Best CD, MM Rates & Bank Special Deals Thread 2021 - Please post updates here

[pb4uski]

Already spent 45 minutes googling for this, even at TreasuryDirect.gov.


Question: If I buy $10,000 I-Bond and wait a few years, then redeem it, is the $10,000 initial investment still there? (Yes, I know there will be a last-3-months interest penalty).



Or has the $10,000 possibly decreased (or increased) due to market fluctuations (demand for I-bonds) ?



I ask because I once invested a TIPS fund (different thing, I know) and the value decreased over time.



I am hoping the I-bonds hold their initial principal amount.



Bonus question : if I hold the i-bond for at least 5 years, does the penalty disappear?



Thanks

The i-bond does not have any interest rate risk... in other words, changes in interest rates have no imact on the value of your i-bonds because i-bonds do not trade on the secondary market.. you can only buy and redeem them through Treasury Direct so that are similar to an online savings account or bank money market fund or bank CD (but pay much better interest).

And yes, if you hold the i-bond for over 5 years then there is no penalty.

 

[pb4uski]

U.S. Treasury Bonds are considered risk free investments. It's as close as guaranteeing you will get your money back as you can get.

What isn't guaranteed is the market value of those bonds, which is how they're priced in a bond fund.
$10,000 in 10 year bond 1.63% => $11,755
$10,000 in 10 year bond 2.00% => $12,190
If you buy a $10,000 bond and rates immediately go up to 2%, your bond's market value drops by 4%. Why? Because $9,643 earning 2%/year becomes $11,755. It's the same bond, but the market wants a 2% investment, not a 1.63% investment.

^^^ This description of interest rate risk is correct for most government bonds that trade on the secondary market, but NOT for i-bonds. I-bonds don't trade on the secondary market and can only be purchased or redeemed directly with the U.S. government via Treasury Direct.

 

[John Galt III]

Correct, with I-bonds purchased from Treasury direct, the principle is always safe and interest earned is paid out less 3 month penalty interest for less than 5 years held. (This assumes full faith of US govt. does not default during your holding period).

Sent from my SM-G955U using Early Retirement Forum mobile app

Thanks, guys, for the info on the integrity of the principal over time, in I-bonds. This is the place to go for a quick, clear answer!

 

[RunningBum]

I noticed when logging into PenFed they have a 12 month 1% money market certificate special. Normal rate is 0.85%, I believe.

I'm not all that excited about this, with rates very likely going up next year, but some might be interested. I didn't get far enough to see what you forfeit if you withdraw early.

 

[Hopeful]

Just check my Toyota income driver notes, and it looks like they lowered the rate to 1.15% from 1.35% this month.

 

[jazz4cash]

I noticed when logging into PenFed they have a 12 month 1% money market certificate special. Normal rate is 0.85%, I believe.

I'm not all that excited about this, with rates very likely going up next year, but some might be interested. I didn't get far enough to see what you forfeit if you withdraw early.

I’m seeing 1% for 15 months and .85% for 12.

 

[RunningBum]

I’m seeing 1% for 15 months and .85% for 12.

Maybe it was a very short time special, but I probably read it wrong because they're still calling it a holiday deal at the rates you quote above. Sorry for my error.

 

[njhowie]

I’m seeing 1% for 15 months and .85% for 12.

They're now advertising within gmail...

 

[John Galt III]

The Pen Fed 7 year CD is at 1.5%.

I have been considering this. I have $20K in a Pen Fed 3 year 3 % cd maturing in January, 2022.

Haven't decided yet. 1.5% is just so low. Arghhh.

 

[pb4uski]

The Pen Fed 7 year CD is at 1.5%.

I have been considering this. I have $20K in a Pen Fed 3 year 3 % cd maturing in January, 2022.

Haven't decided yet. 1.5% is just so low. Arghhh.

Wouldn't buying $20k of i-bonds be much better that a 7-year 1.5% CD? Same credit risk but more yield and more flexibility. Buy $10k in 2021 and $10k in Jan 2022.

 

[John Galt III]

Wouldn't buying $20k of i-bonds be much better that a 7-year 1.5% CD? Same credit risk but more yield and more flexibility. Buy $10k in 2021 and $10k in Jan 2022.

I'm one step ahead of you, PB4. I already bought $10K of i-bonds in Dec, 2021.

Planning on buying $10K more Jan, 2022. I can buy $5k more if I buy it with my 2021 taxes in April, 2022. But that's it for 2022. $15K.

I have about $55K in a 0.05 % savings account that I want to do something conservative with. Well, it's already conservative at 0.05%, yeah, but something a little more remunerative.

And thanks to to you and this forum for turning me on the the i-bonds!

I have mucho $K in Penfed 3.5% that will mature in Jan, 2024. Will worry about that then.

 

[aja8888]

With the FED ending QE (well, they say they are going to do that) and with them raising interest rates (they say that too!), you may want to wait until this Spring to see if they make a few adjustments. The banks will follow with increases to the CDs.

However, if the FED is just "jawboning" (a FED Tool), maybe none of their moves will take place that soon.

 

[njhowie]

The Pen Fed 7 year CD is at 1.5%.

I have been considering this. I have $20K in a Pen Fed 3 year 3 % cd maturing in January, 2022.

Haven't decided yet. 1.5% is just so low. Arghhh.

7 years is a very long time to lock up money for just 1.5%. You might want to consider laddering the $20k over the 7 years...maybe $5k in 1, 3, 5, and 7 year maturities. At least if rates go higher sooner rather than later, you'll be better positioned to take advantage of it.

Also, you might want to consider NASA FCU - 1.7% for 49 months and they have free membership.

https://www.nasafcu.com/personal/checking-savings/certificates/certificates---rates

 

[Chuckanut]

The Pen Fed 7 year CD is at 1.5%.

I have been considering this. I have $20K in a Pen Fed 3 year 3 % cd maturing in January, 2022.

Haven't decided yet. 1.5% is just so low. Arghhh.

Ugh! 1.5% for a 7 year CD. Just reading that is painful.

With the FRB signaling interest rate increases for next year, I suspect PenFed wants to lock in a source of cheap money for 2023 and beyond.

I am going with iBonds for now. And I am transferring funds into T-Mobile money which is still paying a full 1%.

 

[harllee]

Following. I am amassing cash to pay my entrance fee into a Continuing Care Community in the next couple of years. I need around $300,000. Currently the money is in a CD at a local credit union but the interest rate is low. So I am trying to see if I can do any better on this money short term.

 

[jazz4cash]

Agree with the others. No way I’d lock up funds for 7 yrs for 1.5%. Penfed EWP is brutal. I’m buying MYGAs instead.

 

[xlf11]

HMBradley just changed their rate and added more hoops to jump to qualify for 3% starting on 2/1/22. Here is the news: https://www.doctorofcredit.com/new-...s-rate-when-you-save-your-paycheck-hmbradley/

 

[John Galt III]

7 years is a very long time to lock up money for just 1.5%. You might want to consider laddering the $20k over the 7 years...maybe $5k in 1, 3, 5, and 7 year maturities. At least if rates go higher sooner rather than later, you'll be better positioned to take advantage of it.

Also, you might want to consider NASA FCU - 1.7% for 49 months and they have free membership.

https://www.nasafcu.com/personal/checking-savings/certificates/certificates---rates

Thanks for the NASA FCU referral ! Will check it out. Are non-military welcome? It will add another institution to my already-cluttered portfolio, but what else can one do?

 

[njhowie]

Thanks for the NASA FCU referral ! Will check it out. Are non-military welcome? It will add another institution to my already-cluttered portfolio, but what else can one do?

Anyone can join. If you aren't a member of one of the organizations associated, they offer a free one year membership to the National Space Society which qualifies. You don't have to renew it.

 

[MichaelB]

2022 thread now open, here https://www.early-retirement.org/fo...ead-2022-please-post-updates-here-112376.html