Ease of Building a CD Ladder at Fidelity?

[Qs Laptop]

I'm transitioning to allocating more of my portfolio to fixed income. As such, I'm exploring CD ladders. I've got the bulk of my investments at Fidelity.

I've often read here about the ease of building a CD ladder at Fidelity--"just a couple of clicks, might take you two minutes" seems to be a common refrain.

Is it really that easy?

I think I found the appropriate page for building a CD ladder at Fidelity. Is it really just a matter of clicking on one of the time horizons and filling out the guided menu choices?




Is there any reason I should not select the default choices that Fidelity presents to me?

Any other hints or tips are appreciated.

 

[pb4uski]

Following. The impression I have is the default choices are not necessarily best yielding available.

 

[Spock]

The tool will offer suggestions based on your risk profile. So it will not offer CCC rated bonds if you have your profile set to AAA's only.
I've pharted with it a little. I let it offer suggestions for the rungs and then use the "chose alternates" option on each run to pick a frequently better alternative.
One item to note is the tool is not available for IRAs. There is some legal requirement they have to avoid when it comes to auto-selecting investment choices in retirement accounts.

 

[Car-Guy]

I built mine the old fashion way. I picked and chose a variety of rates, terms, and values based on what I wanted over about a 6 month period of time to build a 2 year ladder. It's takes me less than 30 sec to select and buy individual CD's once I've decided which ones I want.

 

[COcheesehead]

Or go to the yield table and pick out CDs at whatever duration you want for how much you want in each rung.
To pb4uski’s point, the yield table/tool hides offerings that don’t fit the preselected durations. If you search all within the timeframe of your ladder you might find some hidden gems that fall outside the parameters of the tool and/or the yield table. I find better bonds using that method.

 

[djsander]

There is also a build a custom ladder that you can see just below the pre selected ladders. I’ve done the 2 year ladder and it was about as easy as it gets.

 

[RE2Boys]

I've noted that the tool will avoid any callable CDs among the suggested choices, thus you may not be offered the highest yields available.

 

[pb4uski]

... One item to note is the tool is not available for IRAs. There is some legal requirement they have to avoid when it comes to auto-selecting investment choices in retirement accounts.

But can you build it using a non IRA account, then print or copy it and then go to your IRA and do the buys?

 

[Qs Laptop]

One item to note is the tool is not available for IRAs. There is some legal requirement they have to avoid when it comes to auto-selecting investment choices in retirement accounts.

That's unfortunate, as I was going to build it in an IRA.

But can you build it using a non IRA account, then print or copy it and then go to your IRA and do the buys?

 

[djsander]

I just went in to my fidelity account and built one in my IRA and it didn’t stop me. I didn’t execute it. There was one place it said you have to have a brokerage account. Another place it said you are required to have brokerage or certain IRA. When setting up it listed all my accounts as selectable. Mine is a roll over IRA so who knows what it requires.

 

[Finance Dave]

I built mine the old fashion way. I picked and chose a variety of rates, terms, and values based on what I wanted over about a 6 month period of time to build a 2 year ladder. It's takes me less than 30 sec to select and buy individual CD's once I've decided which ones I want.

This is how I did mine. The other way is easier, but I wanted more liquidity (for example, I want a CD maturing every 1-2 months not every 6 months) in case we need the money for something....and this is easy to do if you buy individually. Of course the downside is that I have to manage mine more...I need to reinvest about once a month...not a big deal for me.

 

[Dtail]

Following. The impression I have is the default choices are not necessarily best yielding available.

Hmm, I did think they were the highest yielding ones out there at those maturities, just not necessarily the firms one might wish to park their money at, plus one might wish to mix the frequency of payments.

 

[Trooper]

Once the ladder is created, any experience with Fido's auto-roll feature? Specifically looking for how the system chooses how to pick the next CD, once the current rung matures.

 

[xlf11]

It sounds like you have to call to cancel an auto-roll. Anyway to cancel on the website?

 

[COcheesehead]

It sounds like you have to call to cancel an auto-roll. Anyway to cancel on the website?

Yes, you can do it online.

From Fidelity’s website
You can cancel the Auto Roll Service at any time. If you only wish to cancel the Auto Roll Service and revoke your authorized instructions, you may do so either at the position, ladder, or at the account level. To cancel the Auto Roll Service from a particular position, simply cancel the pending order from the Orders page on Fidelity.com. To cancel the Auto Roll Service for all positions within an account, you may unsubscribe from the Alerts Service for that account. Additionally, owners of a CD Ladder with the Auto Roll Service enabled may cancel the Auto Roll Service by making the appropriate selection from the Purchased Ladders list.

 

[djsander]

It sounds like you have to call to cancel an auto-roll. Anyway to cancel on the website?

I’ve gone in when the next order is pending and cancel the order before it’s executed. It sends you a reminder. No calling to cancel and it cancels it just for that one. Next one that comes due repeat the process. I didn’t know about the rest of the methods on cancelling auto roll.

 

[Spock]

I just went in to my fidelity account and built one in my IRA and it didn’t stop me. I didn’t execute it. There was one place it said you have to have a brokerage account. Another place it said you are required to have brokerage or certain IRA. When setting up it listed all my accounts as selectable. Mine is a roll over IRA so who knows what it requires.

Were you able to check the box to have the tool chose/suggest a bond for each rung of the ladder? You can build a bond ladder in an IRA with the tool, but you have to select the bonds yourself. In a non-IRA account the tool will select bonds for each rung and then present them to you to accept or change.

 

[Alex The Great]

I'm using Fidelity for pretty much all financial needs, including IRAs which historically established there. I like its interface much more than Schwab or Vanguard. But I never used any of their service like CD ladder. I prefer to pick CDs for the ladder manually assuming I understand what I'm trying to accomplish.

 

[Trooper]

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I'm using Fidelity for pretty much all financial needs, including IRAs which historically established there. I like its interface much more than Schwab or Vanguard. But I never used any of their service like CD ladder. I prefer to pick CDs for the ladder manually assuming I understand what I'm trying to accomplish.

I am about to use Fidelity for our HOA reserves, for which I am treasurer. My plan is to build a short-term CD ladder, either by using their Ladder Builder tool, or manually. I am knowledgeable enough to do that, but want to set up a process for the next Treasurer who may not be.

Looking for feedback on how Fidelity's auto-roll algorithm selects each rung of the ladder upon maturity of the previous one. Is it always the highest yielding one of the same maturity? Does bank rating play into it? Callable/non-callable?

 

[frayne]

I have used FIDO for building CD ladders in my T-IRA for years, fairly easy and straightforward. Just take some time to learn and understand some of the terms and conditions, i.e. callable vs non callable, blue sky, etc. I didn't use their laddering program, just built the ladder myself from the CDs I liked, easy peasy.

 

[djsander]

Were you able to check the box to have the tool chose/suggest a bond for each rung of the ladder? You can build a bond ladder in an IRA with the tool, but you have to select the bonds yourself. In a non-IRA account the tool will select bonds for each rung and then present them to you to accept or change.

I haven’t tried with bonds I was answering about CDs as that was the originally discussion. I might poke around in the bond ladder section which took me awhile to find or I wasn’t looking. Not sure.

 

[foxfirev5]

I have used FIDO for building CD ladders in my T-IRA for years, fairly easy and straightforward. Just take some time to learn and understand some of the terms and conditions, i.e. callable vs non callable, blue sky, etc. I didn't use their laddering program, just built the ladder myself from the CDs I liked, easy peasy.

Yeah, I've been building ladders at Fido since I retired in 2016. If a caveman like me can do it most people can. I can't believe I was laddering before it was the cool thing to do.

 

[jazz4cash]

^^^so you’re an influencer!

 

[foxfirev5]

That's a stretch! Only do as I say or do at your own peril.

 

[Trooper]

First CD Ladder at Fidelity

I'm about to build my first CD ladder at Fidelity - a 3mo/6mo/9mo/12mo ladder of equal dollar amounts. I noticed that there were no 9-month CDs available when using the ladder building tool, but there was one available in their CD list (see attachments).

Why is this?