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Old 07-22-2010, 10:21 AM   #21
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Originally Posted by Dawg52 View Post
Where do you find them? I just did a search on Fidelity and 2.65% was the highest I found for a 5yr muni. That was searching S.E. states. Lead me by the hand.
Searching at Schwab, I'm seeing a few number of munis maturing in 2015 and 2016 that have a YTM of 4% or close to it. Of course, these tend to be revenue bonds (i.e. riskier than general obligation bonds) from entities where the state/local budget situation is rather terrible.

The highest yielding non-callable GO bonds in that maturity I'm seeing are coming up in the 3.4% YTM range.

"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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Old 07-22-2010, 10:25 AM   #22
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Revenue bonds can be a little dicey. One of the good things about WI is that GO bonds rarely default because state taxpayers pay their taxes 95% of the time. In my community, the ratio is 98.5%, which is very good........

Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)

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Old 07-22-2010, 11:01 PM   #23
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Originally Posted by Gone4Good View Post
Any idea what their early withdrawal penalty is? I think I looked at them a decided their penalty was too high, but if it's 90 days interest, or something like that, I'd hit that 3.5% 10-yr.
The way to figure it, is how much does the interest rate have to go up to make the deal break even or above. For example at 3% and a 6 month penalty, it works out that for 1 year left its 1.5% and for 4 years its like .4 percent. So if we get lt rates back at 5% it makes sense to take the penalty and run.
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Old 07-23-2010, 04:44 PM   #24
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Originally Posted by FinanceDude View Post
So, you would lock in at 3% for 5 years? Wow..........
Absolutely, because I'm not really "locking it in." Ally's withdrawal penalty is just 60 days interest, so any time I want to reinvest it will cost me just 50bp to pull my money out. That is a super low cost put option I'm getting for free. So not only am I earning nearly twice the treasury rate for treasury credit risk, I'm getting a valuable interest rate put option at no cost.
Retired early, traveling perpetually.
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Old 07-23-2010, 05:59 PM   #25
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About six months ago I was looking for a good place to put a Roth CD. Ally's rates sounded good. But when I Googled Ally Bank reviews, found several complaints of very slow service when attempting to transfer out big chunks. Some of them seemed to be running on the border between gross incompetance and outright trickery.

As it turned out, I found a local CU that gave better rates and I did not investigate Ally any further, so not sure of the significance of this.

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