Gyroscopic Investing

I have some money in high-interest savings accounts at non-local banks.  All three of these banks are in different states from the one I live in.  I'm planning to take some of this money out to fund my PP, but I'll probably leave some in as part of my cash (I know that's not the ideal PP way, but I'll take a little risk for convenience at this point).

Anyway, how can I check on these banks and see whether any of them are in shaky financial condition?

Free:  https://origin.bankrate.com/rates/safe- ... Promo.aspx

http://www.federalreserve.gov/newsevent ... a.htm  the horses mouth.

stuper1 wrote: I have some money in high-interest savings accounts at non-local banks.

Say what? Can you please explain to an old-fart like me what currently constitutes "high interest" on a savings account? When I see a bank advertising "great rates" nowadays I'm thinking they have decided to be bold and beat the competition by offering something like .15% instead of .14%.

notsheigetz wrote:

stuper1 wrote: I have some money in high-interest savings accounts at non-local banks.

Say what? Can you please explain to an old-fart like me what currently constitutes "high interest" on a savings account? When I see a bank advertising "great rates" nowadays I'm thinking they have decided to be bold and beat the competition by offering something like .15% instead of .14%.

Online-only savings accounts with banks like HSBC and ING Direct (now CapitalOne 360) offer about 0.75%. Just a few years ago when I opened one with HSBC, I was getting 6%. Now my 30-year bonds are offering a bit more than half that. What a world, huh?

Pointedstick wrote: Online-only savings accounts with banks like like HSBC and ING Direct (now CapitalOne 360) offer about 0.75%.

Or you can get 0.90% (variable) in savings or money market.  0.94% locked in for a 1yr CD.  1.59% for a 5yr CD.  Or 1.09% for 2 years, and you can raise the rate once (if rates go up).  1.35% for 4 years, with 2 rate options.

All you have to do is open accounts at the SINGLE major bank to fail the latest stress test, Ally Bank (formerly known as GMAC Bank, formerly part of GMAC Financial).

I have about 1/4 of one year of income in CDs there.  I'm well under the insured limit.   

(speaking of moral hazard in another thread...)

AgAuMoney wrote:

Pointedstick wrote: Online-only savings accounts with banks like like HSBC and ING Direct (now CapitalOne 360) offer about 0.75%.

Or you can get 0.90% (variable) in savings or money market.  0.94% locked in for a 1yr CD.  1.59% for a 5yr CD.  Or 1.09% for 2 years, and you can raise the rate once (if rates go up).  1.35% for 4 years, with 2 rate options.

All you have to do is open accounts at the SINGLE major bank to fail the latest stress test, Ally Bank (formerly known as GMAC Bank, formerly part of GMAC Financial).

I have about 1/4 of one year of income in CDs there.  I'm well under the insured limit.   

(speaking of moral hazard in another thread...)

For some reason this thread jogged a memory of when I first opened up a savings account to save money for college when I was a teenager. That would have been in the mid-60's. I remember doing calculations in my head about the interest rate and thinking that everything I was told about putting money in the bank with compounding interest was nonsense. I think the rates were less than 2 percent and I quickly concluded that this was no way to get rich.

Somewhere along the line this changed as we headed into the 70's and as well as I can remember from that time forward a 5 percent interest rate was considered fairly modest. It wasn't even that long ago that you could park your money in your brokerage money market account and earn 5 percent.

My parents kept ALL of their money in cash throughout their 30 years of retirement and the interest was always a reliable income stream.

They are both 90+ years old and still alive but that reliable income stream is now gone. I think the odds of it returning in their lifetimes is pretty remote.

I've been reading Craigs and MT's book today and something that struck me was how even at my age you should not think that you are anywhere close to having foreseen all the possibilities.

notsheigetz wrote:I think the odds of it returning in their lifetimes is pretty remote.

I've been reading Craigs and MT's book today and something that struck me was how even at my age you should not think that you are anywhere close to having foreseen all the possibilities.

Best wishes to your parents traveling thru this vastly different world...

I'm a big believe in the idea that while history does not repeat, it does rhyme.  Or in other words, that while you won't ever again experience quite the exact same circumstance as happened previously, there will be similarities.

Re. the current context, I interpret that to mean that either we aren't going to see 5.25% passbook savings and 15% CDs and long-term Treasuries, or that if we do see them, it will be in a context that makes them seem sufficiently different that we won't "back up the truck" like maybe we currently think we would.

For example, not long ago you could lock long-term rates in that class if you were willing to lend money to emerging/developing market gov'ts and/or businesses or perhaps even Greece.  How many "backed up the truck" to load up on "guaranteed" income for 20-30 years?

Another example, if within the next 5-10 years, the U.S. 30yr Treasury auctions are clearing at 15% because with inflation running so high the Fed simply cannot buy enough to keep rates down and no other sovereign powers are interested in more than a nibble, will you be interested?

Acknowledging that one is completely unable to anticipate every future scenario is one of the reasons why "betting the farm" on any particular approach is unwise.  Yes, you give up potentially a LOT of return by adopting a more pragmatic approach.  But until you have the basics covered, how much, honestly, can you afford to lose?  If I point to any position and say "that becomes worth nothing" will you survive?  How many such can you survive?  What about thrive?  Or somewhere in between?

Spread your bets...  I think Harry had the right idea - widely disparate assets, including some held such that you could pick up and leave for greener pastures.

I'm getting 1.17% on up to $25k at First Bank & Trust in Brookings, South Dakota.  Weiss gives them a B- grade, which is OK I think.