Can you get over 4% returns investing right now?

Fred Tracy · Post by **Fred Tracy** » Fri Aug 17, 2012 5:43 am

Hey all, so I've got my high-interest bank account (due to some recommendations on here, thanks!) that pays 4% on everything up to 25k. I don't have 25k yet, so I get a guaranteed 4% right now.
I've been considering moving my savings into the stock market, so my question is, given that I'll only be investing in things like index funds and so on (relatively low risk..), is it even possible to beat 4%? Should I just leave the money in the bank until I get over 25k then decide what to do?
Thanks!

Post by **jacob** » Fri Aug 17, 2012 6:04 am

The equity situation is iffy.
If I could get 4% guaranteed on cash, I'd take that.

GPMagnus · Post by **GPMagnus** » Fri Aug 17, 2012 1:08 pm

I agree with jacob, although I assume this is 4% nominal rather than real (read indexed to the CPI), which means that you protect the value of your money, with a very small upside - around 1 to 2% BUT you can sleep soundly at night, which is worth a lot more than a potential extra 3% yield from the market (which would be worth USD 750 per year) but where you lose sleep and potentially your principal

Dragline · Post by **Dragline** » Fri Aug 17, 2012 1:42 pm

I concur.

MattF · Post by **MattF** » Fri Aug 17, 2012 1:55 pm

Where is this 4% bank account you speak of? Everything on www.savingsaccounts.com (linked from a previous thread) is <=1%

secretwealth · Post by **secretwealth** » Fri Aug 17, 2012 4:17 pm

Yeah--I want to know where you can get 4% on your first 25k. That's a great place to put an emergency fund.
I'd recommend putting 25k there and put your excess in other investment vehicles. There are plenty of dividend stocks paying out more than 4% in dividends, plus plenty of bonds with yields well over 4%. The risk is higher than a bank account, of course, so it'd only be worth looking at when you have >25k to put somewhere other than your account.

Fred Tracy · Post by **Fred Tracy** » Fri Aug 17, 2012 5:17 pm

Thanks guys. I don't know the difference between 4% real and nominal, but I got about 20 bucks last month with 6-8 grand in the account.. take $7000, then 4% then divide by 12 and that's $23, so I believe it is really 4%.
I'm getting it from a local bank called Coppermark Bank. It's not a savings account, but a "high interest checking account." I believe many banks offer this, BUT you need to meet certain prerequisites each month.
Mine are: one direct deposit, 16 debit transactions, and paperless billing.
I suppose I will wait until I have 25k then go from there.. makes my life easier. I wonder if it is possible to open up multiple bank accounts. Granted, if you have 400k, that's 16 separate bank accounts, which means 256 debit transactions per month lol..

jennypenny · Post by **jennypenny** » Fri Aug 17, 2012 5:31 pm

this?

http://www.coppermarkbank.com/FHIC/
@FT--that is the best offer I've seen in years. I'm going to call and see if it's available for out of state customers. I'd move my EF there in a heartbeat.
edit: called and they said it's only available to residents of Oklahoma and Texas

justjohn · Post by **justjohn** » Fri Aug 17, 2012 5:47 pm

That is a fantastic offer. Seems too good to be true.
Oh, I think the 4% real vs 4% nominal takes into account inflation. So they are paying you 4% interest, but if inflation is 2% your real value is 2%.
But the true value for inflation is hard to pin down. The government offers up a value (that is used to change Social Security payments, etc), but it is based on a "basket" of goods, which perhaps has little relationship to what you spend your money on.

dragoncar · Post by **dragoncar** » Fri Aug 17, 2012 8:40 pm

It's a good promotion, but im guessing the rate isn't guaranteed. Keep the cash there while you learn about investing so you'll have another plan if the rate changes.

Fred Tracy · Post by **Fred Tracy** » Sat Aug 18, 2012 2:43 am

Thanks guys. Ah, I was thinking it was not inflation adjusted anyway.. so my real return after inflation may be only ~1%.. but at least I'm not losing money!
Jenny, I was under the impression that a lot of banks did this sort of thing. Maybe there's one near you that does it?
Indeed, I will just leave the money there while I learn about the stock market and such. It does feel good to not have it sitting around losing to inflation though.