where to park some money?

[frank]

I have a sizable cd coming due the first of december. I was considering parking this money in a savings or 12 month cd. I think the cd rates are going to climb for a while, but don't know how long to wait before getting a long term cd. my question is what would you do with it? use short term cd, use the no penalty for withdrawal cd, high yield savings, or just go with todays long term 5 year rates? do you think the cd rates will increase another point in the next twelve months or stay flat? thanks

frank

 

[pb4uski]

VMMXX.... liquid, safe and currently pays 2.2%

https://investor.vanguard.com/mutual-funds/profile/VMMXX

I'm doing the same thing... parked in VMMXX waiting for CD rates to increase.

 

[jebmke]

The yield curve sort of flattens out after two years so I am moving mostly to brokered CDs at around the two year mark. Bought some yesterday ~3.05%

 

[24601NoMore]

Ditto on VMMXX. Good yield @ ~2.2%. Not FDIC insured, but has never "broken the buck" (far as I know).

I'm in the same boat as you - have some CDs maturing and am expecting rates to inch up slightly (.1 - .25) after the next Fed raise in Dec. 2-yr brokered CDs @ 3.05 look to be the sweet spot at this point - decent yield but not locking in "too" long. I'm personally not going out beyond 2 year maturity at this point as we have at least 1 and as many as 5 rate increases coming over the next 13 months..I did buy some 3-yr earlier this year and am now regretting as I have one at 2.8%. Oh well..

 

[footenote]

Perfect timing - was wondering where to stash a slug of EE Bonds that matured yesterday. Thanks for excellent advice!

 

[Bamaman]

Ally Bank has a 2.1% no penalty CD for 11 months. If the rates go up in the near future, they'll increase the rate. No new deposits to it allowed, but there is no penalty for withdrawals.
They did have a $1,000 bonus for new customers bringing in substantial deposits, but it expired. Ally seems to often to have sales promos going on.

 

[hlfo718]

T Bills/Treasury MMF maybe better if you have high state tax like NY, Ca.

 

[TDub]

Ditto on VMMXX. Good yield @ ~2.2%. Not FDIC insured, but has never "broken the buck" (far as I know).

I'm in the same boat as you - have some CDs maturing and am expecting rates to inch up slightly (.1 - .25) after the next Fed raise in Dec. 2-yr brokered CDs @ 3.05 look to be the sweet spot at this point - decent yield but not locking in "too" long. I'm personally not going out beyond 2 year maturity at this point as we have at least 1 and as many as 5 rate increases coming over the next 13 months..I did buy some 3-yr earlier this year and am now regretting as I have one at 2.8%. Oh well..

Not to one up you, RetireSoon, but I have a 4-year CD that matures in 2020 with an APY of...1.98%. If only I could yell at my younger, dumber self!

 

[jebmke]

T Bills/Treasury MMF maybe better if you have high state tax like NY, Ca.

Yes; if subject to state tax, treasury notes are competitive with CDs and don't have all the liquidity fuss that CDs have. Once you get a sizeable amount, there is almost no substitute for treasuries.

 

[jazz4cash]

Deleted

 

[jazz4cash]

Not to one up you, RetireSoon, but I have a 4-year CD that matures in 2020 with an APY of...1.98%. If only I could yell at my younger, dumber self!

Why don’t you sell it. I just cashed in a CD with only 8 months left to maturity. I use the early withdrawal penalty calculator on deposit accounts.com to assess the penalty.

 

[Rex]

2.15% apy

Here are two FDIC options....

CIT Bank 2.15% money market (called "savings builder") &
Goldman Sachs Bank aka Marcus 2.15% 13 month no penalty CD

 

[Midpack]

VMMXX.... liquid, safe and currently pays 2.2%

https://investor.vanguard.com/mutual-funds/profile/VMMXX

I'm doing the same thing... parked in VMMXX waiting for CD rates to increase.

I just put some money in VMMXX. Nice to see some return there where there was none. A few years ago I took all my cash out of VMMXX and opened an Ally account paying 1% when VMMXX was essentially zero. Now they’re comparable returns.

 

[frank]

all good ideas. I have about 30 days before my cd matures. maybe something better will show up by then, otherwise the no penalty cd's look pretty good.

 

[SumDay]

VMMXX.... liquid, safe and currently pays 2.2%

https://investor.vanguard.com/mutual-funds/profile/VMMXX

I'm doing the same thing... parked in VMMXX waiting for CD rates to increase.

Tritto on VMMXX. That's my bucket for 'down' years.

 

[tulak]

Another +1 for VMMXX.

I’m in the process of moving all my high yields savings back to this fund.

 

[brucethebroker]

The yield curve sort of flattens out after two years so I am moving mostly to brokered CDs at around the two year mark. Bought some yesterday ~3.05%

Yeah, IMO, the sweet spot on CD's is 2-3 years. Not enough bonus to go 5 or more.

Park your cash with Ally and check out their no penalty CD.

 

[mrfeh]

If you plan on putting the money in a CD at some point, just buy a 2-3 year CD now. Nobody knows if CD rates will be higher in 6-12 months or lower.

 

[ShokWaveRider]

I have a whopper (Post Tax i.e. Cash) CD maturing in December from PenFED. Trying to decide what I want to do. 1 year at the highest I can get, 3 year MYGA (Tax Deferred) or just MM for now.

 

[FIREd_2015]

I just purchased some 6 month zero coupon Treasuries yielding 2.49% on Fidelity's website (no State tax). It doesn't make sense to buy 12 month CDs unless it paid close to 3% or 18 month CDs unless it was paying over 3.25%. IMHO.

 

[njhowie]

Yeah, IMO, the sweet spot on CD's is 2-3 years. Not enough bonus to go 5 or more.

Park your cash with Ally and check out their no penalty CD.

Although I can appreciate the desire to take the two or three year CD at this time, where to put money to lock in rates also depends on your investment horizon.

Going to five years (or more) may not be about "the bonus" over a shorter term, but rather the guarantee today of the income stream at the later time frame. Not knowing when the Fed will stop increasing rates, whether longer-term rates may continue to be held down by market forces, or when the Fed may be forced in to lowering it again, it's my belief that there's more to it than simply looking at the maturity based on the best bang for the buck you might get today.

 

[brucethebroker]

....Not knowing when the Fed will stop increasing rates, whether longer-term rates may continue to be held down by market forces, or when the Fed may be forced in to lowering it again, it's my belief that there's more to it than simply looking at the maturity based on the best bang for the buck you might get today.

You are correct that no one "knows" what the Fed will do. But they have sure been giving out huge 'hints" for the last couple of years-and, so far, they have not tried to deceive us. Sure, that could change, but for now, "the trend" is most likely "your friend".

 

[Scuba]

Yes; if subject to state tax, treasury notes are competitive with CDs and don't have all the liquidity fuss that CDs have. Once you get a sizeable amount, there is almost no substitute for treasuries.

Maybe this is a dumb question, but I thought interest income is taxed similarly regardless of source except for munis. How are Treasuries different than CD’s for tax purposes?

 

[MichaelB]

Maybe this is a dumb question, but I thought interest income is taxed similarly regardless of source except for munis. How are Treasuries different than CD’s for tax purposes?

Treasury interest is exempt from state income tax.

 

[frank]

parked my money in a 6 month cd for 2.81 percent a month ago. the way people are talking now I might have missed the sweet spot for cd's at this go around.