S/T CD's in a Retirement Account

[njhowie]

Morgan Stanley new issue CDs now 2.65% for 2 years, 2.85% for 3 years.

6 month 1.9%, 9 month 2.0%, 12 month 2.1%

[alaska55]

Quote:

Originally Posted by IMATERP Howie is absolutely correct. I have two bonds and 5 CDs in this mix. A GE Capital bond which I have had for many years is due in 2020 and I just picked up the 5 year Ford bonds at 3.7%. For myself, I generally hold all of my CD's and Bonds to maturity. By the way, I did almost get burned once. During the 2008/2009 debacle I had 70 or 80k in GM Smart Notes. Thankfully, in the Govt's eyes GM was too big to fail. That is the new underlying premium which exists nowadays - the too big to fail premium.

GM filed chapter 11 and union retirement fund was 1st in line. Bond holders got about 20% of par.

[IMATERP]

Seven months out.... Not a bad strategy this year. This and a bit of side hustle $ and I barely notice any decrease.

Again, don't fight the Fed.

I

[Lsbcal]

I don't think anyone in this thrad has mentioned TIPS. I purchased April 2020 TIPS which had a real return rate of 1.3%. So if inflation runs 2% one might expect 3.3%.

[Spock]

Quote:

Originally Posted by IMATERP Seven months out.... Not a bad strategy this year. This and a bit of side hustle $ and I barely notice any decrease. Again, don't fight the Fed. I

Are you doing any fretting over the GE bonds or are the maturing soon enough to ride it out?

[copyright1997reloaded]

Quote:

Originally Posted by alaska55 GM filed chapter 11 and union retirement fund was 1st in line. Bond holders got about 20% of par.

This bears repeating. The GM bankruptcy turned 165 years of bankruptcy law on its head when the union retirement fund was placed ahead of senior bond holders.


In terms of GE, their debt yield spreads have widened to the point where GE debt is about junk levels. GE also has $26B (as in Billion) in debt coming due in the next two years.

Here's a chart of the GE 5% perpetual, not looking so good:
Domestic bonds: General Electric, 5% perp., USD (US369604BQ57, 369604BQ5)

If one thinks that GE will survive and prosper, this might be a good buy. In my eyes, I'm staying away from GE because they need to sell assets, and it is beginning to look like the next year or so might not be such a great time to have tons of debt and to need to sell assets.

[IMATERP]

Quote:

Originally Posted by Spock Are you doing any fretting over the GE bonds or are the maturing soon enough to ride it out?

March 2020. No fretting here. GE has problems - but they can extend the problems a few extra years.

I

[njhowie]

Quote:

Originally Posted by Lsbcal I don't think anyone in this thrad has mentioned TIPS. I purchased April 2020 TIPS which had a real return rate of 1.3%. So if inflation runs 2% one might expect 3.3%.

There's a TIPS issue (912828C99) maturing April 15 (4.5 months) that's been trading (secondary market) all day long for 3.1% YTM. Would expect it to be in 2.4% to 2.5% range. Still plenty available.

What gives?