Hashemian Blog Web Tools, Financial Markets, Technology Monday, June 02, 2008 The Inverted CD Yields  I was checking ING DIRECT's CD (Certificates of Deposit) rates today and wondered how long will they continue to be inverted. A 6-month CD currently has an APY of 3.3%, while that of a 4-year CD stands at 2.5%. What I would really like to see is a normal curve, where the longer the CD term, the higher its yield. Bank yields generally follow the economy and when you see this type of anomaly, one interpretation is that there's more uncertainty with the short-term economic outlook than that of the long-term. Another way to put it, there is more perceived risk in the short-term and hence the investment rewards are higher. So what is the person with a long-term goal to do? My approach is not lock in my money for such a long time when shorter rates pay nearly a full percentage more. That can amount to quite a bit of interest. Sure, there's always the risk of buyer's remorse if the rates headed lower, but to me eschewing the long-term, low-yield CD is a calculated risk. I would opt for a short-term, higher-yielding CD and keep rolling it over until the longer-term CD rates become more favorable. In fact, it may make sense to completely bypass CD's for a savings account with a decent rate. ING DIRECT's savings account currently has a 3% APY, and the funds remain completely liquid with no early withdrawal penalties. If and when CD rates become more enticing, one can quickly kick some money from the savings account into a CD. savings accounts,banks,cd,apy,apr,yields,interest rates Labels: financial, money <The Inverted CD Yields> // posted by rh 1 comments Sunday, March 11, 2007 Energy Policy? Daylight-Saving Time (DST)  Here we go again. As if this whole idea of daylight-saving time (DST) wasn't bad enough, this year the US has decided to tweak the time-shift and spring forward 3 weeks in advance. I received an email from one of our vendors a few days ago regarding the change and this was a part of it: On August 8, 2005, President George W. Bush signed the Energy Policy Act of 2005. This Act changed the time change dates for Daylight Saving Time in the U.S. Beginning in 2007, DST will begin on the second Sunday in March and end the first Sunday in November. The Secretary of Energy will report the impact of this change to Congress. Congress retains the right to resume the 2005 Daylight Saving Time schedule once the Department of Energy study is complete. What kind of moronic "Energy Policy" is that? Someone's ought to tell these people in charge that wasting time with a stupid idea is not a good use of our tax dollars. Those dollars can be used for better ideas than just fiddling with a bad idea. I wrote about this 2 years ago and I grumble about it every year. Some may say, why waist time complaining, or just do as you're told like the rest of the people, herd mentality. Here we are, in a democracy, and we're expected to follow a lame idea like sheep in a herd. Only those with narrow intellectual capacities would buy the energy conservation claims. There has been no credible evidence linking energy conservation with DST. Even if there are miniscule savings, they can never outweigh the negative effects, namely the so called mini Y2K issue that many people have been busy averting. The mini Y2K refers to the problem of computers losing and gaining one hour during these time changes. A lot of time and resources have gone into making sure that critical systems are not adversely affected because of this latest change. What a waste. In my view, the real answer behind the DST is the same answer behind just about any other question, money. I've always known that the DST had little to do with saving energy and more to do with profits. Maybe kicking people out of bed earlier and having them outside for longer hours translates into more opportunity for spending. It could also mean more hours of work for employees, many of whom will see little compensation for the additional work. Always follow the money, it'll lead to the truth. So while you're yawning in your car driving to work on Monday with bloodshot eyes, consider that fact that you (and I) are nothing but sheep in a big herd driven by the big business and their insatiable quench for more money. And the guard dogs? Politicians, of course. dst,daylight saving time,politicians,business,money,mini y2k Labels: business, business-finance, money, politics <Energy Policy? Daylight-Saving Time (DST)> // posted by rh 1 comments Sunday, March 04, 2007 Houses, Roofs, and Snow  There's an old Persian adage that states: "The bigger one's roof, the more one's snow". Living on America's east coast the adage doesn't really apply. The roofs are generally pitched and snow simply thaws and slides off. Back in Iran where most roofs are flat and building structures are of questionable soundness, people are forced to shovel the snow off the tops or else face a collapse or at least water damage, so the phrase fits well. But what the metaphorical phrase tries to convey is that bigger assets bring bigger hassles. Ironically this wisdom also fits the recent trend in the US housing market. America is a culture of consumers, the bigger and the more luxurious, the better. Some may argue that it is the consumer that drives the mammoth economy here, but considering the troubles brewing in the subprime mortgage markets, there is also a dark side to out-of-bounds consumerism. For the past few years the housing market has been one of seemingly endless growth. That lulled many to jump into the market without much consideration for a possible downside. Bigger homes (known as McMansions) sprang up everywhere and builders couldn’t keep up. People kept snapping up ever bigger and more expensive homes. The general belief was to hold on to the house for a short period, then sell for a handsome profit, rinse and repeat. Now that the housing market has gone limp, it has dragged many into hard times and many may owe more than the current value of their homes, the so called upside-down position. Owning a bigger home is not necessarily an American invention. People do it all over the world, but many fail to consider the real cost of having a bigger home if they are forced into a long-term ownership. The general financial approach is a foolishly simple one. You look at the price, then figure out the monthly payments and if it seems to fit one's monthly income, then it's a go. But there is quite a bit more there than meets the eye. Let's take a quick inventory: Initial fees: For that bigger house you will be paying higher fees to the real estate broker, the mortgage banker, the inspector, and the lawyer, just to name a few. Mortgage payments: Unless you're locked in a long-term fixed mortgage (like a 30-year variety), the assumption should be that the variable rate will eventually kick in and in most instances that means higher monthly payments. In some cases the monthly payments could outpace one's income quickly. Taxes: A bigger home means higher taxes. Even if you know what your tax liability is at the time of purchase, there is no chance it'll stay the same for long. There are two forces working against you there. The higher the assessed price of your home goes, the more your town will charge you in property taxes. Also tax rates (known as mill rates around here) never stay in one spot. As the town cost rises, so does the mill rate. It's inevitable. Energy: the bigger the house, the more the cost of heating and cooling it. Unless, of course, you cordon off parts of the house, in which case what's the point of living in a bigger house to begin with? Water and sewer: Many water companies charge homes for water and sewer services based on square footage, not actual usage. In any case, if you are in a bigger home, you will use more water and produce more waste. Just think of watering a larger front lawn as one instance. Repairs: A bigger home simply contains more stuff and therefore more chances for breaks and malfunctions. It's the law of probability. More toilets, more electrical wiring, more piping, more doors and windows, etc. And each one adds an additional risk of needing repair at some point. Maintenance: A bigger property requires more maintenance (think of the snow metaphor.) More gutters to clean, more windows to wipe, more rooms to dust, more lawn to mow, and more driveway to plow. You might need to hire a helping hand or two to cover the maintenance, thus having to part with more money. Furnishings: A roomier house means more volume to fill. That leads to trips to furniture stores to buy more couches, a bigger TV, and more decorative items to hang on the bare walls or fill the corners, or more rugs to throw on the bare floors. Even more closet space means more shopping for clothes and shoes and accessories, and of course more organizers to sort them by color or size. Don't laugh, this is just human nature. I know, I know, enough already. I'm sure this list is not even close to being complete. But there is no escaping the consequences of owning a bigger home. And if more snow won't faze you, the bigger pile of dead leaves in autumn will. homes,mortgage,subprime mortgage,tax,money,housing market Labels: business-finance, money, mortgage, tax <Houses, Roofs, and Snow> // posted by rh 1 comments

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