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/commentable: What to do with an expired Certificate of Deposit
Dinarius = digital interest
28 September 2009

What to do with an expired Certificate of Deposit

Greetings from the most active part of the site for now. While we code and prepare for the 01NOV09 re-opening of the site, this category is well underway researching and watching the market and attempting something smart with money. The big question, what should you do with an expired C.D.?

The situation is simple: Some months or years ago, you or someone who loved you, put money in a Certificate of Deposit and now that time is up. If you don’t act, the bank will roll it over to the lowest rate they have – If you act, your choices in terms of interest, are bleak at best. Several things today that bring this article to the pages of Dinarius: Citi is offering five-year C.D.‘s at 3.5% FIVE YEARS. That’s a long time. Also, Sony, (NYSE:SNE) closed at $30.00 even.

So here’s the disclaimer and the thought. First of all, do what you feel is the smartest thing to do with your money. If any amount of risk makes you hesitate, don’t take any risk! Certificates of Deposit are basically without risk. The thought is this: SONY has been taking its sweet time coming back from the giant valley that all stocks fell into at the end of last year and beginning of this.

With good news, SONY grows slowly. With bad news, SONY grows slowly. Let’s examine 3.5% on an tiny $10,000 C.D. In FIVE YEARS, it will have a staggering $350.00 added to it. You’ll boast $70 a year. A $100,000 C.D.? $700 a year average with $3,500 additional in 2014 What will $3,500 be worth in 2014? Probably not $3,500 as we see it today.

SONY NYSE:SNE one year

The image above from Google Finance doesn’t totally show why SNE is a smart-buy even if you can only buy 200 shares ($6,000 worth at the close today) because that “valley” is ruining all the 52-week high’s and low’s. So here’s the FIVE YEAR on NYSE:SNE

SONY NYSE:SNE five year

Ahhhhh. That’s why we’re even bothering to get back into this. It’s not unheard of or impossible to think that if you’re patient enough to wait for a Certificate of Deposit to dribble 3.5% in five years, you might be paitient enough to see SONY return to $40.00 a share which would be 33% over today’s close. If that happened in a year, you’d be pleased. And here’s the good news: You’re not greedy!

Since you might have already been tempted to make $350 or $3,500 in five years but are okay with risk, how about buying 200 or 2,000 shares, keeping an eye on SONY and SELLING when your target is reached? 200 shares that go up a dollar means making $200 dollars! Ain’t life grand? That could just as easily happen tomorrow as it did in the last five days of trading ($28.63 to $30.00 at close today). Viola! A buck and good change per share after trading fees.


Okay, like money faster than five years or thirteen months, hate the risk and are fast on your feet? Forget playing the stock market, play the Money Market accounts. Sun Trust gave me the following choices just weeks ago (really). Roll an expired C.D. over from 1.1% to 0.65% for thirteen months, or transfer that money to a Money Market checking account earning 1.5% for the first two months. Really? There’s a choice there?

In a little more than a month, I’m going to shop around, find a higher or equal offer for Money Market, withdraw and close this account with no penalties and let someone else collect on the 0.45% that the account drops to after the introductory rate. Simple! Much less risk, positive and slow return, and requiring some basic driving here and there and phone calls on my part.

But frankly, since I’ve not invested so much in the stock market, (“not floating my boat on stocks” as I say,) I’m not afraid of a little risk when it seems the returns are higher yet still slow and steady – while I do always remember that risk and loss can come any day, I’ve made peace with that. I bought SNE at $26.84 (+ $3.16 at close today), Cemex NYSE:CX at $12.62 (+ $0.58 at close today) and merely had my eye on NYSE:GAP and NYSE:GSK (which is still a very lovely heavyweight even at today’s close, $39.67).

GlaxoSmithKline NYSE:GSK five year

If stocks under $5.00 are more your speed, dig these:

NYSE:MRVC MRV Communications is a little, affordable darling that closed at $1.00 flat today and begs for you to sit patiently on it. Google Finance won’t show you, but MRVC has loved $2.00 and spiked twice in grand moves up to $4.00

NYSE:VRS hasn’t been so well behaved for me. I’m down 0.43 cents per share, and today, closing at $2.89 from $3.01 bothered because I was watching too carefully.

NYSE:LF LeapFrog Enterprises fooled me. After climbing steadily, it declined in the last half of this month botching my happy portfolio but presenting a lovely opportunity for you risky readers! Historically, LF has enjoyed a $5.00 and $7.00 cost per share. Getting in at $3.98 (today’s close) still leaves some room for potential growth if your patience can span three to six months.


Trading isn’t always the stocks you pick. It’s how you trade. We’re looking at slow and steady. We’re accepting that there’s always risk. We’re thinking that patience isn’t just a virtue, it’s a requisite. We’re also remembering that we neither float our boat on stock investments nor do we float our boat on ONE or TWO stocks. Spread smart, grow slow.

In most cases, we’re sure to beat any new rollover offer you get on an expired Certificate of Deposit! Stay tuned!

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