Lessons My Banker Never Taught Me

New Horizon Financial 320 Palisade Avenue

Bogota, NJ 07603Tel. 201.489.1118Fax. 201.457.1082

Topics for Discussion

• Certificate of Deposit (CD’s) • Historical CD Rates• Bank Fees• The Role of the Federal Reserve• Reserve Requirements and Lending• Inflation• Taxation• Options

CD’s

• What is a CD? – A certificate of deposit is a savings certificate that

entitles the owner to receive interest. – CD’s bear a maturity date, have a specified fixed

interest rate and can be issued in any denomination.

– Durations range from one month to several years.– Issued by most commercial banks.

Footnote 1

Historical Rates (CD’s from 1984-2010)

Current CD RatesDuration Bank Rate

6 Month Allied Bank .1%

1 Year Discover Bank .35%

2 Year Ally Bank .5

3 Year GE Money Bank 1.2%

5 Year Discover Bank 1.9%

7 Year Denver Savings Bank 2.45%

10 Year Bond 1.9%

30 Year Bond 3.1%

Footnote 2

CD - Time Deposits - Bank of America

Less than $10,000

$10,000 - $24,999

$25,000 - $49,999

$50,000 - $99,999

$100,000 - $499,999

$500,000 and over

Term Rate/APY(%)† Rate/APY(%)† Rate/APY(%)† Rate/APY(%)† Rate/APY(%)† Rate/APY(%)†

28 - 89 Days 0.27/0.27 0.27/0.27 0.27/0.27 0.27/0.27 0.27/0.27 0.27/0.27

90 - 179 Days 0.28/0.28 0.28/0.28 0.28/0.28 0.28/0.28 0.28/0.28 0.28/0.28

06 - 11 Months 0.30/0.30 0.30/0.30 0.30/0.30 0.30/0.30 0.30/0.30 0.30/0.30

12 - 17 Months 0.35/0.35 0.35/0.35 0.35/0.35 0.35/0.35 0.35/0.35 0.35/0.35

18 - 23 Months 0.35/0.35 0.35/0.35 0.35/0.35 0.35/0.35 0.35/0.35 0.35/0.35

24 - 35 Months 0.40/0.40 0.40/0.40 0.40/0.40 0.40/0.40 0.40/0.40 0.40/0.40

36 - 47 Months 0.60/0.60 0.60/0.60 0.60/0.60 0.60/0.60 0.60/0.60 0.60/0.60

48 - 59 Months 0.85/0.85 0.85/0.85 0.85/0.85 0.85/0.85 0.85/0.85 0.85/0.85

60 - 119 Months

1.10/1.11 1.10/1.11 1.10/1.11 1.10/1.11 1.10/1.11 1.10/1.11

120 Months 2.28/2.30 2.28/2.30 2.28/2.30 2.28/2.30 2.28/2.30 2.28/2.30

Minimum to Open: $15,000 Terms of 7 Days - 27 Days/$1,000 Terms of 28 Days - 10 Years.

Bank FeesInvestment Vehicle Minimum To Invest Rate %

Regular Savings Account No Minimum .05

Money Market Savings No Minimum .13

Growth Money Market Savings

No Minimum .13

7 Month Term CD $10,000 .40

7 Month Term IRA $2,000 .40

9 Month Term CD $5,000 .30

9 Month Term IRA $2,000 .30

12 Month Term CD $10,000 .45

12 Month Term IRA $2,000 .45

18 Month Term CD $10,000 .65

18 Month Term IRA $2,000 .65

What is the Federal Reserve

• What is the Fed?

– The Federal Reserve is a formal organization created to study and implement monetary policy

Footnote 3

Federal Reserve

“Although the federal funds rate is likely to remain exceptionally low for an extended period, as the expansion matures, the Federal Reserve will at some point need to begin to tighten money conditions to prevent the development of inflationary pressures.” – Ben S. Bernenke

Reserve Requirements and Lending

• Reserve requirements are the amount of funds that a depository institution must hold in reserve against specified deposit liabilities.

• Reserves must be held in the form of vault cash or deposits with Federal Reserve Banks.

Reserve Requirements

Deposit Liabilities Requirement

$0 to $11.5 million 0%

More than $11.5 million to $71.0 million 3%

More than $71.0 million 10%

Footnote 4

LendingType of Loan Rate

New Auto Loan Average (New York, NY) 5.8%

Used Auto Loan Average (New York, NY) 6.09%

Subsidized Undergrad Stafford Loan 3.4%

Subsidized Graduate Stafford or Unsubsidized Loans

6.8%

Parents and Direct PLUS Loans 7.9%

Average Credit Card APR 14.9%

Unsecured Credit Card

Footnote 5

Lending

Subsidized student loan interest used to be 6.8%. But when Democrats took over the House in 2007, they passed phased-in cheaper rates for subsidized student loans. The rates fell to a current low of 3.4% for subsidized Stafford student loans this past school year. The rates are scheduled to revert back to 6.8% for the 2012-2013 school year.

Footnote 6

Lending

At a time when Americans owe more on student loans than on credit cards — student debt is topping $1 trillion for the first time — and the Occupy movement has highlighted the rising furor over spiraling student debt…

Inflation

• Inflation is the rate at which the general prices of goods and services rise.

• As it increases your purchasing power decreases.

• Example: If inflation is 2% a pack of gum that costs $1 will cost $1.02 in one year.

Inflation• The inflation rate in the U.S. was reported at

2.7% in March 2012Year Inflation Rate Year Inflation Rate

2011 3.16% 2001 2.83%

2010 1.64% 2000 3.38%

2009 -0.34% 1999 2.19%

2008 3.85% 1998 1.55%

2007 2.85% 1997 2.34%

2006 3.24% 1996 2.93%

2005 3.39% 1995 2.81%

2004 2.68% 1994 2.61%

2003 2.27% 1993 2.96%

2002 1.59% 1992 3.03%

Taxation

• Money markets and CD’s are taxable.

• Between taxation, inflation and bank fees you may be losing “buying power” keeping your money in a bank.

• You may consider the use of alternative means to stay ahead of inflation and reduce your tax burden

• Certain investments can be tax free.

2012 IRS Tax BracketsTax Bracket Single Married Filing Jointly Head of Household

10% $0 - $8,700 $0 - $17,400 $0 - $12,400

15% $8,701 - $35,350 $17,401 - $70,700 $12,401 - $47,350

25% $35,351 - $85,650 $70701 - $142,700 $47,351 - $122,300

28% $85,651 - $178,650 $142,701 - $217,450 $122,301 - $198,050

33% $178,651 - $388,350 $217,451 - $388,350 $198,051 - $388,350

35% $388,350+ $388,350+ $388,350+

Options

• Mattress

• Ask questions of your banker

• Read a quarterly filing to see banks profits

• Talk to an investment adviser about municipal bonds

Footnotes1- http://www.bankrate.com/system/util/print.aspx?p=finance/cd-rates-history-jan-2011.aspx

2- www.bankofamerica.com

3-"Bernanke Reaffirms 'Extended Period' of Low Rates", nytimes.com, February 24, 2010

4-http://www.hsh.com/autosample.html, http://ehow.com/info_810511_average-rates-student-loans.html, http://www.lowcards.com/ccu.aspx

5-"Obama pushes to keep low student loan rates", http://money.cnn.com/2012/04/20/pf/college/student_loans/index.htm, April 20, 2012

6-” Student Loan Interest Rates Loom as Political Battle” http://www.nytimes.com/2012/04/20/education/student-loan-interest-rates-loom-as-political-battle.html?_r=1

DisclosureSecurities offered through Cadaret, Grant & Co., Inc., member FINRA/SIPC. One Lincoln Center, Syracuse, NY 13202. Telephone number: 315.471.2191Performance figures displayed herein represent past performance and are not predictive of future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares/units, when redeemed, may be worth more or less than the original cost. Investment securities are not FDIC-insured, nor are they deposits of, or guaranteed by, a bank or any other entity.The information has been gathered from sources believed to be reliable, however, Cadaret, Grant does not guarantee the accuracy or completeness of the information. The cost basis of securities positions is being provided by the account holder and neither the representative not Cadaret, Grant makes any representations as to the accuracy of such cost basis. The cost basis information provided is meant as a general guide and should not be relied upon as tax or legal advice.