Machinery_E
Titanium
- Joined
- Aug 19, 2004
- Location
- Ohio, USA
I've been talking to the bank about opening a CD to store extra cash, as the checking account is earning no interest and thought it would be smart for it to be at least making something? They came back with a variety of options. I'm new at actually having a surplus to work with so I'm confused about this, but the way the banker is talking, businesses are very much into doing this. (Might explain why it takes so long to get paid-the money is elsewhere!)
#1-Putting it in a CD-my bank is paying about .5% interest on CD's-however, they said they can get me a CD from a big name bank that would be making 1.5% interest. They said they would be making no money on this, but want to do it to keep the relationship with me. Totally safe, FDIC insure.
#2-Putting it in a mutual fund, comprised of 60% municipal bonds, and 40% stocks. Its roughly been returning about 7%. Again, no charge to do this, but said the fund or their broker charges about 1% of the earnings. Said its a more conservative mutual fund, but there is a risk of loss with this option.
#3-He started to get into this, but probably could see I was getting overwhelmed-he was saying about putting almost all my cash in one of the above, and setting up a line of credit. The way I understood it, as income comes in, you use it to pay bills-if you come up short, you use the line of credit till you get the income in. That way, more of your money is working for you.
I guess the hardest thing for me to grasp is how the bank is supposedly not making money on this-he pretty much said they want to keep the relationship with me, and for me to be happy, and if down the road I need a loan or something else, they will make money off of me then.
Banker seems to be putting no pressure on, whatever I want to do. He said it wouldn't be a problem to get the funds back out if I need it if sales get slow, want to buy some equipment, etc.
Thoughts?
#1-Putting it in a CD-my bank is paying about .5% interest on CD's-however, they said they can get me a CD from a big name bank that would be making 1.5% interest. They said they would be making no money on this, but want to do it to keep the relationship with me. Totally safe, FDIC insure.
#2-Putting it in a mutual fund, comprised of 60% municipal bonds, and 40% stocks. Its roughly been returning about 7%. Again, no charge to do this, but said the fund or their broker charges about 1% of the earnings. Said its a more conservative mutual fund, but there is a risk of loss with this option.
#3-He started to get into this, but probably could see I was getting overwhelmed-he was saying about putting almost all my cash in one of the above, and setting up a line of credit. The way I understood it, as income comes in, you use it to pay bills-if you come up short, you use the line of credit till you get the income in. That way, more of your money is working for you.
I guess the hardest thing for me to grasp is how the bank is supposedly not making money on this-he pretty much said they want to keep the relationship with me, and for me to be happy, and if down the road I need a loan or something else, they will make money off of me then.
Banker seems to be putting no pressure on, whatever I want to do. He said it wouldn't be a problem to get the funds back out if I need it if sales get slow, want to buy some equipment, etc.
Thoughts?