Jesse Toprak
Jesse Toprak, chief auto analyst at Cars.com, a website with pricing information and reviews for online auto shoppers.
For investors, borrowers, savers and consumers, rising interest rates and slow economic growth will help shape the outlook for 2014. So where will the opportunities be…and where will the dangers lurk? Bottom Line/Personal asked six top experts for their favorite financial strategies…
My favorite flexible CDs now…
CIT Bank Achiever Two-Year CDs recently yielded 1.2% and have both a “bump-up” and an “add-on” feature. If interest rates rise, you can request a one-time adjustment to get a higher rate. Also, you have the onetime option of adding an unlimited amount of money to the CD and still retain the right to bump up your rate. Minimum initial deposit: $25,000. BankOnCIT.com
Bank5 Connect has a “Roll-Up” CD that matures in three years. Your money can be withdrawn with no penalty during a 10-day grace period at the end of each 12-month period. Or if you decide to keep your money in the CD, the interest rate automatically increases-from 0.95% for the first year to 1.25% for the second year and 1.35% for the third year. Minimum initial deposit: $500. Bank5Connect.com
My favorite junk bond fund now…
AdvisorShares Peritus High Yield ETF (HYLD) gained 11% in 2013 through November 25 and held up well in the volatile second quarter, falling just 0.7% when interest rates spiked. I prefer this new, actively managed exchange-traded fund (ETF) run by 25-year veteran Timothy Gramatovich to passive index funds. So many investors have piled into the junk bond category that you need a manager who can find good values. Recent yield: 7.7%.
My favorite balanced fund now…
Berwyn Income Fund (BERIX) allows longtime manager Robert Killen to move in and out of stocks, bonds and cash depending on where he sees markets and the economy heading. It has outperformed the Standard & Poor’s 500 stock index over the past 10 years with half the volatility. In the 2008 bear market, Berwyn was down just 10% versus 37% for the S&P 500.
My favorite index fund now…
PowerShares FTSE RAFI US 1000 Portfolio (PRF). This ETF invests in the 1,000 largest US stocks according to scores based on averages over the past five years for sales, cash flow and dividends, plus a measure of book value (the value of a company’s assets if they all were sold). Each March, the fund rebalances its holdings, paring back those whose stock prices have outperformed and adding to those who prices have underperformed.
Solution: Personal loans are relatively easy to get now at many banks and credit unions. You will need a credit score of at least 620 to qualify for these unsecured installment loans, which you pay off on a fixed schedule (typically over two to 10 years) and that can range from $500 to $20,000, depending on your income. Typical rates are in the 10%-to-20% range—not great, but much better than the 18%-to-30% that many credit cards charge. In addition, simply paying off your credit card debt with this kind of loan could raise your credit score.