• Do you feel the Helms' $8000 liquid balance is adequate? Explain.
I feel that the Helms are in a great state in their career as of today. With that said they could invest more into their savings. They do have $8000 liquid balance, but only $7400 is earning interest. The $600 checking account is not a good idea at all. They should put their savings somewhere else where they’re money can grow more interest for future us. The checking account is not letting the money grow it’s just sitting there.
Explain the relative risks and potential advantages of CDs. Explain under what condition(s) you would recommend them for the Helms
To first explain this we would need to know what a CD is. “A CD is a savings account held for a fixed-term with the understanding or agreement that the depositor can only withdraw by giving written notice. It entitles the depositor to receive interest. A CD bears a maturity date generally ranging from a month to five years.” (Investopedia, 2008) I would think that CD/s would be a great idea. They allow the depositor to get a higher interest rate, which is exactly what the Helms are looking for. It would give them more money for future use. Another great quality of using CD/s is the security of them. Also, they can choose how long they want to put in money to the CD/s. Although the longer they put in the higher the rate will be. There is also a minimum of $500 to be deposited. There are some disadvantages to the CD/s. You have the taxes to pay on it once you withdraw. Also, you could get penalized for drawing out the money too early. And with the fixed rate(the interest rate is fixed so it never changes) you could have a very low one and won’t be able to change it through the duration of the life of the CD.
Do you agr ...