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1. There is a fight, a tug-of-war if you will, in between savers and debtors in this nation. Savers Lament On the saver's side, conditions are dreadful. Rates of interest on certificates of deposit (CD) have dropped substantially to the point where the average rate for a 1-year CD is 0.55% and merely 1.63% for a 5-y CD. Assess that for a bit ... your cash locked-up for 5 years making just 1.63%! Other cost savings automobiles are struggling too. For example, a popular fund that contains corporate bonds from Wells Fargo, AT&T, Wal-Mart, and other blue-chip American companies has an average maturity of 12 years and presently yields about 3.75%. That's 3.75% of taxable interest earnings. Assuming your tax rate is 33%, you're entrusted to an effective, after-tax yield of 2.5% which, my pal, is less than the historic inflation average of 3%. So, while your bond investment is better than money in the bank and secures you to some degree against inflation, you still end up with 0.5% lower buying power every year. So savers can't be too pleased about this. While Debtors Rejoice Borrowers, on the other hand, are having the time of their lives. Recently, the typical 30-year fixed-rate home loan struck its all-time low of 4.19%. The kicker here is that home mortgage rates should in fact be more than 0.5% lower - in the 3.8% range - based upon their correlation with interest rates on Treasury bonds. Nevertheless, rates are not likely to go much lower so here's a tip: If you are in the marketplace to refinance, waiting is most likely not going to help you much. Moreover, customers of mine are borrowing millions at 2.15% to fund their business activities. Appears a Little Unfair Without taking an ethical stance, it does appear a bit unjust that savers, who in a sense are the "good guys" constructing wealth for their future, contributing capital for economic development and conserving for a rainy day, are being penalized for the actions of careless borrowers and greedy loan providers. Borrowers got in over their heads, didn't take sensible safety measures, and are now getting loan modifications and lowered rates on the cash they owe. Banks experienced enormous losses because of bad loaning practices and caused this drop in rates

2. to ultra-low levels. Nevertheless, this type of discussion does not get us anywhere. What has actually occurred, has occurred - fair or unjust. So where do we go from here, and how do we benefit from all this? What Borrowers Can Do Have a look at your financial resources from a debtor's point of view. First: re-finance your mortgage NOW if you can because rates most likely aren't going to fall much lower. Second: store, shop, look for a much better rate on your charge card. Loaning costs are dropping all around so why should you pay the same old high rate on your credit card? Find banks that are hungry to lend you cash such as smaller sized institutions and Cooperative credit union, and avoid mega-banks that usually have all the cash they need. Third: get a business loan if you need the money. Banks are relaxing and making loans at fairly low rates that are really engaging despite the danger of slower business in this weak economy. Nevertheless, utilize sound judgment and profundity as you handle more debt. Take on "good" financial obligation that funds your home purchase or properties that appreciate in value. Stay away from taking on "bad" debt for diminishing possessions you can ill manage such as a new cars and truck or boat. If you should take on "bad" financial obligation, ensure it is short term and pay it off really rapidly. What Savers Can Do Now the hard part: discovering deals as a saver. First: search for a longer-term CD that will adjust greater if rates rise. There is bit even worse than locking your money in a 5-year CD at 1.50% only to see rates rise to 5% 2 years from now. 2nd: think about purchasing business bonds with maturities of 5 years or less. These bonds still yield more than CDs, but make certain you understand what you are buying - if the corporation goes bankrupt, you could lose an excellent chunk of your milebrook financial reviews "safe" investment. Third: consider buying high dividend-paying blue-chip stocks. Warren Buffet recently said that stocks are cheaper than bonds right now, and he's right. There are numerous strong companies out there whose dividend yields are above 3%. For instance, Altria presently has a dividend yield of 6% and a strong history of consistent dividend payments. So ... it depends on you to be a winner or loser in the cost savings and borrowing game. All you need to do is understand the realities, decide to act, get on the phone or in your automobile, and start getting your affairs in order.