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Brokered CDs...Questions??
Old 09-14-2009, 01:08 PM   #1
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Brokered CDs...Questions??

hello...Within my investment allocation I have both a 10 year laddered CD/Treas investment "piece" as well as other funds currently sitting in MM...w/.5% yield. I am working on improving the yield on my MM liquid funds.

I have purchased brokered CDs in my TD/Ameritrade account with the "ladder" approach and have historically found the yield on the brokered CDs at least as good as the on line banks. Currently the TD brokered CDs in the shorter term (say 6 mo-2 yrs) are dramatically lower than i online bank rates...example...one year Ally .95% through TD...2.00% purchased directly. No doubt this is significantly due to TDs "cut/commission"

Is there a place to go where the "pass through" rates are closer to direct purchase rates?? Does VG Brokerage (or another brokerage)offer better pass through rates?

As I move closer to "retirement" I want to become "better" at increasing yield within particular risk categories

What do some of you do to increase safe yields...where do you go to find such yields?? I would like to keep maturities short right now with the thought of lengthening as interest rates rise (my assumption...next 1-3 years).

Thanks All...Tom
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Old 09-14-2009, 10:33 PM   #2
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Bump

Maybe I should have asked where to put liquid funds for 1-2 years to improve yield w/safety of principal?? Maybe a ST bond fund?

Thanks...Tom R
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Old 09-14-2009, 11:42 PM   #3
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Sure, you could put it in a short term bond fund. Check the bond fund's performance in 2008, which should give you some idea of what to expect if we have another economic dip.

I have my fixed income in bond funds and in money market. I am not making much of anything from the part that is in money market, but I want to have enough very liquid assets to use for any cash needs related to my relocation after I retire. After I get settled, if interest rates are still this bad I will have to put more in short term bond funds. At least in bond funds I might get some reasonable dividends whereas VMMXX money market is giving essentially no interest these days.
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Old 09-15-2009, 12:02 AM   #4
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OP:

Be careful of shortterm bond funds, GNMA funds, etc. If rates do rise, your NAV will drop. Listen to Bob brinker, when he explains your question.
Someone always asks that exact question each week.

Right now there is no free lunch. CD rates are low, I also noticed buying CD through a brokerage (ie. Vanguard) the rates are always lower than buying direct.

Credit unions in general offer better rates. Some have easy to join membership.

Alliant credit union is pretty good. Savings acct. pays 2% APY. Been pretty stable compared to other banks/credit unions.

Penfed has the best 7yr, CD at 4%. Three years ago you could have locked in 6.25%APY 7 yr, at Penfed.
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Old 09-15-2009, 05:07 AM   #5
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Tom

I have been periodically checking both Vanguard, and Schwab, and every once in a while Fidelity. My experience is similar to yours when 1-5 year CD rates were in the 4-5% range the brokerage were competitive with online banks and the low hassle factor made it worth while to use them. Now I find folks like Penfed to be offering .5-1% more than Schwab/Vanguard
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Old 09-15-2009, 07:21 AM   #6
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Thanks...I think a short-term bond fund may make sense as part of my fixed income portfolio. I still will work on my 10 year ladder but may add a short term bond fund to improve yield a bit right now.

I use VG Short -term corporate to fund my dollar cost averaging. I have dollar cost averaged into a group of VG equity/reit/gnma funds for over 10 years. I think I will look at the other VG st fund mentioned earlier...I believe it may have lower volatility?

Thanks...Tom
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Old 09-15-2009, 07:49 AM   #7
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Old Jimmy Rogers believes interest rates will rise for years to come. Here is an article a year old, but I doubt his views have changed.

MoneyNews - Rogers: U.S. Interest Rates Will Rise for Years
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Old 09-15-2009, 11:23 AM   #8
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Quote:
Originally Posted by TomCat View Post
Thanks...I think a short-term bond fund may make sense as part of my fixed income portfolio. I still will work on my 10 year ladder but may add a short term bond fund to improve yield a bit right now.

I use VG Short -term corporate to fund my dollar cost averaging. I have dollar cost averaged into a group of VG equity/reit/gnma funds for over 10 years. I think I will look at the other VG st fund mentioned earlier...I believe it may have lower volatility?

Thanks...Tom
If you have data on the ST bond funds you are looking at, their current
distribution yields, and their maximum NAV changes that you would be
willing to share, that info might be useful to others. Thanks.
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