Best CD, MM Rates & Bank Special Deals Thread 2020 - Please post updates here

[F.I.R.E User]

I guess I will stay on the VIO Bank bandwagon for now LOL.

[gcgang]

Ok all you CD ladderers.

I’ve used my IRA as fixed income, primarily 5 year laddering CDs. They are maturing and the rates my online broker offers range from 0.05% 0-1 year, up to 0.40% for 5 years.

Should I stick with the strategy, going 3-5 years to pick up a measly 35 basis points, or put in in insured 3month CD vs keep in brokerage cash, or totally abandon my strategy and take more risk?

I’m not interested in splitting the IRa into multiple accounts by transferring part of it to another custodian, especially if the yield pickup would only be a percent or so.

[Dtail]

Quote:

Originally Posted by gcgang Ok all you CD ladderers. I’ve used my IRA as fixed income, primarily 5 year laddering CDs. They are maturing and the rates my online broker offers range from 0.05% 0-1 year, up to 0.40% for 5 years. Should I stick with the strategy, going 3-5 years to pick up a measly 35 basis points, or put in in insured 3month CD vs keep in brokerage cash, or totally abandon my strategy and take more risk? I’m not interested in splitting the IRa into multiple accounts by transferring part of it to another custodian, especially if the yield pickup would only be a percent or so.

For my parents, I substituted a MYGA for their one portion of the Cd ladder which came due this year. The main negative risk of more severe early withdrawal penalties and credit risk (AA) is minimal.

[RunningBum]

Quote:

Originally Posted by gcgang Ok all you CD ladderers. I’ve used my IRA as fixed income, primarily 5 year laddering CDs. They are maturing and the rates my online broker offers range from 0.05% 0-1 year, up to 0.40% for 5 years. Should I stick with the strategy, going 3-5 years to pick up a measly 35 basis points, or put in in insured 3month CD vs keep in brokerage cash, or totally abandon my strategy and take more risk? I’m not interested in splitting the IRa into multiple accounts by transferring part of it to another custodian, especially if the yield pickup would only be a percent or so.

I can't see tying up any money in CDs at such low rates. What kind of rate can you get with a money market or savings account? How about a short term bond fund, or TIPs?

I guess CDs aren't that bad as long as you can get out of them if rates start to rise. Forfeiting some interest is trivial at these rates.

[gcgang]

Quote:

Originally Posted by Dtail For my parents, I substituted a MYGA for their one portion of the Cd ladder which came due this year. The main negative risk of more severe early withdrawal penalties and credit risk (AA) is minimal.

What is a MYGA?

[pb4uski]

Multi-Year Guaranteed Annuity.... similar to a CD but issued by an insurance company so no FDIC insurance and surrender charges rather than early withdrawal penalties.

[Dtail]

Quote:

Originally Posted by gcgang What is a MYGA?

It is a multi year guaranteed annuity. See the below link and we can discuss more.

https://www.blueprintincome.com/fixe...tRating=A%252B

[Gotadimple]

Hi-Yield Savings Accounts at Internet Banks offer higher rates than CDs at the same banks. B&M banks offer Money Market Accounts (which are NOT funds) at higher interest rates than their savings accounts - again CD rates are below the Money Market Account.

In some cases (YMMV), High Yield Savings Accounts are better than short-term bond funds. Both yields can change - so plan carefully.

[gcgang]

Quote:

Originally Posted by Dtail It is a multi year guaranteed annuity. See the below link and we can discuss more. https://www.blueprintincome.com/fixe...tRating=A%252B

Nice link. Thanks, but no thanks. 1-2% more than nothing not worth the risk, illiquidity and hassle to me.

Just did a Roth conversion. I doubt I’ll ever touch that money, so maybe I’ll invest it like my 20 year old daughter, the eventual beneficiary, should.

As other CDs mature, maybe some less stock correlated stuff like gold, REITs, EM debt...nah, probably end up w short term CDs at 0.01%.

[pb4uski]

^^^ You might want to consider preferred stocks. See https://www.early-retirement.org/for...77428-137.html

Over the past couple years I put together a small (~13% of my portfolio) mostly investment grade preferred stock portfolio that yields almost 6%... familiar names... Bank of America, Mellon Bank, Duke Energy, Hartford, J.P. Morgan Chase, MetLife, PG&E, Wells Fargo and some others.

[Chuckanut]

I checked out the MYGA site. Nothing available in my state. I even lowered quality to B+ and tried different terms. Nothing.

[jazz4cash]

Quote:

Originally Posted by Chuckanut I checked out the MYGA site. Nothing available in my state. I even lowered quality to B+ and tried different terms. Nothing.

Which site did you try? Hard to imagine you live in a state that does not offer these products. The sites I know of include Blueprint Income, immediateannuities.com, Stan The Annuity Man. Fidelity and Vanguard also offer MYGA products. Another one is Gainbridge (which is a direct distribution product from Guggenheim)

[cbo111]

Wow, I just had a $60K CD mature that was earning 4%. I browsed the current rates and found their 5-year CD is now paying .4%!
These are truly "coffee can/under the mattress" equivalent rates. I noticed their MM rate is currently also .4%. I really don't feel comfortable moving it to equities. What to do?

[Dash man]

Quote:

Originally Posted by cbo111 Wow, I just had a $60K CD mature that was earning 4%. I browsed the current rates and found their 5-year CD is now paying .4%! These are truly "coffee can/under the mattress" equivalent rates. I noticed their MM rate is currently also .4%. I really don't feel comfortable moving it to equities. What to do?

Ally Bank and Synchrony Bank each have Savings accounts at 0.6%. That’s about the best you can do and be FDIC insured.

[RunningBum]

Quote:

Originally Posted by cbo111 Wow, I just had a $60K CD mature that was earning 4%. I browsed the current rates and found their 5-year CD is now paying .4%! These are truly "coffee can/under the mattress" equivalent rates. I noticed their MM rate is currently also .4%. I really don't feel comfortable moving it to equities. What to do?

Congratulate yourself for locking in that favorable rate for the last 5 years, then deal with the reality of lower rates today. Assuming your goal for cash was to reduce volatility and have cash available, I wouldn't take on more risk trying for a higher return. I also wouldn't lock into a low rate for a long time unless it's really cheap to break the commitment.

Maybe you can find a transfer bonus somewhere to help a little with your return.

[pb4uski]

Quote:

Originally Posted by cbo111 Wow, I just had a $60K CD mature that was earning 4%. I browsed the current rates and found their 5-year CD is now paying .4%! These are truly "coffee can/under the mattress" equivalent rates. I noticed their MM rate is currently also .4%. I really don't feel comfortable moving it to equities. What to do?

How much risk are you willing to take?

As someone mentioned, online savings accounts are now paying ~0.6%. They are 100% FDIC insured so not credit risk and no interest rate risk and outstanding liquidity. Bad thing is that they could go lower over time, even lower than that 0.4% CD.

If you qualify to join Navy Federal, their 12 month CD is ~0.8% and 5-year is ~1.2%... add another 0.05% for more than $100k. Or alternatively, they have 12-24 month add-on CDs that are 0.7% to 0.8%.

If you're willing to take some credit risk, you have things like Dominion Energy Reliabiity Investment account (1.5%-1.7% depending on your balance) or Toyota Motor Credit IncomeDriver Notes (2.0%)... these have some credit risk but no interest rate risk and good liquidity.

Next would be baby-bonds and preferred stocks. These are a little work to research, have some market risk and interest rate risk, but yield ~5-6% for low investment grade credits. My current favorite baby bond is AGO.PRB which is rated A by S&P and currently yields 6.4%. YMMV.

[Oilcan]

How about a Multi Year Guarantee Annuity? I've been looking for a place to replace some CD's that have matured and have found these to be a possible answer. Depending on the company, many are paying over 2%. Since I'm only in the research phase and have not purchased any, does anyone else have a view on these MYGA's, pro or con?

[pb4uski]

MYGAs were mentioned and commented on in another recent thread: https://www.early-retirement.org/for...ow-105555.html

[Dtail]

Quote:

Originally Posted by pb4uski MYGAs were mentioned and commented on in another recent thread: https://www.early-retirement.org/for...ow-105555.html

Not to mention it is mentioned about 11 posts up in this thread.

[smihaila]

Quote:

Originally Posted by Dash man Ally Bank and Synchrony Bank each have Savings accounts at 0.6%. That’s about the best you can do and be FDIC insured.

And SFGIdirect.com at 0.67%. A credit union that I trust - FAST ACH transfers and the limit is a million. No teasing interest rates or other games. The only drawback is that you can link only one external account, and it's done via a Secure Messaging message plus some proof that you own that external account.