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Online Savings & Money Market Account Rates 2020

Online Savings & Money Market Account Rates

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Bank in New York offering 2% on Savings Account through 2010

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I have come across a bank in New York offering a 2% savings rate, guaranteed through the end of the year. This offer beats any short term CDs.

A New York City-based bank is offering a money market account with a 2.00% APY guaranteed to last to 12/31/2010.  It is only available through the branches (not on the internet).  The bank is a small bank called Metropolitan National Bank which seems to only have offices at 46th and 5th, Park and 39th, Broadway and 36th and some remote place in Brooklyn.

This offer isn't well publicized.  It is not mentioned on the bank's website or in the branches.  I overheard someone asking about it when I was in 46th Street branch and the first representative denied that it existed although the second came up with some information.  I then got the information and opened an account.

According to the information that I received, the minimum balance required to earn this APY is $2,500.

The bank has poor service even for New York, and seems to be rated on 2 stars on bankrate and 3 stars on Bauer.  But, it is FDIC insured, and I'll put up with the bank's shortcomings to earn 2% through the end of the year (staying below FDIC limits, of course).

iShares Barclays TIPS Bond ETF (TIP) Offers Decent Yield and Inflation Protection

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The iShares Barclays TIPS Bond ETF (TIP) provides a decent yield currently at 4.09% as well as future inflation protection and little to no risk of default or loss of principle.

As savings and CD rates have come down, I've begun to look anew at other sources of reliable income. After all, earning 1.5% on my money just isn't going to do it right now. So I've begun to look at options trading again (see my post on QQQQ) to generate income and also moderate to high dividend ETFs.

In the ETF space, I'm looking for an investment that is relatively safe, can provide a yield over 3%, and has a good track record of performance. If the ETF is comprised of bonds then I'd like some hedge for interest rate risk and a relatively short duration.

The iShares Barclays TIPS Bond ETF (TIP) fits those categories. It provides a current yield of 4.09%. Because the ETF is comprised of TIPS, Treasury Inflation Protected Securities, the value is protected against inflation. So, while most bonds will lose value as interest rates rise (if they do) TIPS should do a much better job of maintaining their value. Read a full explanation for how TIPS work.  TIPS are a form of Treasury Security, and thus they are backed by the full faith and credit of the US Government. Defalt risk is virtually 0.

What's nice about buying the ETF versus individual TIPS is that you can benefit from the ETF having some older TIPS that have higher interest rates. Thus, while the current 20 year TIP is only yielding 2.06%, the TIP ETF is providing over 4%,

Is It Better to Invest in an Individual Bond or a Bond Fund?

There are risks in the TIP ETF not present when deposting money into a savings account or a CD. If interest rates spike but inflation does not, then the fund will lose value. This could happen if the markets decide to stop buying Treasuries. So far though, investors have been more than eager to scoop up US debt (Strong 1-Year Treasury Auction Quells Rate Fears - For Now).


Roth versus Traditional IRA: The Age Old Question

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A guide to help readers determine which is better for their financial situation: the Roth or Traditional IRA.

There is no right answer.  Real helpful, huh? To elaborate, the answer depends on your unique financial circumstances and goals.  To determine which retirement plan is best, you will want to consider a few important questions.  Where are you now?  Where will you be when you retire?  How will you get there?

Both forms of the IRA are great ways to save for retirement, although each offers different advantages.

Traditional IRA:

  • Tax deductible contributions (depending on income level)
  • Withdraws begin at age 59 1/2 and are mandatory by 70 1/2
  • Taxes are paid on earnings when withdrawn from the IRA
  • Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.)
  • Available to everyone; no income restrictions
  • All funds withdrawn (including principal contributions) before 59 1/2 are subject to a 10% penalty (subject to exception).

Roth IRA:

  • Contributions are not tax deductible
  • No Mandatory Distribution Age
  • All earnings and principal are 100% tax free if rules and regulations are followed
  • Funds can be used to purchase a variety of investments (stocks, bonds, certificates of deposits, etc.)
  • Available only to single-filers making up to $132,000 or married couples making a combined maximum of $194,000 annually.
  • Principal contributions can be withdrawn any time without penalty (subject to some minimal conditions).

Tax Deferred vs. Tax Free

The biggest difference between the Traditional and Roth IRA is the way Uncle Sam treats the taxes. If you earn $50,000 a year and put $2,000 in a traditional IRA, you will be able to deduct the $2,000 from your taxes (meaning you will only have to pay tax on $48,000 in income to the IRS). At 59 1/2, you may begin withdrawing funds but will be forced to pay taxes on all of the capital gains, interest, dividends, etc., that were earned over the past years.   The Traditional IRA is therefore tax deferred.

On the other hand, if you put the same $2,000 in a Roth IRA, you would not receive the income tax deduction. If you needed the money in the account, you could withdraw the principal at any time (although you will pay penalties if you withdraw any of the earnings your money has made). When you reached retirement age, you would be able to withdraw all of the money 100% tax free. The Roth IRA is going to make more sense in most situations. Unfortunately, not everyone qualifies for a Roth. A person filing their taxes as single can not make over $132,000. Married couples are better off, with a maximum income of $194,000 yearly.