only get about a 2% yield on a 5 year CD, not 5%. And you have to pay taxes on the 2%, leaving you with something less.

The problem is what happens if we have a situation like the late 1970's where the inflation rate is 10% per year, or more. That's why you need a big pot of cash to protect yourself under those conditions.

Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.