Saturday, April 2, 2011

Current Roth IRA... little changes for the future...

Speaking of Cd Rates… I took a little look at the cd’s inside my Roth IRA. With the help of’s calculators, I realized it was smarter to close some of my low earning CD’s, take the 3 or 6 penalty (mere pennies because the rate was so low), and open a new CD at the new rates because I’d make the amount I’d loose from redeeming them early (AND I’d earn a few more dollars in profit.) back.
Since the money in this account is strictly CD and Savings accounts with No market risk, it’s important to chase those Dollars and Cents. For those of you who don’t know, this was the money I “played with” in a Roth IRA in many different mutual funds, cd’s, ect while I learned how to invest. I pulled the money out after I’d made back all I’d put in there, plus a couple hundred dollars. Yes, in hindsight, I should have kept it in there for the full market recovery, but that’s part of the lesson I learned. I ultimately pulled the money out because I didn’t like the funds I could invest in because they were loaded with insane fees. Since most people don’t open a Roth until they are 25, I’m okay with this money being out of the market for now (since I’m still 24) and It reminds me of all the lessons I’ve learned along the way… Plus, I’ll be opening a real ROTH IRA that will be invested this year in Mutual funds at Vanguard (with really low rates in a target date account) when I scrape together the $3,000.00 I need (and I’ll max it out or die trying).
So, back to the Cd rates. I closed 3 CD’s earning 1.25%, and opened one combined CD at 2.0%.
I also have 2 CD’s earning 1.40%, but I’d make more if I let them naturally mature than pay the penalty because they are going to be done in October of this year.
Finally, I have 2 Cd’s at 1.50%, which I’d earn more money on if I closed (& took the penalty) and re-opened a new CD because of the time left that they have on them. Its only about $2 per cd in profit, but that’s $2 more in 2 years instead of $2 less in like 3 years… so I’m better off closing and re-opening a combined CD.
My 14 cd’s at 1.75% will stay the way they are because it’s not worth the penalty. I’ll re-evaluate them later on if rates rise.
And now I have a good chunk at 2.0%!

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