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Old 02-18-2010, 12:00 PM   #61
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I have elected a 100% cash portfolio after considering all the options. I will take my gauranteed current 3.5% yield knowing that inflation will likely result in a rise in interest rates which will only increase my yield and hurt equities. I can make up for any "market loss" by saving more. I plan to retire in 7 years with a portfolio close to 2 million. I am half way there now and plan to save north of 100k annually at 0 risk aside from "inflation".
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Old 02-18-2010, 12:05 PM   #62
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I have elected a 100% cash portfolio after considering all the options. I will take my gauranteed current 3.5% yield knowing that inflation will likely result in a rise in interest rates which will only increase my yield and hurt equities. I can make up for any "market loss" by saving more. I plan to retire in 7 years with a portfolio close to 2 million. I am half way there now and plan to save north of 100k annually at 0 risk aside from "inflation".
This is interesting, Where do you find a 3.5% yield on cash?

Ha
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Old 02-18-2010, 12:07 PM   #63
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igobanking.com 3.55% 5 year, break cd 6 month penalty when rates go up far enough
pen fed 3.50% 5 year
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Old 02-18-2010, 12:14 PM   #64
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This is interesting, Where do you find a 3.5% yield on cash?

Ha
Here are a few I've found.

Federal TSP G Fund: 3.48%
Pentagon Federal Credit Union 5 year certificate: 3.5%
Apple Federal Credit Union 5 year certificate: 3.5%
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Old 02-18-2010, 12:41 PM   #65
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igobanking.com 3.55% 5 year, break cd 6 month penalty when rates go up far enough
pen fed 3.50% 5 year
Do you have your $1M spread only between these 2 or do you have other banks you use others to avoid the risk as you are well over the FDIC limits?
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Old 02-18-2010, 12:46 PM   #66
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I have 9 cd's for 82k each (I am under 100k in each case). Each cd in wifes name with a different beneficiary. 4 different banks (penfed, ally, Igobanking.com, hudson city savings bank) yielding 3.50, 3.15, 3.40, 3.55. and 180K in an IRA plus 50k emergency in ally high yield savings.

This protects me from lawsuits (but not divorce) and keeps me under the old 100k limit.

first cd's to break when rates change are ally as they only have a 2 month penalty for early withdrawal, thus I think they price their cd a little lower than the competition knowing they can lure folks anyway
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Old 02-18-2010, 12:55 PM   #67
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I have 9 cd's for 82k each (I am under 100k in each case). Each cd in wifes name with a different beneficiary. 4 different banks (penfed, ally, Igobanking.com, hudson city savings bank) yielding 3.50, 3.15, 3.40, 3.55. and 180K in an IRA plus 50k emergency in ally high yield savings.

This protects me from lawsuits (but not divorce) and keeps me under the old 100k limit.

first cd's to break when rates change are ally as they only have a 2 month penalty for early withdrawal, thus I think they price their cd a little lower than the competition knowing they can lure folks anyway
Pretty good - thanks for sharing the details. Excuse my ignorance, but if one has several CD's from the same bank in the same name are they each covered by the FDIC or does the FDIC limit cover the sum of all your CD's?
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Old 02-18-2010, 01:18 PM   #68
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Pretty good - thanks for sharing the details. Excuse my ignorance, but if one has several CD's from the same bank in the same name are they each covered by the FDIC or does the FDIC limit cover the sum of all your CD's?
Here's a link to the FDIC site:

FDIC: Your Insured Deposits

They apply to limit to each "ownership category". Joint account with spouse gets $500,000 coverage ($250,000 each). Husband and wife can each have single accounts with $250,000 in total coverage. IRA accounts are insured seperate. Then you can have accounts joint with qualified family members to get even more coverage.

Floatingdoc's wise to keep under the old $100,000 limit with longer terms since there's no guarantee the $250,000 will remain.
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Old 02-18-2010, 01:39 PM   #69
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Here's a link to the FDIC site:

FDIC: Your Insured Deposits

They apply to limit to each "ownership category". Joint account with spouse gets $500,000 coverage ($250,000 each). Husband and wife can each have single accounts with $250,000 in total coverage. IRA accounts are insured seperate. Then you can have accounts joint with qualified family members to get even more coverage.

Floatingdoc's wise to keep under the old $100,000 limit with longer terms since there's no guarantee the $250,000 will remain.
Thanks for the link and explanation. I know I'm probably still being dumb, but I'm not convinced that multiple CD's in my name are considered to be different ownership categories for each CD. If a bank went under and I had 5 CD's in my name each worth $100K would I be insured for $250K or $500K?
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Old 02-18-2010, 01:51 PM   #70
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Thanks for the link and explanation. I know I'm probably still being dumb, but I'm not convinced that multiple CD's in my name are considered to be different ownership categories for each CD. If a bank went under and I had 5 CD's in my name each worth $100K would I be insured for $250K or $500K?
Your right. All CDs and accounts in your name only are grouped together and insured up to $250,000 (note: old limit of $100,000 is scheduled kick back in on 1-1-2014). However, all accounts joint with your spouse are grouped together and insured up to $500,000 ($250,000 each). Your wife's accounts are grouped together and insured up to $250,000. So, just between the two of you, your single and joint accounts will be insured up to $1,000,000 in the same bank. Any IRA accounts you have are insured seperate. You can also extend the coverage by having accounts joint with qualified relatives like children. Look at the example the FDIC gives here:

FDIC: Your Insured Deposits
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Old 02-18-2010, 01:55 PM   #71
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Alan, in addition to the earlier link, here is an FDIC insurance coverage estimator that will let you run "what if" scenarios: http://www2.fdic.gov/edie/
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Old 02-18-2010, 02:31 PM   #72
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Your right. All CDs and accounts in your name only are grouped together and insured up to $250,000 (note: old limit of $100,000 is scheduled kick back in on 1-1-2014). However, all accounts joint with your spouse are grouped together and insured up to $500,000 ($250,000 each). Your wife's accounts are grouped together and insured up to $250,000. So, just between the two of you, your single and joint accounts will be insured up to $1,000,000 in the same bank. Any IRA accounts you have are insured seperate. You can also extend the coverage by having accounts joint with qualified relatives like children. Look at the example the FDIC gives here:

FDIC: Your Insured Deposits
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Alan, in addition to the earlier link, here is an FDIC insurance coverage estimator that will let you run "what if" scenarios: http://www2.fdic.gov/edie/
Excellent - thanks guys
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Old 02-18-2010, 03:44 PM   #73
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Your right. All CDs and accounts in your name only are grouped together and insured up to $250,000 (note: old limit of $100,000 is scheduled kick back in on 1-1-2014). However, all accounts joint with your spouse are grouped together and insured up to $500,000 ($250,000 each). Your wife's accounts are grouped together and insured up to $250,000. So, just between the two of you, your single and joint accounts will be insured up to $1,000,000 in the same bank. Any IRA accounts you have are insured seperate. You can also extend the coverage by having accounts joint with qualified relatives like children. Look at the example the FDIC gives here:

FDIC: Your Insured Deposits

I don't think it has to be "qualified relatives". What is "qualified". Really, if it is a different category of ownership such as in trust for (itf) or payable on death (POD) then it is insured

Wife POD husband
Wife POD brother
Wife POD sister in law
Wife POD brother in law etc.

As for me, I trust the payables (in my case, my sisters) so I am not worried.
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Old 02-18-2010, 05:53 PM   #74
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Thanks for the lists.
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Old 02-27-2010, 03:42 PM   #75
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Thank you floatingdoc for the info. I've heard about 4% 5-year CDs in other threads but can't find them (maybe penfed had them but no longer?). I've been looking at CD rates today and they are not looking good at all. igobanking dropped their rate compared to when you opened it. Looks like penfed still has theirs at 3.5% with 180-day-interest breakup fee - does anyone know how to join there easily?

Also, if someone knows of other good CDs / money-markets / etc, please post. I've been at Alliant for their 2% savings for a while now and almost hitting the FDIC insurance with them with my CD + savings account there. My CD is a POD account. I wonder if I drop POD from savings and just leave it without POD, I might effectively increase my coverage (where only savings account would now be up to 250k and CD would be insured separately due to POD). I am single and child-less, so can't do the spouse thing for increasing the FDIC limits. Do others have same understanding of POD-related coverage rules? (that's how I am reading http://www.fdic.gov/deposit/deposits/insured/faq.html but a confirmation is always nice :-) )
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Old 02-27-2010, 04:24 PM   #76
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Will cost you about $20-$30 one time to use option #7 on this page, assuming you don't qualify in any other way. Well worth it IMO.

https://www.penfed.org/howToJoin/overview.asp
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Old 02-27-2010, 11:03 PM   #77
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I have been exploring the possibility of going all cash, even though I am years away from early retirement. Are any of you retirees all cash right now?
Many of us in this forum were led here by early retirement books that touted the efficient market theory and suggested investing broadly in cheap index funds. It's very possible we're biased.

There is no shame in playing it safe. Many people are. All the big mutual funds have their treasury funds closed because so many people are trying to get in...into funds that don't pay enough to cover the fees...losing money for safety. What do they know? There have been times recently that cash would've been a great position.

For the moment deflation seems to be ruling. They're giving stuff away in all the stores I visit. My verizon cell phone bill went down 25%. Union grocery stores are getting crushed by tough competition forcing prices down. Dollar menus are expanding. 4 dollar prescriptions, 6 dollar electric can openers, 10 dollar toasters, 40 dollar vacuum cleaners, I got net flix for 8.99 a month..... I just bought a brand new 3000 dollar racing bike for 1000. I'm not affraid of inflation yet...there will be a time though.

"I" savings bonds bonds are paying 3.36% right now, and all the CD's people have suggested here look pretty good to me.
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Old 03-01-2010, 01:06 PM   #78
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Coke is paying 3.3%
McDonald's is paying 3.4%
J&J is paying 3.1%
Exxon is paying 2.6%
P&G is paying 2.8%
Kraft is paying 4.1%
Walmart is paying 2.0%

I just can't get excited about buying CD's when the most stable companies in the world pay comparable current rates, have a strong history of increasing those payments over the years, and currently get more favorable tax treatment to boot.

In 10 years, I suspect that a portfolio of strong, dividend paying companies will give you more income than a portfolio of CD's, but to each their own.
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Old 03-01-2010, 01:15 PM   #79
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Yes that is true however, I don't have principle risk.
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Old 03-01-2010, 02:46 PM   #80
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Coke is paying 3.3%
McDonald's is paying 3.4%
J&J is paying 3.1%
Exxon is paying 2.6%
P&G is paying 2.8%
Kraft is paying 4.1%
Walmart is paying 2.0%

I just can't get excited about buying CD's when the most stable companies in the world pay comparable current rates, have a strong history of increasing those payments over the years, and currently get more favorable tax treatment to boot.

In 10 years, I suspect that a portfolio of strong, dividend paying companies will give you more income than a portfolio of CD's, but to each their own.
Except when the favorable tax treatment of dividends goes poof.
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