Is it too late to refinance my mortgage?

Motley Fool

Q: Is it too late to refinance my mortgage? — S.C., Columbus, Ohio

A: It may be, as interest rates are higher than they’ve been in a long while. Refinancing often makes sense when prevailing rates are at least a percentage point lower than your current loan’s rate. It also depends on how long you plan to stay in the home — it will take several years’ worth of savings on interest to cover the refinancing’s closing costs.

Q: I’m 26 and am wondering — should I invest some money in CDs? — D.B., Cadillac, Michigan

A: Certificates of deposit are solid choices for your short-term investments, and they’re more attractive than they have been in recent years, thanks to rising interest rates.

But even young people should consider saving and investing for retirement, and unless interest rates are quite high, CDs won’t serve you well for that. Money that you won’t need for at least five years (or, to be more conservative, 10 years), is likely to grow more briskly in stocks, which over many years have outperformed bonds, cash and even gold.

Consider that many three- and five-year CDs recently yielded around 3.5%. You can top that with some dividend-paying stocks.

Walgreens Boots Alliance recently yielded 5.75%, for example while Intel yielded 5.6%, 3M 5.2% and Citigroup 4.7%. Those payouts aren’t guaranteed, but many companies have been paying them — and increasing them — regularly over decades.

Also, the stock prices of healthy and growing companies should increase over time. CDs are good for short-term money, emergency funds and when you need safety more than growth.

Be smart about numbers

In your investing life, and in life in general, you need to be savvy about numbers — because some are not quite as good or bad as they may seem. Here are some tips to keep in mind as you evaluate news stories, earnings reports or press releases.

Imagine, for example, that a company you’re thinking of investing in announces “record earnings” for its last quarter. That sure sounds great, but perhaps it set a record last quarter with earnings per share of $2.50, and this past quarter it reported

EPS of $2.52. That’s less impressive, right? Look for meaningful growth rates — ideally long-term ones — instead of record highs.

Look closely at robust growth rates, too: Imagine that the Home Surgery Kits Co. (OUCHH) reported revenue up 100% over the last quarter — a doubling. Check to see what its actual revenue was. If it only went from $200,000 to $400,000, that’s rather puny, and such a small business is not ideal for most stock investors.

Meanwhile, if a company has grown huge, raking in $100 billion annually, know that it’s reasonable for its growth rate to slow. After all, it can be harder to go from $100 billion in revenue to $200 billion than from $100 million to $200 million.

“Annualized” growth rates, showing how much a company (or mutual fund) earned on average per year, can also be tricky. It’s smart to check exactly what period of growth is reflected and to look for any single unusually large number that might have skewed the average. For example, if a mutual fund has an unusually steep average annual growth rate of 29% over five years, it might be due to a single year in which it earned, say, 86% — a return that it won’t likely be able to repeat.

Look beyond numbers, too. A company might have posted strong growth, but there might be trouble ahead if a new rival is stealing some of its market share.