Jewish World Review May 22, 2000 /17 Iyar, 5760
Are callable CDs a waste of time?
DEAR BRUCE: I recently purchased some callable CDs that pay 7-1/2 percent. How are they different from regular CDs? -- J.W., via e-mail
DEAR J.W.: The difference is in the callable feature. It means that at any time, with notice, the bank can redeem your CDs by paying off the balance and whatever interest is due, as opposed to the regular CD, with which the timeframe is agreed upon in advance. A callable note is an open-ended proposition.
DEAR BRUCE: I am purchasing a new SUV. Originally, I wanted to put about half of the money down -- about $10,000 -- and take out a loan for three years. Someone suggested that I take the money that I would have used as a down payment and invest it in a CD and take a five-year loan. The total cost is going to be $24,500, tax included. -- L.B., via e-mail
DEAR L.B.: I can't imagine that the interest on the automobile loan would be less then the interest the CD is paying. Doing it the way that you suggest would simply cost you more money. But if you were to put down a little bit of money and invest the rest in the marketplace, you may very well outpace the cost of the loan.
Going from a three- to a five-year loan on an automobile is, in my opinion, very, very foolish. If you can't afford to pay it off in three years, then you can't afford the vehicle.
DEAR BRUCE: We are a retired couple who manage to make it through medical bills and taxes with a little left over. We have 11 grandchildren, and the oldest, who's 22, is getting married. We would like to give her $500 for a wedding gift. We would also like to give something to the other 10 grandchildren.
We thought of savings bonds, but there is the length of maturity. We also thought of CDs, but they have to be renewed each term, and with the youngest child being only 5, we didn't want to have to get involved with renewals, as we might be on our way to "happy land." What are your thoughts? -- W.W., New York
DEAR W.W.: Keep the money and leave the kids whatever you choose to when you leave this mortal coil.
I have no problem with the wedding gift for the one getting married, but what makes you think you have to do something equal for the other 10 grandchildren? I would keep that money and use it for your own well being, and if there is any money left over in your estate after you pass away, then remember them in your
Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).
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