Friday, January 25, 2008

Bummer.

It was to be expected, I suppose: my FNBO Direct online savings account, which I opened several months ago at 5.05%, just had its rate slashed to 4.30%. I have about $11,104 in this account, so I guess this will cost me somewhere around $83 this year-- assuming the rate stays at 4.30% and doesn't drop even further. Not the end of the world, but still... bummer.
I haven't written too much about all this economic turmoil, but it's certainly snowballing into a bigger and bigger topic of conversation. Last night I was at the Trader Joe's wine shop and noticed that they seemed to be raising some prices, which the cashier confirmed when I asked him about it. Someone else in line chimed in that "given current stock market conditions, that's just cruel."
I overheard a conversation somewhere else where someone said she had sold some of her international mutual funds yesterday, since she was too aggressively invested for her age and wanted to cut her losses since she thought things would only get worse. My international funds seemed to be up a little when I checked earlier this morning, so who knows if she was right! I myself am just sitting tight and not changing any investments around right now. And repeating silently to myself "30 years to retirement, 30 years to retirement..."

12 comments:

JohnT said...

I too got bit by the FNBO drop. At least they're up front about it and tell you in an email. Other banks just drop it and hope you don't notice. I joined back in the 6% promo rate and never moved my money out. Makes me think a little more about those 6.01% reward checking accounts that everyone is offering, even with all the requirements.

SandyVoice said...

"30 years to retirement, 30 years to retirement..."

That's the important thing. If you're invested for the long haul, invest in companies that have good track records, and which are not likely to fold. The entire stock market is tanking at the moment -- your investments are not the only ones. When the market comes back up, and it always does, your investments will go back up with it.

I don't have much to invest (as everyone here now knows, I only put $50 a month into my retirement account), but I like the funds I chose, and I'm leaving my money there. I'm not saying you should take my advice, of course! But I read a lot before I started to invest. That's what everyone says, and it makes sense to me.

And yeah, I'm bummed about my savings account cutting its rate, but I bet that will go back up with the market, too.

Eric said...

Go ahead and plan for another drop. Most of these savings accounts are basing their rates on the fed. I had HSBC and pretty much every time the fed dropped a quarter-point, as did my return. The fed will drop either a half or another 3/4 point cut when they meet next week.

Anonymous said...

Rookie investors love to sell low.

Personal Finance Princess said...

My e-Trade savings account saw the same drop. I'm optimistic though - this is just a bump in the road

AJ said...

Madame X, I came across your post in pflogs.org and when I saw the title I couldn't help but chuckle. When my ING rate dropped I was going to write a post of my own, and the only title that came to mind was..."Bummer."

Hang in there, brace for the Fed meeting and check out Blueprint's post on rate chasing!

Anonymous said...

As for interest rate sensitive 'savings/investments,' there isn't much choice. You'll have to live with the rates or risk plunking more in equities. ,(who knows where the bottom is, but with 30 years till retirement you might consider bottom feeding the hardest hit financial stocks at some point as the return over the next few years will most likely be better than an only interest account?)

That said, another option would be to pay additional equity down on your real estate, especially if you have an equity line available in the event cash is needed again. If you should need the cash and the fed lowers rates yet again, the after tax borrowing cost for a single taxpayer might be pretty good ... besides, noticing your frugality you will not be needing the $11,000 cash parked at 4.30% anyway?

RacerX said...

Over the long haul it does balance out. The only other piece is to be a bit of a Contrarian.

When everyone is sayingw00t, be a bit conservative, when everyone is yelling sell, look for bargins!

WorkingMom said...

Also seeing drops in higher interest savings and MMA accounts :(. Depressing, yes, and I agree with other posters that we're starting to look at other types of acocunts to offset some of the short term interest loss. I do think rates will bounce.

The strange upside - and this is likely to be REALLY temporary - like for about a week - is that fixed mortgage rates are through the floor. Just started refi our 30 year fixed mortgage @ 5.875% down to a 15 year FIXED mortgage @ 3.875%. Our payment goes up by only $150 - $200 a month (very do-able) and our house will be paid off before DS goes to college and we retire.

Lastly, as our incomes continue to rise (God willing and the creek don't rise), if/when we get smacked by AMT (we're on the cusp now), we minimize any blow losing the mortgage deduction would have dealt us.

Thank God for silver linings.

Ginger said...

Its just a blip while we wait this thing out. You've got the right perspective, you have 30 years till retirement so hold tight.

Young said...

Well, we all know that "what goes up, must come down" but with interest rates recently I'm wondering if we can also reassure ourselves that "what goes down, must go up". That seems slightly more comforting than reminding myself that I have 30 or 40 years to retirement. Of course this doesn't hurt me too much personally now, but even the small amount of interest in my ING checking matters!

Escape Brooklyn said...

Why Trader Joe's, why??? I hope their craft ales stay at $1/bottle!