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Old 05-21-2020, 08:27 AM   #461
Recycles dryer sheets
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Originally Posted by brewer12345 View Post
Google "negative convexity."
Whatís negative convexity?
Most fixed-income bonds or securities have a positive convexity, which roughly means the price moves in the opposite direction to interest rates. But mortgage-backed securities have negative convexity. Their price tends not to rise as quickly, and can even drop, when Treasury and other market rates go down. Thatís because the people holding the underlying mortgages are more likely to prepay and refinance into a lower rate. When that happens, the duration of the securities is shortened.

Thanks Brewer,

Rich
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Old 05-21-2020, 08:54 AM   #462
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I’ve been thinking about GNMAs and as long as interest rates stay low, they are fine. The gotcha is no one knows when interest rates will rise again.

Anyway, my core bond funds have plenty, so I don’t need to add.
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Old 05-21-2020, 08:57 AM   #463
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OK, I will try (Again) to get this thread back on track.

American 1 Credit Union 5-Year IRA CD Is A Rate Leader

5-year IRA CD, 2.27% APY, $50 min deposit;
5-year CD, 2.00% APY, $500 min deposit.
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Old 05-21-2020, 10:34 AM   #464
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Originally Posted by audreyh1 View Post
Iíve been thinking about GNMAs and as long as interest rates stay low, they are fine. The gotcha is no one knows when interest rates will rise again.

Anyway, my core bond funds have plenty, so I donít need to add.
But mortgage spreads over treasuries are elevated, so if they come down you will get prepaid in a lower rate environment. Up to the buyer to decide if the extra yield is worth the risk, of course.
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Old 05-21-2020, 10:44 AM   #465
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Originally Posted by ShokWaveRider View Post
OK, I will try (Again) to get this thread back on track.

American 1 Credit Union 5-Year IRA CD Is A Rate Leader

5-year IRA CD, 2.27% APY, $50 min deposit;
5-year CD, 2.00% APY, $500 min deposit.
Six months ago, who would have thought that a 2.00% or 2.25% 5-year CD would be looking good!

https://www.american1cu.org/rates

I'm fully invested so I didn't check into the membership requirements.
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Old 05-23-2020, 09:30 AM   #466
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There are no catches - Capital One is good when it comes to bonus offers. Also be aware, your balance just needs to be maintained through the 90 day period. On day 91, you can move the money out, regardless if they credit the bonus immediately (which in the past they have done very quickly), or up to 60 days later.

The effective interest rate is 5.5% over the bonus period. You're collecting 1% in 3 months, which is 4% effective. Then add on the 1.5% yield for the account and you have 5.5%. You get 2.5% if you leave the money there for a year and collect the amount shown in their chart. Still very good overall, assuming they keep the account at 1.5%, which is unlikely - it will continue heading lower.

Put your money in, leave it there for the 90 days, pull it out, and put it towards a different bank promo offer. Churn through the offers to compound the high effective rate the bonuses produce.
I had their checking account a couple of years ago so I opened the savings account on May 15th for the $500 offer. I initiated the transfer from Capital to my external account on May 20th. It's showing May 27th as the date when the funds will be available. Since their terms and conditions say funds must be deposited within 10 days of opening the account I'm wondering if the May 20th transfer date will be good enough here or will I be outside of the 10 day window based on the May 27th funds availability date? In which case I'd rather pull the money out now and look for another option.
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Old 05-23-2020, 11:51 AM   #467
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Only way to know is to call and ask them.
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Old 05-23-2020, 01:14 PM   #468
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I just did, he said if the account doesn't automatically close due to no activity within 10 days then I *should be fine*. I asked a couple of different ways and he said he thinks I'll qualify for the reward lol. Doesn't give me the warm and fuzzy I was looking for but what are ya gonna do?
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