1981..interest on CD? almost 16%..top tax rate? 66%

[SoCalDem]

Historical CD Rates

By Jason Gluckman
http://ezinearticles.com/?Historical-CD-Rates&id=123725


When looking at historical CD rates, it is apparent that some trends have remained constant. Generally, institutions that offer certificate of deposits grant higher rates of interests on their CDs that customers deposit money for the agree-on term than those on the CDs in which customers can withdraw the money on demand.

For instance, during 2004 most of the popular banks in the world had offered 0.4% annual rate of interest on saving account deposits which are payable on demand, 0.8% on a 3-month CD and 2% on a 2-year CD.

When studying historical CD rates, the trend indicates that over the last 30 years the rates of interest were ranging in between 2-16% annually. During 1979, the average rate of interest on CDs was 11.44% worldwide.

This was the rate before considering tax rate and inflation rate. During the same period, those rates were 66% and 13% respectively, which in turn left the net rate of interest of CD as 9.41%.

In 1981, the CD rate was almost 16% and in which year the tax rate and inflation rate were 66% and 9%.

snip

Whatever the previous rates may be, one can say that billions of dollars have been invested in CDs during the 20th and 21 centuries.

snip


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http://research.stlouisfed.org/fred2/data/GS30.txt

10-01-1981.. a 30-yr treasury bond was paying 14.68% interest...

I sure wish we had bought one back then :evilgrin:

[Muttocracy]

1. That's how I paid for college...

Fortunately my parents saved a good chunk of money toward college for me, and I remember getting 10% interest on much of it while in middle school, early high school. Meanwhile, we weren't suffering from unemployment in the family or housing problems, or too much from inflation. I was able to take that money when I was 18 and no more from them.

[TwilightZone]

2. Mortgage rates were insane, though.

My parents paid close to 20% on a mortgage - with good credit - in the early 80s.

[MADem]

3. Had house prices started to get crazy by then? Or were they still halfway sane? nt

[TwilightZone]

4. This was in rural South Dakota.

Prices still aren't crazy there *now*. :)

With some obvious exceptions (San Fran, San Diego, NYC, etc.), home prices didn't really start to get nutty until the early/mid 90s when the speculators and aggressive lenders took over. Demand went up, ARMs and interest-only mortgages became widely available, etc.

[MADem]

5. I was in and outta the country--I just remember seeing a house price one day and going "DAMN!" nt

[TwilightZone]

6. I had a similar experience.

(Sorry for the story length, in advance. :) )

My wife and I took a trip to San Diego in the late 90s or early 2000s. We were living in the Midwest at the time and were looking at relocation city options.

We were driving through a nice neighborhood in the suburbs that looked, say, middle to upper-middle class. We saw a nice house that had a For Sale sign in front of it. Nice house - 4 bed, 3 bath, 3,000 or so square feet, nice landscaped lot.

I stepped out to get a brochure.

$1.5 million. I about keeled over.

[MADem]

8. Geeeeez!!! And if you'd been in the same neighborhood in, oh, the late sixties or early seventies,

it probably would have been "affordable!"

I had friends who bought in La Jolla when it was oh-so-affordable. Fantastic house, beautiful view--but damn--they couldn't afford to buy the patio of the thing now, even with the downturn! Good thing it's paid for!

[TwilightZone]

9. Prices in San Diego went crazy.

They had 20%+ yearly growth in house prices for three or four years in a row. When we started looking, entry-level homes were under $200,000. A few years later when we had finally decided that it was time for a change of scenery, entry-level homes were nearly $500,000.

They've come down some, but it's still *way* overpriced, as far as I'm concerned.

I love La Jolla and almost went to UCSD in the late 80s (I should have, I would have beat the housing boom!) It's now one of the most expensive suburbs in the entire country.

[Lex]

7. and a 30 yr fixed rate mortgage was over 16%

nt