Are Fixed Interest Rate Savings Products Like Bank CDs Really Making Money?
In 2009, the inflation rate was considered low at less than 2%. But if your CD was only paying 2%, you only broke even there. Even if you earned a bit more, you could have been taxed upon your interest, and this lowers your effective return. Since tax rates vary by income, you will have to figure this out for yourself. But you understand that if you paid the governnment 1%, and you lost 2% to inflation, you need to make more than 3% to break even. And right now, as I skim over internet information on bank cd rates, I see that it would be tough to even find a CD that pays 3%! It looks like 2% is more realistic. Tough times for savers. Add in a devalued dollar with less purchasing power, and it is easy to see that many of us also lost value when we saved with a fixed product like a CD. On the other hand, we probably did not lose as much value as we did on some stocks that dropped 0% or more. It seems like it is just an effort to hold on. But stiill, bank CDs are considered safe money inv
