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-   -   Will CDs go up in the next year? (http://www.early-retirement.org/forums/f28/will-cds-go-up-in-the-next-year-93938.html)

street 09-25-2018 02:45 PM

Will CDs go up in the next year?
 
what would be your guess on interest rates going up on CD's with in the next year?

I'm getting 2.6% not the best but I have a small part (CD) of my portfolio with a local bank.

Renew it or hold on and see? I will stay local at this bank with this CD. Thanks

njhowie 09-25-2018 03:12 PM

You're getting 2.6%, but for what term? 2 or 3 years?

If the Fed keeps raising interest rates, then short-term CD rates will continue to move higher. Further out than 3 or 5 years, then how the rates will move is anyones guess.

What your local bank does is also anyones guess. In general, I've found that local retail bank branches give some of the worst rates - basically ripping off the local folks.

If you're going to tie the money up in a CD for some term, why decide to keep it at your local bank when you could be getting much better rates from hundreds of banks through your brokerage account or directly with online banks? You could get better rates today compared to what you're getting at your local bank, regardless of where rates go.

ShokWaveRider 09-25-2018 04:45 PM

OP, Can a Duck Swim?

You need to keep your eyes here:

http://www.early-retirement.org/foru...ml#post2114434

jazz4cash 09-25-2018 08:13 PM

Yes.

Dash man 09-25-2018 08:40 PM

Maybe yes, if the economy stays strong. Maybe no if the economy tanks. Maybe nothing changes if the economy canít figure out what to do. Or maybe an asteroid will hit us on Friday while Iím at the beach.

Lukeee 09-25-2018 08:42 PM

Quote:

Originally Posted by ShokWaveRider (Post 2114460)
OP, Can a Duck Swim?

You need to keep your eyes here:

http://www.early-retirement.org/foru...ml#post2114434

https://cdn9.littlethings.com/app/up...09/Lywdwnm.gif

Helena 09-25-2018 11:22 PM

.

A local regional bank [LA/TX] is now offering a "variable CD" that has a floor rate and will also increase if the federal funds rate increases.

For example, I just took out a 5 year variable CD with the floor rate of 3%. If the Fed increases the rate .25 tomorrow, October 1 my interest rate will increase to 3.25%. If the Fed rate decreases, my interest rate will decease too... but never below the floor rate of 3%. Most experts think the Fed will continue to raise rates the next year or so.

Variable CD

.

GravitySucks 09-26-2018 06:13 PM

Yes.
But maybe not.

Oz investor 09-26-2018 06:24 PM

short term YES , next year ... maybe

street 09-27-2018 01:44 PM

^ thanks for your insight.

ShokWaveRider 09-27-2018 01:51 PM

The Key question is will 4% be the Norm for 3 Years and above.

njhowie 09-27-2018 02:08 PM

Quote:

Originally Posted by ShokWaveRider (Post 2115346)
The Key question is will 4% be the Norm for 3 Years and above.

...and how long until we get there?

foxfirev5 09-27-2018 02:21 PM

Quote:

Originally Posted by njhowie (Post 2115358)
...and how long until we get there?

Or will we get there at all? I'm concerned my 5 year CD ladder may not be long enough when compared to intermediate and total bond funds. Rather than being fixated on the 2 year rise in yields I'm considering adding to my 7-10 year CD's even though the incremental yield advantage is miniscule. Lock in some 3.5% safe income for future years while it's still available. Anyway I'm reinvesting a ladder so I can't get into too much trouble at once.

ShokWaveRider 09-27-2018 02:23 PM

I have to wait until December 2018 and January 2019 till PenFeds Mature.

Lukeee 09-27-2018 02:34 PM

Here is something I found

https://i1.wp.com/stretchadime.com/w..._Fed_Rates.jpg

Source: Interest Rates - Fed Fund Rate, Fed Discount Rate, Prime Rate, CD Rate | Stretch A Dime

njhowie 09-27-2018 02:34 PM

Quote:

Originally Posted by foxfirev5 (Post 2115368)
Or will we get there at all? I'm concerned my 5 year CD ladder may not be long enough when compared to intermediate and total bond funds. Rather than being fixated on the 2 year rise in yields I'm considering adding to my 7-10 year CD's even though the incremental yield advantage is miniscule. Lock in some 3.5% safe income for future years while it's still available. Anyway I'm reinvesting a ladder so I can't get into too much trouble at once.

Absolutely - I could not agree more.

I don't have "a ladder" per se, but essentially my own maturity curve which I am buying CDs along. As maturities come up, I just purchase new ones somewhere along my curve where I get the best bang for the buck. Periodically, I have to bite my tongue and buy something 5 to 10 years out. Along this line of thought, earlier this week, a new CD from HSBC showed up, 4% for 13 years - it's still out there, available at Merrill and Fidelity. I nibbled on a couple - simply because like you, I have no idea when/where rates will top out, I need to have some longer term stuff, and who knows what will happen with stuff at 10 years and longer? However, based on where we've been, I can live with 4% for 13 years. The only one Fidelity is showing further out is a 15 year 3.7% from JPM. So the 4% for 13 years looks pretty good in that respect.

foxfirev5 09-27-2018 02:50 PM

Quote:

Originally Posted by njhowie (Post 2115374)
Absolutely - I could not agree more.

I don't have "a ladder" per se, but essentially my own maturity curve which I am buying CDs along. As maturities come up, I just purchase new ones somewhere along my curve where I get the best bang for the buck. Periodically, I have to bite my tongue and buy something 5 to 10 years out. Along this line of thought, earlier this week, a new CD from HSBC showed up, 4% for 13 years - it's still out there, available at Merrill and Fidelity. I nibbled on a couple - simply because like you, I have no idea when/where rates will top out, I need to have some longer term stuff, and who knows what will happen with stuff at 10 years and longer? However, based on where we've been, I can live with 4% for 13 years. The only one Fidelity is showing further out is a 15 year 3.7% from JPM. So the 4% for 13 years looks pretty good in that respect.

Thanks for the tip. I'll see what's available next week after my equity divies hit. I'm not seeing the need to be too greedy right now.

jazz4cash 09-27-2018 03:11 PM

Quote:

Originally Posted by njhowie (Post 2115374)
Absolutely - I could not agree more.



I don't have "a ladder" per se, but essentially my own maturity curve which I am buying CDs along. As maturities come up, I just purchase new ones somewhere along my curve where I get the best bang for the buck. Periodically, I have to bite my tongue and buy something 5 to 10 years out. Along this line of thought, earlier this week, a new CD from HSBC showed up, 4% for 13 years - it's still out there, available at Merrill and Fidelity. I nibbled on a couple - simply because like you, I have no idea when/where rates will top out, I need to have some longer term stuff, and who knows what will happen with stuff at 10 years and longer? However, based on where we've been, I can live with 4% for 13 years. The only one Fidelity is showing further out is a 15 year 3.7% from JPM. So the 4% for 13 years looks pretty good in that respect.



Iím actually going shorter term cause thatís where I see value (3yrs and less). I watched a Fido fixed income webinar today and there was some dialogue to this effect (eg going shorter in anticipation of rising rates.). I need to go back and watch it again from the archive. I might be tempted to nibble on 4% for 13 but it would be a tiny chunk to barely pay my expenses. Then again Iím still sitting on 5% for 10 PenFedís and I still recall how tough it was to commit to a 10yr CD.

foxfirev5 09-27-2018 03:26 PM

Quote:

Originally Posted by jazz4cash (Post 2115383)
Iím actually going shorter term cause thatís where I see value (3yrs and less). I watched a Fido fixed income webinar today and there was some dialogue to this effect (eg going shorter in anticipation of rising rates.). I need to go back and watch it again from the archive. I might be tempted to nibble on 4% for 13 but it would be a tiny chunk to barely pay my expenses. Then again Iím still sitting on 5% for 10 PenFedís and I still recall how tough it was to commit to a 10yr CD.

Yeah, it's a tough call. But I firmly believe that the quality credit market is very efficient. Long term rates are where they are for a reason. In any event I fill my income needs with what is available. We'll see how it works out.

njhowie 09-27-2018 03:56 PM

Quote:

Originally Posted by jazz4cash (Post 2115383)
Iím actually going shorter term cause thatís where I see value (3yrs and less). I watched a Fido fixed income webinar today and there was some dialogue to this effect (eg going shorter in anticipation of rising rates.). I need to go back and watch it again from the archive. I might be tempted to nibble on 4% for 13 but it would be a tiny chunk to barely pay my expenses. Then again Iím still sitting on 5% for 10 PenFedís and I still recall how tough it was to commit to a 10yr CD.

Sure - my maturity curve looks like the right half of a bell curve - heavily weighted in short-term maturities. A good 70% of my portfolio matures in 3 years or less, and as I recycle them, probably about that same percentage is put back in to stuff maturing in 3 years or less. However, I will judiciously pick up some stuff further out along the way...just so I don't find myself in a position where rates begin to fall again, all the short-term stuff matures without being able to get more fixed income for better rates and getting squeezed out because I didn't pick up longer term stuff sooner. I want to be in your position - holding those 10-year CDs locked in at a great rate while market rates head lower. We just don't know how high the rates will be going. Exactly the same way everyone whines about not timing the stock market, I proceed with that mindset with my fixed income...I'm not going to try and time it for picking up the longer term stuff at exactly the highest yield...I'll just nibble over time increasing my portfolio yield and income stream as long as rates keep going up. Whenever they stop, I'll have enough in longer-term maturities to weather the next downturn in rates. Will I have jumped in to the 10 and 20 year CDs with 50% of my portfolio at just the right time? Of course not. And that's not my objective.


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