Buying a CD at Vanguard in my RO IRA (1st time doing this)

[Graybeard]

Just a suggestion, don't use abbreviations that nobody else uses. Spelling out "rollover" really wouldn't take that much of your time would it? But you make everyone reading this take time to figure out what you're saying.

Honestly, I thought RO IRA was very obvious and that other people use it too. I do hate it when people use an acronym and don't define it first. Sorry, didn't mean to create a fuss.

 

[sengsational]

No fuss. Everyone was nice. BTW, it was obvious to me what you meant.

I'm glad you got your broker offered CD. You got went longer than I thought you were going to. And pretty big too, at $100K. Discover Bank doesn't rank in the top tier for safety, but it's OK, and of course it's FDIC insured.

 

[Graybeard]

No fuss. Everyone was nice. BTW, it was obvious to me what you meant.

I'm glad you got your broker offered CD. You got went longer than I thought you were going to. And pretty big too, at $100K. Discover Bank doesn't rank in the top tier for safety, but it's OK, and of course it's FDIC insured.

Thanks. I actually bought 2 CDs, 1 around 9 am for $75k was Discover Bank and another around 10 pm for $50k I forget the bank. The FDIC insurance makes it feel like a safe purchase. I like to keep a fair amount in reserve in my IRA in case a good buy comes along. I only have $120k left but there are T bills that will mature over the coming weeks and months.

Looking at the T bill indictive yield at Vanguard, I will not be buying any this week for sure, maybe next week depending how rates move based upon the Fed meeting next week. I did see a couple of 5.30%+ CDs tonight but those may go up depending upon the Fed meeting.

One idea I heard today was the Fed may pause for 1 or 2 meetings and based upon where inflation is they may start to rise again so 5.5% or 6% Fed Funds rate may still happen and that's when I'd want to deploy some of that remaining cash in the IRA.

 

[sengsational]

^ Sounds like a solid plan to me. One can never know for sure, but it's certainly easier to define a range with fixed income instruments over equities, which can do anything at any time.

 

[cj1717]

Are all of the vanguard brokered cd's non callable?

 

[NomDeER]

Are all of the vanguard brokered cd's non callable?

No. It will indicate on the page if and when they are callable. For example, right now Vanguard has 5 different 5-year CDs that it is offering. The first two are callable beginning later this year. (The call information is in brown just below the name of the bank and payment frequency information.) The other three are not callable as they have no call indication.

 

[Safe Harbour]

Answers to some of your questions.

I buy a lot of Brokered CD's at Vanguard. I have ladders in both my brokerage account and my t-IRA. I can safely say the reason there are a lot of CDs available at any term you want is because Vanguard wants to make them available to you. So their Fixed Income desk shops to keep the cupboards full. Also the yields on CDs are almost always higher than Treasuries as they are less safe (even if FDIC insured). Even though you'll get your money back in a bank failure you will have to wait for it. Another benefit of buying CDs through Vanguard is that you can sell the CDs back using Vanguard at very little or no cost. If my CD's in the brokerage account go a few 1000 under cost, I sell them at a loss for tax harvesting and then buy new CDs at the higher rates. This has worked well for me.

 

[pb4uski]

...Even though you'll get your money back in a bank failure you will have to wait for it. ...

Arguably a distinction without a difference since you would presumably be waiting until maturity to get your money back in the normal course of business.

The FDIC acts very quickly in the event of bank failures so I'm not sure there is much need to be concerned.