“Why would you do that?” is what spontaneously popped out my mouth in response to a client’s statement.  asked the question with a tone of complete confusion and disbelief to the point of sounding sarcastic. It wasn’t politically correct or well thought out, but most gut-reaction comments aren’t.   The client’s statement was “I’m going to put the money in a five year CD at my bank because I can earn 2.45%.”

Following my blurted response there was dead silence for what seemed like forever. I then asked my client three questions:
1. Are interest rates low or high right now?
2. Over the next two years do you think interest rates are going to go up or down?
3. Why would you commit to locking your money up at a low rate for five years when you think the rates are going to increase soon?

This is could have been a classic case of making a poor decision for the upcoming five years based on the past five years. See “OBJECTS ARE CLOSER THAN THEY APPEAR.”

• Objects Are Closer Than They Appear
• When Half Right is Wrong
• HSAs - Questions v. Answers
• Mission ICED TEA
• The Save $8 to Spend $10 Coupon