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Post by mozart522 on Jun 11, 2022 16:41:15 GMT
The most common sense now is to buy 3 months treasury or CDs. 1) You lock only 3 months 2) The rate is great at 1.4%, which is over 5.5% annually and higher than 6-12 months 3) Rates will continue to be high for a while. The Fed is raising rates and why I would wait for next week. 4) Better idea to lock ST if you want to trade later. Disclaimer: this is only an opinion, I'm not a financial advisor or an expert. ( link) BTW, I can see that Fidelity has better rates than Schwab...interesting. This is incorrect. The 1.4% is the annualized rate, not 5.5%. Yes, still better than .7 annualized for MM right now.
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CDs
Jun 11, 2022 23:05:34 GMT
Post by anitya on Jun 11, 2022 23:05:34 GMT
The 3 mo CD rate or Treasury rate quoted at various brokerages is the annualized rate not the amount of interest one gets paid for three months.
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CDs
Jun 12, 2022 14:29:15 GMT
Post by fishingrod on Jun 12, 2022 14:29:15 GMT
What most people don't understand is the FDIC coverage is different for each category of ownership. For instance, "In general, the owner of a revocable trust account is insured up to $250,000 for each unique beneficiary..."
Joint account FDIC coverage is different also.
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Post by yogibearbull on Jun 12, 2022 14:55:52 GMT
Each CD with different POD beneficiary gets its own max FDIC coverage.
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Post by Deleted on Jun 12, 2022 15:36:03 GMT
FDIC protects against bank failure but not theft or incompetence (unless the govt shuts them down, I guess).
Savings accounts with a single owner and designated account beneficiaries fall under revocable trust category and extends the total covered. I recently opened one at a bank.
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CDs
Jun 12, 2022 16:47:47 GMT
Post by retiredat48 on Jun 12, 2022 16:47:47 GMT
CD ladders are where it is at, for people who want to use CDs as a portion of their portfolio. I have a five year CD ladder. I have had it for a long time. It is five 5 year CDs, with one maturing each year, which I buy another 5 year CD with. So even though each CD is a 5 year CD, the 'duration' of the whole ladder is only 2.5 years. So like Capital , said "for CDs it is a factor of both rate and maturity." Ladders enable one to take advantage of higher yielding, longer duration CDs, while keeping the total duration lower. But this process takes 4 years to implement. fishingrod,…for a five year CD ladder, what rates were you getting in purchasing CDs 3 to 5 years ago?? How far above zero percent? tia R48
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Post by fishingrod on Jun 12, 2022 17:13:49 GMT
retiredat48 , Between the two credit unions I use, one of them are usually running a special for members. I was lucky I caught a special 5 year at 3% from Pen Fed about 5 years ago. Also Apple Fed had a very small window with a special before that at around 3%. I have found them to be very lenient and understanding if I ask to break a CD, and renew with higher rate. I don't abuse that. Twice in 15 years. Haven't had a penalty yet. The lowest % rung 5 year CD I have is yielding 2%, and is renewing in August 2022.
The highest is 3%. The weighted average is 2.68%
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CDs
Jun 12, 2022 17:34:26 GMT
Post by retiredat48 on Jun 12, 2022 17:34:26 GMT
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CDs
Jun 12, 2022 17:50:55 GMT
Post by Deleted on Jun 12, 2022 17:50:55 GMT
www.investopedia.com/terms/c/certificateofdeposit.aspI recommend reading the linked article and parts listed at the bottom of the first page to learn about different classifications, features, ways to purchase, and risks. Given all that, and the low interest rate environment, I won't be buying them any time soon.
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CDs
Jun 12, 2022 23:28:20 GMT
Post by anitya on Jun 12, 2022 23:28:20 GMT
You should always go with FDIC insured banks.
But if you have to worry if there is enough FDIC coverage, I am not sure you are not reaching for yield. I would rather go with a higher credit rated FDIC bank with a slightly lower yield on the CD than the other way around. Once you decide on the bank, of course, you want to try to structure your deposits in a way you get the maximum FDIC protection, assuming your structuring is not too painful.
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CDs
Jun 13, 2022 3:35:00 GMT
Post by FD1000 on Jun 13, 2022 3:35:00 GMT
The more you guys discuss CDs, the more I think treasuries are a better choice, they pay more and guaranteed by the U.S. government and the limit is much higher than $250K...maybe 5 million( link)? + no state tax. So, why not treasuries?
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Post by fishingrod on Jun 13, 2022 13:57:24 GMT
" FD1000 ,The more you guys discuss CDs, the more I think treasuries are a better choice, they pay more and guaranteed by the U.S. government and the limit is much higher than $250K...maybe 5 million(link)? + no state tax. So, why not treasuries?" __________________________________________________________________________________________________
Aren't you the one who started this thread?
Are you buying or badgering?
Ohh, that's right, you don't post your buys anymore, you only tell people how bad their moves are!
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CDs
Jun 13, 2022 14:05:41 GMT
Post by Chahta on Jun 13, 2022 14:05:41 GMT
The more you guys discuss CDs, the more I think treasuries are a better choice, they pay more and guaranteed by the U.S. government and the limit is much higher than $250K...maybe 5 million( link)? + no state tax. So, why not treasuries? I agree. 1 year ladder 2.2% annual currently and 2 year ladder is 2.8% annual. And I believe it will go up every 3/6 months. Seems like the best ballast option going right now. I don't see any upside using a fund other than liquidity. Days like today in the market convince me.
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CDs
Jun 13, 2022 14:05:51 GMT
Chahta likes this
Post by fishingrod on Jun 13, 2022 14:05:51 GMT
The more you guys discuss CDs, the more I think treasuries are a better choice, they pay more and guaranteed by the U.S. government and the limit is much higher than $250K...maybe 5 million( link)? + no state tax. So, why not treasuries? You are correct that treasuries are paying more than CDs right now.
It is not always that way. One needs to buy when the window is open.
Are you buying?
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Post by FD1000 on Jun 13, 2022 14:10:03 GMT
" FD1000 ,The more you guys discuss CDs, the more I think treasuries are a better choice, they pay more and guaranteed by the U.S. government and the limit is much higher than $250K...maybe 5 million(link)? + no state tax. So, why not treasuries?" __________________________________________________________________________________________________
Aren't you the one who started this thread?
Are you buying or badgering?
Ohh, that's right, you don't post your buys anymore, you only tell people how bad their moves are!
Not badgering, just looking for info. If treasuries pay more, even if they pay the same, why not treasuries? (In taxable, even a small % lower for treasuries is still OK, depending on one's taxes.) I'm not buying because I want liquid money, but if I see 5% (CD or treasuries) for the next 5-10 years, I will be interested.
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Jun 13, 2022 14:11:48 GMT
Post by fishingrod on Jun 13, 2022 14:11:48 GMT
Treasuries don't always pay more.
An old article but everything is the same.
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Jun 13, 2022 14:17:59 GMT
Post by FD1000 on Jun 13, 2022 14:17:59 GMT
Treasuries don't always pay more.
An old article but everything is the same.
Thanks for a good article.
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CDs
Jun 13, 2022 14:24:29 GMT
Post by fishingrod on Jun 13, 2022 14:24:29 GMT
Sorry FD1000 , No need to scratch your head too much over the differences. Both savings vehicles are straightforward, nothing hidden as long as you understand the basics.
You must weigh the pros and cons of each as they apply to you.
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Post by anitya on Jun 13, 2022 21:43:13 GMT
I bought Treasuries today at Schwab for the first time. I prefer Fidelity where I bought on Friday. Schwab does not allow me to bid for less than the minimum quantity offered. Also, Schwab does not allow me to change the price. The field is locked. I have noticed that at Schwab the bid ask spreads in price (0.2) are wider than at Fidelity (0.06). 0.2 is $200 for $100k bonds. Higher minimums and wider bid-ask spreads at Schwab. So, if you have choice, between the two brokerages I would buy Treasuries at Fidelity. I will no longer be buying at Schwab.
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Post by anitya on Jun 13, 2022 22:03:32 GMT
For the same 2 yr Treasury security, which I own -
Fidelity bid-ask price - 98.375 -98.391 Schwab bid-ask price - 98.328 - 98.453
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CDs
Jun 13, 2022 22:31:51 GMT
Post by Deleted on Jun 13, 2022 22:31:51 GMT
For the same 2 yr Treasury security, which I own - Fidelity bid-ask price - 98.375 -98.391 Schwab bid-ask price - 98.328 - 98.453 How did you successfully bid? Market order?
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Jun 14, 2022 6:17:26 GMT
Post by anitya on Jun 14, 2022 6:17:26 GMT
For the same 2 yr Treasury security, which I own - Fidelity bid-ask price - 98.375 -98.391 Schwab bid-ask price - 98.328 - 98.453 How did you successfully bid? Market order? At Schwab, it was not possible to change limit order (which is their default) but you are forced to pay the Ask price. At Fidelity, you can change the limit price you want to pay and the system will tell you whether it would be accepted or not. But with bid-ask spread being so narrow at Fidelity, if you are serious, you just bid the ask price and you are done. See my post right before the one you quoted for additional details. Thanks.
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