Play the Market with Variable CDs
As a result, many banks and financial institutions are now offering CDs that have fluctuating interest rates and flexible maturity dates. You often have to give up a little bit of yield in order to gain flexibility with your CD. However, many CDs offer benefits that are just too good to pass up.

Bump-up CDs have become all the rage in banking institutions. These CDs give investors crucial freedom regarding interest rates. In fact, if interest rates rise while you own a lower-interest CD, the bump up CD allows you to take advantage of the higher interest rates.

For example, let’s say you have bought a five year bump up CD at 1.34% APY. However, two years into your purchase, the bank is now offering 1.5% APY on five year CDs. If you own a bump-up CD, you can upgrade your CD to the higher interest rate and earn more interest as a result.

According to Dan Edwards of Wells Fargo, “Bump-up CDs increase assets because they’re directly tied to the prevalent interest rate climate.”

Realities of Bump-Up CDs
Keep in mind, some banks will only offer bump-up CDs for shorter term CDs such as two year CDs. The starting yield on bump-up CDs is usually set a bit lower than on traditional CDs, simply because the bank has to assume that interest rates will rise.

When you buy a bump-up CD, you are basically betting that interest rates will rise over the duration of your CD. You are taking a risk here, because if interest rates do not rise, then you’ll be stuck with a low-yield CD.

So, here’s one way to decide whether a bump-up CD will pay off. If you see that the bank is offering a three year CD with a bump up option, and a three year CD without a bump up option but at a quarter percent higher interest rate, then only purchase the bump up CD if you believe rates will rise by more than a quarter of a percent.
Also, the length of time that it takes for interest rates to rise will determine whether your investment pays off. If it takes a long time for interest rates to rise, then it’s likely that the extra time you spend waiting will not have paid off the lower interest that you received during the waiting period.

Know the Rules
You also need to make sure that you know how many times you are permitted to bump up your CD. Many banks will place restrictions on the number of times you can bump up. Some banks may even require that you extend the term of your CD before you bump up.

You should do your own research before buying bump up CDs. Only purchase these CDs if you strongly believe that interest rates will significantly rise during the term of your CD. Otherwise, it is smarter to go with a conservative investment such as a CD.

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Post: Capitalize On High CD Rates With Bump Up CDs taken from: Ratelines.com

While many investors around the world are looking into hedge funds, very few people actually know the defining characteristics of these funds. Here, we’ll take a close look at the structure and characteristics of hedge funds.

Hedge funds have been around since 1949, when Alfred Winslow Jones set up one of the first funds. Jones built up a private partnership and placed his equity fund under the trusteeship of this partnership.

Jones started by melding leverage and short sales into one fund to create a conservative investment. He believed that choosing the best stocks was a far better option than simply predicting the direction of the market. So, let’s take a look at some of what Jones helped to create.

Corporate Structure
Most US-based financial services companies and managers will build hedge funds as Limited Partnerships. Foreign hedge funds sometimes organize themselves as corporations so they can let in as many investors as they like.

Open Ended or Closed Ended
There are generally two types of hedge funds available; closed-ended and open-ended. In open-ended funds, the fund manager will issue new shares to incoming investors. At that point, the existing investors can issue a call for shares at the current net-asset value, as long as the fund has established redemption policies.

Transparency Not Required
The majority of hedge funds conform to a variety of SEC exemptions that allow them to withhold performance information and earnings. Managers structure hedge funds this way so that they can protect trade secrets.

Performance Fees
The majority of hedge funds will pay their managers around 20% of profits. This means that managers only make money if the hedge fund is successful. If previous losses were incurred, many hedge funds stipulate that a “hurdle” rate of return must occur before the manager is compensated.

Combination of general partner and limited partner
A hedge fund manager will usually contribute quite a bit of his or her own wealth to any hedge fund. Most hedge fund managers, therefore, work as limited partners. However, the job function as hedge fund managers also grants the manager status as general partner.

A High Barrier of Entry
Hedge funds require investors to deposit a sizable amount of assets into the hedge fund in order to take part.  The fund manager needs a lot of capital to accomplish his or her objectives.

Chasing After Absolute Return
Good hedge funds will strive to pull in a risk-adjusted absolute return instead of trying to outdo standard market indexes.

A High Degree of Flexibility
Hedge funds have unparalleled access to a wide variety of securities and instruments. Most hedge funds focus on derivatives, which are instruments to mitigate their risk and focus on a market niche by accurately speculating on inherent price complexities.

Since hedge funds utilize a great deal of strategic diversity, they don’t often correlate to equity market standards. This is because hedge funds profit from stock selection, not market performance.

Hedge funds have low liquidity, but this is because their payouts come in large chunks. While hedge funds are generally too expensive for the average investor, some hedge funds have popped up that offer easier qualifications. That’s a basic rundown of hedge funds, so now you know the gist of how they work.

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Post: Hedge Funds Explained taken from: Ratelines.com

Financing investment property can be a great way to bring in some steady income. Many people purchase homes with the express intent of renting them and thereby earning a monthly income from their home.

Some investors like to “fix-up” homes, renovate them, and then sell them for a profit. As long as you are correctly financing your property, these and other methods can help you reap an income from your investment property.

Basically, you can finance an investment property one of three ways.
1.Utilize your own resources to purchase the property. You will have to underwrite all costs yourself and you need to use cash to buy the property. This is a great option because you lower your liability. At the same time, it might be difficult to come up with the cash to purchase a home.

2.You can also ask your bank to give you a line of credit. This will help you make down payments and fulfill other large capital requirements. As you earn money from rent or sales, you can repay the bank and still maintain a profit.

3.Setting up a partnership with other investors can also help you fund these properties. This way, you split the costs with others. This is another great alternative. As long as you have a good working relationship with your partners, you can easily divide profits between all of the partners involved.

You should carefully consider all of your options before you decide how to finance your property. Keep your risks low and maintain a high potential for profit.

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Post: How To Finance Investment Property taken from: Ratelines.com

Since money market accounts are offering very low interest rates currently, many investors are turning to stocks and bonds as an alternative way to earn interest. Many people are unaware that there are some very striking differences between the major market indexes. Here, we’ll take a look at these indexes and explain some of the differences.

Both the NYSE and the Nasdaq contain some powerhouse companies. While you can find some household names such as Johnson and Johnson, Coca-Cola, American Airlines, and many others on the NYSE, you’ll find tech giants like Microsoft, Oracle, and Cisco on the Nasdaq. In general, the Nasdaq tends to contain more tech oriented companies than the NYSE

However, there are some fundamental trading differences between the two.

NYSE
In the NYSE, floor traders who have access to the securities floor bid on trades through an auction market. A specialist is assigned to every single stock in the NYSE. This means that in order to buy a stock on the NYSE, a broker has to either purchase it on a DOT system, or call it in to a floor broker.

Nasdaq
While the NYSE has a physical location, the Nasdaq is a wholly electronic trading market. Market makers rather than specialists oversee stocks on the Nasdaq. These market makers manage the liquidity and trading for each stock. The Nasdaq is run as an Over the Counter trading market, which basically means buyers and sellers are connected to one another via the Nasdaq network.

Brokers still have to place calls to market makers on the Nasdaq network, but all trades are processed through an online system that is sponsored by Nasdaq.

Your broker can give you more details regarding index terminology, so don’t be afraid to ask.

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Post: The NYSE vs. The NASDAQ: When You’ve Gone beyond Money Market Accounts taken from: Ratelines.com

The best CD rates on the market just became a little less attractive as EverBank cut the interest on its highest yielding 5-year CD to 3.30% annual percentage yield, from 3.44% recently.  Still, the online bank based in Florida remains the place to go for the best available 5-year CD rates in the country.  This has been the case since March 16 on this year.

From March 16 to April 2, the rate actually increased gradually form 3.30% to 3.44%, but eventually came back down to 3.30%.  Nationally, the average for 5-year CD APYs has risen to 2.14% from a record low of 2.06% in late January of this year.

EverBank only asks for a minimum deposit of $1,500; however, they do slap higher penalties than most banks for pre-terminations; 25% of the interest you would have earned if you’d kept the account for the length of the term.

Apart from EverBank, the best rate is 3.25% APY, you can get this rate from:

An online division of Flushing Savings, igobanking.com requires only a $1,000 minimum deposit.

Miami Lakes base BankUnited asks for a $5,000 deposit, they have 75 branches in FL.

Have a look at our database where you can find CD rates listings for many other banks, and find yourself a great deal.

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Post: Highest 5 – year CD rate, slides to 3.30% from 3.44% taken from: Ratelines.com

Other banks that offer top rates for 2 year CDs are:
-Gold savings bank, a single location in Mountlake Terrace WA offers 2.20% APY for a $10,000 minimum deposit.

-A community bank in Franklin TN offers 2.14% APY, for a $2,500 minimum deposit

-You can get a rate of 2.07% APY from the State bank of India for a $2,500 minimum deposit if you obtain the CD through their Chicago office, or $5,000 if you do it though the New York office.

Arguably the best deal around though is a rather unusual 25 month CD from Legacy bank that offers 2.90% APY.

If none of the rates are quite as attractive as you hoped for 24 month CDs, you might want to try looking around for a 5 year CD with high interest, and low pre-termination fines. In the end you may find one that is actually a better deal for a 2-year period. You can scan for available options on our database.

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Post: 24 month CD Interest Rates are down taken from: Ratelines.com

The majority of savings rates are not adjusted for inflation. This means that when inflation rates rise, your interest basically gets eaten by the market. One exception to this rule is Series I Bonds, a government bond that is actually indexed by inflation. Here’s an overview of these bonds.

The Basics of Series I Bonds
Series I bonds were created in the late 90s with the express purpose of protecting the owner from inflation. You can purchase a variety of denominations of Series I bonds, notably: $50, $75, $100, $200, $500, $1,000, and $5,000. Investors can purchase Series I bonds at face value.

There are minimums and maximums, however. Investors can purchase a minimum of $50 Series I bonds, and a maximum of $5,000 in Series I bonds annually.  However, you can purchase $5,000 in paper bonds and $5,000 in electronic bonds in one calendar year.

Restrictions and Limitations
You must wait at least one year before you cash in Series I bonds. It’s best to wait at least five years before cashing in your bond, because if you cash in a bond before five years, you have to pay a three month penalty.

You must purchase electronic Series I bonds through TreasuryDirect.  I Bonds offer great interest rates that steadily stay above the inflation rate. This means you are guaranteed to make a good return on your Series I bonds.

Series I Bonds: Slow and Steady Returns
Series I bonds will have fixed rates set by the Fed. Individuals and corporations can purchase Series I bonds, as long as the purchaser is a U.S. resident with a Social Security number.

Series I bonds make a great conservative investment for people who want to ensure that they gain steady returns on their money.

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Post: Stay Ahead of Inflation with Series I Savings Bonds and Savings Rates taken from: Ratelines.com

College is an important investment for people. This is a chance to really broaden one’s horizons. If you have children, then you need to start saving money for your child’s college fund as early on as possible. College can cost thousands upon thousands of dollars. Settling should not be synonymous with college applications and acceptance letters. If you plan ahead for your child’s future, he or she will surely have what they need to truly succeed. The following are some tips for how to begin saving for your child’s college fund so that you have the money to help them attend the college of their dreams.

One of the first things you should do is set up a separate bank account for your child’s college fund. This will help you keep track of what funds you have specifically for this goal. A general savings account isn’t going to cut it. When times are lean, you may need to use this fund. Additionally, having an account earmarked for this purpose will really help you stay focused so that you can truly save enough for your child’s education.

Once you have a good sized amount of money saved, think about opening a CD. Just by agreeing not to spend your money for a certain amount of time, you can make money with high interest rates. CDs can last anywhere from a few years to a few months. Having such an account really takes saving for your child’s college fund to a new level. Instead of just saving up your pennies each month, you will be able to make money. This takes saving for college to a whole new level.

Take a small portion of your child’s college fund and use it in the stock market. This is a nice way to turn a small amount of money into something more. Don’t be too aggressive when it comes to your child’s college fund. You don’t want it to disappear because you make a bad decision. Explore your options so that you can take the small amount of money you have saved and can increase it!

Lastly, try to keep penny or dime jars around the house. Once these jars are full, take them to your bank so that they are immediately deposited into your child’s college fund. This is a solid way to keep saving even when times are tough or lean. Every cent counts when it comes to saving for your child’s college fund. Consider increasing the amount you save by 10% every year. This will give you goals that will help you save as much as possible.

You really need to dig in and be serious about saving if you want to save enough money for your child’s college education. This is an important investment. After all, a college education goes a long way. A degree will really open doors for your child so that it is that much easier to obtain a solid job with a high salary. While at college, your child may very well meet people who can help him or her land jobs in the future. If you truly want your child to be a success, then you can not afford to be lazy about saving for their education. Soon, with a little hard work and organization, you will have the money you need to send your children to the college of their dreams. After all, who wants less than the best for their family?

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Post: Begin Saving For Your Child’s College Fund taken from: Ratelines.com

Sometimes, credit unions can offer the strongest CD rates on the market. Many investors have noticed that the CD rates offered by credit unions often exceed those given by banks. Here, we’ll discuss some of the pros and cons of purchasing CDs with credit unions.

Credit Unions Offer Plenty to Investors
First of all, many credit unions consistently deliver very high interest rates on CDs. This makes them especially attractive to investors. In many cases, credit unions will offer an interest rate that is roughly half a percent higher than the interest rates offered by nearby banks.

Credit unions can afford to provide such high interest rates because they engage in cooperative savings. The earnings of the credit union are returned to members as high rates on savings. Most credit unions are also nonprofit organizations. This means they are not beholden to a group of shareholders. So, credit unions have the capability to offer high interest rates on CDs.

Options for Different Types of Investors
Also, credit unions also sometimes present CDs that have a lower minimum principal deposit than banks. This appeals to investors of lower income brackets, or simply to investors who wish to invest a small amount of money in a CD. Credit unions also offer CDs with short maturity rates, giving investors the chance to receive payments sooner than with traditional bank CDs.

Many people have a knee-jerk reaction to CDs in that they always go to banks. Banks are viewed as more stable institutions than credit unions. But, properly accredited credit unions can offer some of the best CD rates available on the market. It’s a good idea to investigate these institutions before you make your investment in either a bank or credit union.

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Post: Find High CD Rates with Credit Unions taken from: Ratelines.com

For example, a farmer raising wheat will sell a future contract on the wheat that has yet to be harvested.  The farmer will guarantee that the wheat will be sold for a fixed price so that a bread company can buy the contract even before the harvest, thus protecting the farmer and buyer should the market value of the wheat change.

Commodities Market Explosion
Commodity markets are where raw or primary products are exchanged. These commodities are traded on the aforementioned commodity exchanges, where they are bought and sold in standardized contracts. The commodities markets have had an upturn in trading investments in the 2000s.  From 2002-2007, the value of global physical exports of commodities rose 17%; during that same time, the value of commodity derivate trading on exchanges rose 200%.  Over-the-counter trading, which is where two parties directly trade stocks, bonds, derivatives, or commodities, derivatives has increased more than 500% in that time period as well.  The over-the-counter commodities’ derivatives markets, trading mostly in gold and silver, increased 27% during the 2002-2007 period, as precious metals fell to only 8% of such commodities derivatives trading.

Commodity markets are clearly being explored presently as they give the investors a potential large payout despite the risk.  In 2007, global derivative and physical trading of commodities on exchanges shot up to 1,684 million contracts, an increase of over 33% from 2002.  Industrial metals increased 30%, energy at 29%, and agricultural at 30% during the period, while precious metals only grew 3%.

To some degree, this explosion in commodities trading correlates with the economies and open markets of China and India.  As these countries have become significant consumers and producers, the commodities market has seen a major increase.  Other countries such as Vietnam and Israel are growing into economic successes, which in turn have led to this explosion in agricultural commodities due to large exports from those nations.  Many argue that the 2008 global boom in commodity prices – for everything from coal to corn – came from a combination of demand by China and India and unrestrained speculation in forward markets.

Because this commodities bubble popped in the latter months of 2008, many anticipate that farmers will face large drops in crop prices; steel commodities have also tumbled due to the lower demand.  This reversal in commodities’ fortunes accelerated in 2009 as oil prices and soybeans, once safe investment for commodities traded, have experienced erratic performance.  Sugar, however, has been a strong gainer, in part due to a somewhat more limited supply than other commodities.

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Post: What are Commodity Exchanges taken from: Ratelines.com