TIAA Direct/TIAA-CREF banking? Surprisingly high savings/money market interest rate

you had no interest? seriously tho, 1 1/4% is a big deal these days!

 

Clark Howard an Atlanta radio/television financial wizard is always speaking highly of them. Which is odd because he usually has nothing good to say about banks.

 

I'm not sure that even TIAA-CREF's rate is worth it. Aren't consumer prices rising faster than that? That rate is still absurdly low, isn't it?

 

Well, nothing as safe, but when the stock market dips and blue chip companies at the top of their fields become more affordable, that's the time to buy.

Just recently, I thought to myself, I'm going to buy more Apple...but it's already at $400/share. How much higher could it go? Well, four weeks later it's at $525. But if it didn't go anywhere, I'd just sell it again. And believe me, I'm watching it very closely, given Steve Jobs' death and future uncertainties about where Apple might be headed in another three or four quarters.

Another idea might be certain financial institutions. JP Morgan/Chase still has good numbers, as does Bank of Marin, although I don't think it's time to buy the latter at the moment. Wells Fargo is a good safe bet, has a bit of potential upside without too much risk.

Bank of America, although deeply devalued right now, could be a long term comeback winner; their shares were down to $7.00 and are slowly climbing to $8.00. This is one of those cheaper stocks where you can buy hundreds or thousands of shares, and the upside potential is huge.

Heck, in '08 I took a gamble and bought a bunch of Ford when it was at $4.00/share; it's at nearly $13 now. That's a 300% gain, before cap gains taxes.

Boeing was a good one that I missed; I waited too long after they'd ironed out most of the production problems with the 787 and had lots of orders on the books; it's not doing much and I'm considering reducing my stake, but we'll see how it goes. But I haven't lost anything, either, which is all I'm really concerned about.

Also look for stocks that pay dividends, that can be another strategy. And invest in companies that do business in things you care about personally, and are willing to follow. I like cars, technology, banking and aircraft, and that's where I tend to invest.

I'm no expert, and freely admit that I've been lucky as much as anything else, though. And I've made some mistakes too, but not too many.

If an investment is a net loss, such as CDs, it just doesn't make sense to put money there.

I tend to watch the stocks regularly and don't hang on for the long term. And if it's not looking good, I get out quickly.

 

I have an account currently at 1.50% at a credit union. I *think* it might be a "special" rate for members of my time share, though. It started at 2% late last year, but has dropped a bit lately. Either way, 1.25% is pretty good at this point, and I've seen CDs with lower rates. I have a 2.25% CD maturing in the summer, and am unsure of what to do with it. I'll probably just take it into my Ally MM and transfer it to my higher yield savings with the FCU.

IF you want to look, it's http://www.quorumfcu.org I believe. Like I said, not positive about their high yield savings for everyday members.

 

I know, I just don't think there's something absolutely safe that pays above 1.5%.

This is the bummer about our current economic policy. The low interest rates benefit businesses and other borrowers. But they also make it impossible for investors to find safe havens for their money that still beat the rate of inflation.

I don't want to side track us, but the Fed's handling of our currency and interest rates are doing most small time investors—like me—no favors whatsoever. All this extra money pumped into the system is also devaluing the dollar and raising the cost of gas and other things too. It's a net loss for us, while businesses are doing great. Thus, my continued flirtation with the stock market. I figure, if business is doing well, that's the only way for me to get a little piece of the action.

I suppose that property is potentially another option, but unless you become a landlord (something which doesn't interest me), buying it and counting on being able to sell later at a profit obviously isn't a solution, either. And it's nothing close to liquid.

I wish I had a better answer. I feel overexposed risk-wise, but I can't afford to have the cash just sitting there, either.

 

I think the only landlord situation I'd consider is with higher value single family dwellings, in good neighborhoods and close to good schools. In northern CA, the only area I'd consider for that is either parts of Marin County or the Mid-Peninsula. But—the multi-million dollar Bay Area prices aside—it's not something that interests me on a gut level, so I've never gotten involved.

 

I bought in 2006 after I lost my mom. Being 23, I felt like I needed a change at the time so I sold my condo (for a profit after 1.5 yrs) and bought my house. I just re-fi'd from 5.5% to 4.375%. My house, after lots of renovations, landscaping, etc, appraised for just a hair over what I originally paid for it. That's OK, I'm making it mine and don't have any plans to move on my own decision.

There's some other good options in down neighborhoods. The problem is having the funds to buy the distressed property, renovate it, and be able to hold it while it's on the market again or be able to rent it out after the work. It becomes a full time job, unfortunately.

As for the interest rate you mentioned above, I'm one of those stuck in the middle. I have a mortgage, but also have investments. My investments haven't done much in terms of value over the last couple years, but the dividends & capital gains have provided more shares in mutual funds that I hope will help out a lot when they turn around. I agree, though, that with mostly term debt, higher rates would benefit me more. Unfortunately, the federal reserve is sort of stuck in a tough position between trying to help businesses and help move the economy and not causing too much inflation (which is mostly all gas and speculation related).

 

From personal experience I say, screen your tenants carefully.

When a high end rental goes bad it can be very expensive to get them out. I had one that managed to stay in a property for 14 months without paying me after the first/last/security. They knew and abused the bankruptcy code well and had done this before. Even my lawyer was impressed by their knowledge of the system. I went with initial impression and a few phone calls to check them out. Never again.

 

Nothing is as safe as FDIC. But 1.25% is too low for me to move money from a more-convenient (local) bank to a less-convenient one. My savings account pays as near zero as makes no difference, and holds the money I expect to spend (plus a buffer) for the next year or so.

Stocks fluctuate with the market. They are a good long-term investment but not a reliable source of income, and speculation on short-term fluctuations is nothing but gambling. The stock portion of my portfolio is in mutual funds, which are safer due to the spreading of risk.

To get the best interest rate with reasonable (never guaranteed!!!) safety, look for bonds from strong, secure companies. Bond funds spread the risk, but there is market risk. Individual bonds are essentially CDs issued by a company. As long as they don't default (which is your risk) you get a constant rate of interest, and your money at the end of the term.

I took a bath on my REITs when the housing market collapsed, but I've done really well with a closed-end REIT that started up just after the crash and bought a lot of upscale residential rental properties at bargain basement prices. These are very, very fancy apartment buildings, and because prices were so low at the time, the return has been excellent. At some point they'll liquidate the holdings and hopefully pay a big payout, on top of the very respectable dividends I'm getting until then.

Of course, any REIT that you bought right after the crash has performed really well since then.

I'd never be a direct, personal landlord. My only exposure to rental property will be through a REIT. The headaches of renting are not worth it. (Obviously some folks disagree with me. They probably have a higher tolerance for hassles.)

So to answer the original question: No, there's nothing as safe as FDIC that will provide decent enough returns to actually justify moving money. But there are some reasonably safe investments that will do okay.

 

Yeh, I agree with your stance about being a landlord. Like I said, just doesn't interest me that much on a gut level, either.

Anything purchased right after the crash has done really well.

Apple fell to $90, now it's working toward $600. In hindsight, I'd say that was a risk I'm glad I took. Heck, it was true with Oracle, Ford, ADM, Boeing, Bank of Marin (which didn't utilize TARP funds), even Research in Motion (which was actually still hot in early '09), the list goes on and on.

My biggest regret is not plowing even more money into the market at the beginning of the crash. But I'm thankful for how it did work out, and focusing on that instead. I guess there are certain times to take a risk, and other times not to.

Getting 1% return on one's investments doesn't seem like it's worth the trouble. That's like having $1,000,000 in the bank, and getting $10,000 in interest?!? Doesn't seem like a good strategy.

Not taking enough of a risk is also a risk.

 

This is a very difficult time to invest.
One really good safe deal is US Savings iBonds, you can do $5000 per year.
If you want to hold 20-yrs (college) EE-Bonds double value in 20-yrs...not too bad.
Re: Banks- 1% interest does not "interest" me
So I tend to go with Fidelity and Vanguard.
Hard to beat FGMNX or VFIIX Ginnie Mae funds are federally backed ultra-safe +7-8% last year (of course you never know). I also like the tax free short/intermediate term bond funds (FSTFX/VWITX). Also FFRHX is a 5 star bank loan fund which is a little inverse correlation to the others. A mix of these funds gives you a shot at 4-5% like money market funds used to.

I've heard TIAA-CREF is great for 401K with high interest stable value cash fund.
Just not available to outsiders.

 

I don't think Ginnie Maes are federally backed any more. That's why you can get those 7 or 8% rates. The market does not trust them. I think they're a good bet. But that's just me. And I hold mine in the "junk" portion of my portfolio: A very small percentage of my portfolio in high-risk, high-return bonds.

I didn't have much to invest right after the crash. And the problem was, if folks remember, nobody knew if it was going to keep going down. Calling the bottom of a market is pretty much impossible. I did have a couple of CDs mature, and with no interest any more, that closed-end REIT came up and seemed a good bet. So far I think it's about the best thing I could have done with that money.

Of course, you dream about having liquidated everything just as the crash started, or before, and then buying back in right at the bottom. But I don't have that kind of savvy. I'm back up to about where I was before the crash. Can't complain. Capitalism is all about the transfer of money from the poor to the rich, and from honest investors to white-collar criminals. Always has been, probably always will be.