Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
CD advice
Old 01-07-2019, 08:35 AM   #1
Recycles dryer sheets
Earl E Retyre's Avatar
 
Join Date: Jan 2010
Posts: 312
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
__________________

Earl E Retyre is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-07-2019, 09:36 AM   #2
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 2,324
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.
__________________

Ready is offline   Reply With Quote
Old 01-07-2019, 09:52 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,702
Quote:
Originally Posted by Ready View Post
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.
+1.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 01-07-2019, 10:00 AM   #4
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 2,324
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.
COcheesehead is offline   Reply With Quote
Old 01-07-2019, 10:03 AM   #5
Recycles dryer sheets
Earl E Retyre's Avatar
 
Join Date: Jan 2010
Posts: 312
Quote:
Originally Posted by Ready View Post
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.

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.
Earl E Retyre is offline   Reply With Quote
Old 01-07-2019, 10:19 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,702
Quote:
Originally Posted by Earl E Retyre View Post
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.
Have a look at www.depositaccounts.com. The blog is particularly helpful in highlighting attractive options.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 01-07-2019, 02:44 PM   #7
Recycles dryer sheets
Earl E Retyre's Avatar
 
Join Date: Jan 2010
Posts: 312
Quote:
Originally Posted by brewer12345 View Post
Have a look at www.depositaccounts.com. The blog is particularly helpful in highlighting attractive options.
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.
Earl E Retyre is offline   Reply With Quote
Old 01-07-2019, 03:12 PM   #8
Recycles dryer sheets
 
Join Date: Sep 2008
Posts: 473
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.
almost there is offline   Reply With Quote
Old 01-07-2019, 03:47 PM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,702
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.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 01-07-2019, 04:11 PM   #10
Recycles dryer sheets
Earl E Retyre's Avatar
 
Join Date: Jan 2010
Posts: 312
Quote:
Originally Posted by brewer12345 View Post
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.
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.
Earl E Retyre is offline   Reply With Quote
Old 01-07-2019, 04:20 PM   #11
Thinks s/he gets paid by the post
John Galt III's Avatar
 
Join Date: Oct 2008
Posts: 1,525
Quote:
Originally Posted by Earl E Retyre View Post
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.
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.
John Galt III is offline   Reply With Quote
Old 01-07-2019, 04:28 PM   #12
Full time employment: Posting here.
Willers's Avatar
 
Join Date: May 2013
Posts: 537
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.
__________________
“If you don't do it this year, you will be one year older when you do.” - Warren Miller
Willers is offline   Reply With Quote
Old 01-07-2019, 04:41 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru, il
Posts: 5,696
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.
__________________
We grow too soon old, and too late smart.
Enjoy today!
imoldernu is offline   Reply With Quote
Old 01-07-2019, 04:42 PM   #14
Recycles dryer sheets
 
Join Date: Sep 2008
Posts: 473
"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.
almost there is offline   Reply With Quote
Old 01-07-2019, 05:02 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,702
Quote:
Originally Posted by Earl E Retyre View Post
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.
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.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 01-07-2019, 05:17 PM   #16
Full time employment: Posting here.
 
Join Date: Mar 2012
Posts: 685
Quote:
Originally Posted by COcheesehead View Post
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.
Exactly!
njhowie is offline   Reply With Quote
Old 01-07-2019, 05:50 PM   #17
Recycles dryer sheets
mn54's Avatar
 
Join Date: Sep 2007
Location: mpls, mn
Posts: 495
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.
mn54 is offline   Reply With Quote
Old 01-08-2019, 07:21 AM   #18
Recycles dryer sheets
Earl E Retyre's Avatar
 
Join Date: Jan 2010
Posts: 312
Quote:
Originally Posted by mn54 View Post
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.
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.
Earl E Retyre is offline   Reply With Quote
Old 01-08-2019, 09:50 AM   #19
Recycles dryer sheets
Earl E Retyre's Avatar
 
Join Date: Jan 2010
Posts: 312
Quote:
Originally Posted by John Galt III View Post
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.
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.
Earl E Retyre is offline   Reply With Quote
Old 01-08-2019, 10:09 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 20,864
Quote:
Originally Posted by Earl E Retyre View Post
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.
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...60/35/5 AA
pb4uski is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Good advice? Or should I just not give advice?? dtbach FIRE and Money 17 05-29-2014 09:16 AM
Advice, Advice and More Advice flyfishnevada Life after FIRE 18 06-26-2010 05:44 PM

» Quick Links

 
All times are GMT -6. The time now is 03:36 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.