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01-07-2019, 08:35 AM
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#1
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Full time employment: Posting here.
Join Date: Jan 2010
Posts: 537
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CD advice
Until recently, there were a bunch of 5 year new CD offerings at Vanguard for 3.56%. While that met my needs, I held off on buying these thinking that rates were going to hit 4% sometime this year due to the anticipation of the Fed raising rates. And I really wanted 4%. Now it appears that there are no 5 year offerings at all on Vanguard. No 2 or 3 year either. I did not expect all the CD offerings to disappear. There are some on Fidelity but only 3%.
My plan was to become more tax efficient by selling stock in my IRA account and buying brokered CDs with the proceeds and then using cash in my taxable account (that were in CDs) to buy stock. Essentially swapping my CD/stock allocations between taxable/IRA.
My options now include:
(a) waiting to see if 5 year offerings reappear at a reasonable rate and in the mean time be happy with the 2.31% that the money is earning in the VMFXX settlement fund.
(b) there is a local credit union that is offering 3.5% 5 year CD. If I choose this option then I am thinking of not hassling with making it an IRA account. And would then stick with holding CDs in my taxable account. The credit union did not get stellar reviews for customer service but it is insured by NCUA and they have a couple brick and mortar branches nearby.
I know no one has a crystal ball … but, what do you think CD rates are going to do over the next year? Based on the recent purchase of all the available Vanguard CDs and rates seemingly going down and not up, I am leaning towards option b.
Thoughts?
Thanks,
Earl
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01-07-2019, 09:36 AM
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#2
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Thinks s/he gets paid by the post
Join Date: Mar 2013
Location: Southern California
Posts: 3,995
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We are all in the same situation and wondering what to expect in the future regarding rates. Who knows? What I would do in your situation is go with the best 5 year CD rate you can find that has a maximum early termination penalty of 6 months interest. That way if rates really go up a lot you can pay the fee and reinvest. The difference between 3.5% and 4% in actual dollars is not really that much.
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01-07-2019, 09:52 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by Ready
We are all in the same situation and wondering what to expect in the future regarding rates. Who knows? What I would do in your situation is go with the best 5 year CD rate you can find that has a maximum early termination penalty of 6 months interest. That way if rates really go up a lot you can pay the fee and reinvest. The difference between 3.5% and 4% in actual dollars is not really that much.
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+1.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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01-07-2019, 10:00 AM
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#4
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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I am an individual bond buyer, not CD's, but I learned from a few folks on here to always buy a few issues maybe a little further out than you think. I took a shot at some bonds in the 10 year range earlier last year and now I am glad I did. We may not see those higher rates for awhile.
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01-07-2019, 10:03 AM
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#5
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Full time employment: Posting here.
Join Date: Jan 2010
Posts: 537
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Quote:
Originally Posted by Ready
We are all in the same situation and wondering what to expect in the future regarding rates. Who knows? What I would do in your situation is go with the best 5 year CD rate you can find that has a maximum early termination penalty of 6 months interest. That way if rates really go up a lot you can pay the fee and reinvest. The difference between 3.5% and 4% in actual dollars is not really that much.
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I agree with your advice and is what I have done in the past. Problem is that I cannot find 6 month early termination offerings on 3+% rates anymore. The one I found at 3.5% has a 2.5 year termination penalty - so, I would go into that knowing I would not early terminate. But I still think it may make sense to get a bird in the hand at 3.5%. Back in the Penfed 3.0% days we would have loved 3.5%. Maybe I am just getting greedy.
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01-07-2019, 10:19 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by Earl E Retyre
I agree with your advice and is what I have done in the past. Problem is that I cannot find 6 month early termination offerings on 3+% rates anymore. The one I found at 3.5% has a 2.5 year termination penalty - so, I would go into that knowing I would not early terminate. But I still think it may make sense to get a bird in the hand at 3.5%. Back in the Penfed 3.0% days we would have loved 3.5%. Maybe I am just getting greedy.
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Have a look at www.depositaccounts.com. The blog is particularly helpful in highlighting attractive options.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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01-07-2019, 02:44 PM
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#7
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Full time employment: Posting here.
Join Date: Jan 2010
Posts: 537
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Quote:
Originally Posted by brewer12345
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OK, thanks for the link.
After perusing the options, I decided to open CDs with Penfed. Ironically, I just transferred money out of Penfed into Vangaurd. But now that good rates are no longer available there, I am going to transfer back to Penfed.
While the early withdrawal penalty is not the best, at least it is a known bank that I have been doing business with the past 5 years. Now I need to wait several days for the money to transfer back and hope the rates stay the same.
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01-07-2019, 03:12 PM
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#8
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Full time employment: Posting here.
Join Date: Sep 2008
Posts: 998
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Lots of us in the same boat it seems.
Been a busy couple months / last few weeks & days over here.
Roth IRA CD's /IRA CD's / cash CD's etc.
I also opened a PenFed account today. With a 5 yr in mind.
Was looking for / expecting a 4% 5 yr. as well in 2019.
Watching the 10 yr, 30 day etc.. seemed to rattle everyone though.
Could still hit 4%. Just not as sure as I would like to be.........
So I opened up a couple 2.7% 1 yr @ Ch Sch, & 2.75% at Ally,
40 month 3.75% IRA at Navy Fed. / 150k max.
Bumped my one time bump 5 yr. CD's at Mountain America to 3.51% with 3 yrs to go.
Just need a new 5 yr. And PenFed seems a good way to go.
Just so you know / your not alone on this. lol lol
Got my average over 3%. 1st time in a long time.......
* added* brokered CD's are popping up again today. Not top rates, but well off late last weeks bottom / sold out status...
__________________
"I couldn't wait for success, so I went ahead without it." Ret. 2013 @ 51.
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01-07-2019, 03:47 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Note that US Senate FCU has extremely easy membership requirements and a 3.69% 5 year CD rate. Don't know what the early withdrawal penalty is.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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01-07-2019, 04:11 PM
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#10
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Full time employment: Posting here.
Join Date: Jan 2010
Posts: 537
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Quote:
Originally Posted by brewer12345
Note that US Senate FCU has extremely easy membership requirements and a 3.69% 5 year CD rate. Don't know what the early withdrawal penalty is.
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Yeah, I saw US Senate FCU had the best rate but I looked at the negative reviews and comments online. While 3.69% is better than 3.5%, Penfed is a known entity to me and I have no real complaints.
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01-07-2019, 04:20 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Oct 2008
Posts: 2,775
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Quote:
Originally Posted by Earl E Retyre
Yeah, I saw US Senate FCU had the best rate but I looked at the negative reviews and comments online. While 3.69% is better than 3.5%, Penfed is a known entity to me and I have no real complaints.
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I was on the Vanguard website today around 3 PM and saw a 5 year new CD at 3.4 %, I think. But they are hiding the early termination info somewhere.
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01-07-2019, 04:28 PM
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#12
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Full time employment: Posting here.
Join Date: May 2013
Posts: 725
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I went with the Ally 14-mo CD's at 2.85% with about 1/2 my CD cash and I plan to leave the rest in my Vanguard MM and keep an eye out for a good deal or two.
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“If you don't do it this year, you will be one year older when you do.” - Warren Miller
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01-07-2019, 04:41 PM
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#13
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Gone but not forgotten
Join Date: Jul 2012
Location: Peru
Posts: 6,335
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Being one of the few here who believe in IBonds, they have worked out for us. Bought in the early 2000's, they have served us well, because of the inflation (CPI) factor. It depends on how the monies are to be used. For us, it was safety at a time when we weren't sure. Our annualized return has been 5.1, while the S&P annualized return for the same period was 4.1.
The current IBond rate is 2.83%, and is adjusted biannually for inflation. We looked at this as a long term safe haven.
At the time we bought, each person could buy $30K/yr in bonds. today that is limited to $10K/yr.
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If you want others to be happy, practice compassion. If you want to be happy, practice compassion.
--Dalai Lama XIV
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01-07-2019, 04:42 PM
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#14
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Full time employment: Posting here.
Join Date: Sep 2008
Posts: 998
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"Yeah, I saw US Senate FCU had the best rate but I looked at the negative reviews and comments online."
I did the same a while back......... No fun moving IRA's around. Even less fun with an institution with questionable customer service.......
__________________
"I couldn't wait for success, so I went ahead without it." Ret. 2013 @ 51.
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01-07-2019, 05:02 PM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by Earl E Retyre
Yeah, I saw US Senate FCU had the best rate but I looked at the negative reviews and comments online. While 3.69% is better than 3.5%, Penfed is a known entity to me and I have no real complaints.
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Understood. I guess I just can't stomach the draconian early withdrawal language.
Navy Fed has just started offering a 17 month 3.25% CD that allows additional deposits. Believe it is limited to 50k, but may be attractive to those who want a shorter maturity. Navy is a lot more persnickety about membership.
BTW, Pen Fed acquired an antique credit union charter that allows them to offer membership freely to anyone. No idea what this means for rates, but it will be interesting to watch.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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01-07-2019, 05:17 PM
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#16
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Thinks s/he gets paid by the post
Join Date: Mar 2012
Posts: 3,925
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Quote:
Originally Posted by COcheesehead
I am an individual bond buyer, not CD's, but I learned from a few folks on here to always buy a few issues maybe a little further out than you think. I took a shot at some bonds in the 10 year range earlier last year and now I am glad I did. We may not see those higher rates for awhile.
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Exactly!
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01-07-2019, 05:50 PM
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#17
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Full time employment: Posting here.
Join Date: Sep 2007
Location: mpls, mn
Posts: 761
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you might want to look at columbia cu. they have a 2.5 yr cd at 3.6%. easy to join, $5 one time fee like penfed. filled out the paperwork on sat. and they notified me today that it was all done.
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01-08-2019, 07:21 AM
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#18
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Full time employment: Posting here.
Join Date: Jan 2010
Posts: 537
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Quote:
Originally Posted by mn54
you might want to look at columbia cu. they have a 2.5 yr cd at 3.6%. easy to join, $5 one time fee like penfed. filled out the paperwork on sat. and they notified me today that it was all done.
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hmmm … their website says:
Eligibility - Live or work in Washington State the Oregon community of Clackamas, Marion, Multnomah or Washington Counties.
- Have a family member who lives or works in Washington State the Oregon community of Clackamas, Marion, Multnomah or Washington Counties.
- Businesses who have a company located in or have more than half of its owners or employees live or work in Washington State, or the Oregon community of Clackamas, Marion, Multnomah or Washington Counties.
So, I do not think anyone can join.
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01-08-2019, 09:50 AM
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#19
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Full time employment: Posting here.
Join Date: Jan 2010
Posts: 537
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Quote:
Originally Posted by John Galt III
I was on the Vanguard website today around 3 PM and saw a 5 year new CD at 3.4 %, I think. But they are hiding the early termination info somewhere.
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Thanks! Funny how these change so often. I saw new issue at 3.3% but I just bought a CD on Vanguard secondary market at 3.423%. Thanks so much.
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01-08-2019, 10:09 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,204
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Quote:
Originally Posted by Earl E Retyre
OK, thanks for the link.
After perusing the options, I decided to open CDs with Penfed. Ironically, I just transferred money out of Penfed into Vangaurd. But now that good rates are no longer available there, I am going to transfer back to Penfed.
While the early withdrawal penalty is not the best, at least it is a known bank that I have been doing business with the past 5 years. Now I need to wait several days for the money to transfer back and hope the rates stay the same.
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Vanguard is showing 3.3% 5 year brokered CDs from Goldman Sachs Bank right now.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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