Thursday, May 18, 2023

Be Taylor Swift


Every woman and girl wants to be Taylor Swift.  Every man and boy wants to marry her.

Okay, a bit of an exaggeration there, but you know what I mean.  She is an iconic cultural figure who is talented, beautiful, and rich.  It is said that “as Taylor Swift goes, so goes the music industry.”  She has that much influence and popularity.  Ticket demand for her current tour is double that of the top five tours of last year, plus the Super Bowl…..combined.

She is also devoted to her fans, the “Swifties”, as evidenced by her feud with Live Nation/Ticketmaster over the crash of its overwhelmed online system when tickets went on sale for her Eras Tour a few weeks ago.  It was enough to prompt Congress to investigate.  Yes, Miss Swift has some influence in town.

But she is no stranger to taking on corporate giants.  She’s done the same with Spotify and with Apple Music.  And she opted out of “dynamic pricing” for her tour’s tickets.  (In case you’re not familiar with the term, imagine that Kroger advertises strawberries for $1.99 Wednesday morning, but when demand soars and they start flying off the shelf, they raise the price Wednesday afternoon to $3.99.  That is dynamic pricing.)

But I write here not about her talent, beauty, wealth, or devotion to her fans.  I admire her financial savvy.  You may recall that I posted a few weeks ago about some celebrities that endorsed the now-bankrupt—but still being criminally investigated—FTX after falling for its smooth-talking president, Sam Bankman-Fried.  (Read it here.)  Now those celebrities are named in a $5 billion lawsuit for endorsing an unregistered security and misleading potential clients.

The Financial Times reported that Taylor Swift was also approached by FTX about a $100 million sponsorship deal for her tour.  And why wouldn’t she jump at it?  Big bucks, the trendiest investment scheme going at the time, and joining the ranks of other famous people lined up to sing FTX’s praises must have seemed like a smart PR move.

But according to sources, Taylor Swift asked one question: “Can you tell me that these are not unregistered securities?”  When she learned they were not, she declined the offer.

Smart young woman.  She is a model for all of us.  We should all ask some simple but important questions when contemplating investing our hard-earned money.  According to the Securities and Exchange Commission (SEC) it is unlawful to offer or sell securities not registered with them or for which an exemption has not been granted.  Claims of unusually high returns with little risk, unlicensed investment “specialists”, and sketchy sales documents (poor English, misspellings, or even missing documents) should set off alarm bells in a potential investor’s head.

Around Valentine Day I wrote in my blog about a survey that showed men want their female partner to be financially literate.  (Read it here.)  Well no wonder all these men are chasing Taylor Swift!  I understand that her father is or was employed by JP Morgan Bank, so he might be advising her on financial matters.  But that would be all the more impressive: a star who actually listens to sound advice….from her dad. When I conduct my next seminar I think she’d make a great guest speaker.  I think I’ll invite her.  Can someone give me her cell phone number?

Until next time,


“Listening to good advice is worth much more than jewelry made of gold.” Proverbs 25:12 CEV

Monday, May 8, 2023

Return of the CD's (Part Two)


As with most anything else, it pays to shop around when looking for certificates of deposit (CD’s) paying the highest interest rates.  Banks are offering special deals now for CD’s of varying terms (i.e. required length of deposit).  What I’ve found with these deals, however, is that often they are “one and done”.  They may have a good rate for the initial term, but when they renew the subsequent term features a very average rate.  Some banks, in fact, state upfront that after the initial term, the rate will fall to half—or less—of the initial interest rate.

Banks can be flexible in the length of terms for their CD’s, but the rates can also vary wildly.  A bank may offer a special for a one-year CD, but if you want to construct a CD ladder (see my last post), the rates for a three-month, six-month, or nine-month CD are likely to be much lower.

For these reasons, I would encourage CD shoppers to also keep brokers in mind as an option.  Brokers (such as my retirement account custodian or even a bank with a Certificate of Deposit Account Registry service) can purchase a huge volume of CD’s at a time from banks to negotiate a higher rate, then sell them, with still-high interest rates, to their clients.  I’ve found that brokers have a more consistent range of interest rates across the various CD terms.  In other words, the rate for a three-month CD is likely to be reasonably close to a one-year CD’s term.  This makes construction of a CD ladder easier and more lucrative.

In most cases, CD’s sold by brokers are still FDIC-insured.  Just be certain to deal with a reputable broker and get in writing that the CD is insured and is not a security but is in fact a certificate of deposit.

There are downsides to purchasing CD’s from a broker.  Sometimes these CD’s are callable; that is, the issuing bank can decide they don’t want to continue paying the high interest rate, will pay the purchaser the principal and the interest earned to-date, and just terminate the CD contract.  This is more likely to happen as interest rates generally are falling. 

But there is also a risk when rates are rising.  That is happening to me right now.  I purchased a brokered, nine-month, $10,000 CD that will mature in September.  But rates have risen a bit since I made that purchase, and if I were to cash in that CD now it is worth about $9985.  It has lost value.  That’s because a brokered CD can be resold in the secondary market—the broker can resell that CD after it is cashed in.  But who would want a CD earning 4.85% when they can purchase a new CD with a 5.1% rate?  My CD has to be discounted in order to attract another buyer. 

Nevertheless, this is not a risk if the purchaser of a brokered CD keeps it until maturity.  At that point it will not matter what current rates are.  For this reason, it is best to only invest money in a brokered CD if you are certain the money will not be needed until at least the maturity date of the CD.

[Of course, if rates are falling and the bank has not called your CD, it might be worth more than it would otherwise.  So it works both ways.]

Finally, the interest in a brokered CD does not compound.  If you roll over a maturing CD into a new CD, you will just get a check for the interest earned; only the original principal amount gets re-invested in the new CD.

As an alternative to CD’s, your broker or banker may be able to offer U.S. Treasury Bills.  Right now their rates are running very close to what I see in the brokered CD’s market.  Terms vary from four weeks to fifty-two weeks.

The Federal Reserve last week raised the interest rate again but signaled that it might be pausing the steady pace of increases we have seen over the last couple of years.  For that reason, some market watchers predict we are at or very near the peak for interest rates on savings accounts and CD’s.  This might be a good time to lock in some good rates before they start the inevitable decline.

Until next time,


“You could have at least put my money in the bank so that I could have earned interest on it.”  Matthew 25:27 CEV