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Old 09-22-2022, 01:01 PM   #1741
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I've been laddering 6 months and 12 months. When the six months come due, I will start the 2 year part of the ladder. That's the plan--written in jello.
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Old 09-22-2022, 01:02 PM   #1742
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I've been laddering 6 months and 12 months. When the six months come due, I will start the 2 year part of the ladder. That's the plan--written in jello.
I could have written that!
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Old 09-22-2022, 01:23 PM   #1743
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The way rates have been rising, six-months is too long!
(I've been mostly buying six-month T-Bills.) Three months ago (so half way through a six-month T-Bill), the rate was about 2.41%. Today 3.904%. A six month T-Bill maturing now (i.e. purchased 6 months ago) had a yield of 0.95%. Ouch. I made my first 6-month purchase less than a month ago (8/23/22) @ 3.22%. So quite the jump since then.
It's all a crap shoot but I'm a proponent of the mindset "Never let the perfect be the enemy of the good". That's the big value of laddering.

My mom had 2 CDs mature at the end of August. They were earning 0.6%. I moved the money to her Vanguard account (it was in Ally) and bought her 3, 6, 9, and 12-month T bills instead earning between 2.9 and 3.4%. Is it the best she could possibly do? No. But it's 5-6 times better than what she had been getting on that money. And every 3 months, a chunk of it will mature and can be redeployed into a new 12-month bill at the prevailing rate. I'm okay with that.

And I just realized this is the CD thread but the exact same plan works for CDs too.
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Old 09-22-2022, 01:25 PM   #1744
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Well I've been sitting on a lot of cash far to long that's doing nothing... So I've already missed a lot. It's always a bit of a crap shoot but it's time to get in (for me). Sure, I think it's going to keep going up but I don't want to miss another 3, 6 or 9 mo's of getting nothing. So I'm going in shorter term(s) now and probably longer term(s) when these mature. But don't follow me... I'm lost!
Yes. In fact it is lot like equities. You need to stay fully invested. Very hard for rates to rise enough to make up for zeros.
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Old 09-22-2022, 02:38 PM   #1745
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Ally up to 2.1%
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Old 09-22-2022, 02:46 PM   #1746
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Old 09-22-2022, 03:34 PM   #1747
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Well I've been sitting on a lot of cash far to long that's doing nothing... So I've already missed a lot. It's always a bit of a crap shoot but it's time to get in (for me). Sure, I think it's going to keep going up but I don't want to miss another 3, 6 or 9 mo's of getting nothing. So I'm going in shorter term(s) now and probably longer term(s) when these mature. But don't follow me... I'm lost!
Any reason you are not in an online savings account, paying maybe 2% or a little more now? Not much, but better than nothing.
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Old 09-22-2022, 03:47 PM   #1748
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Originally Posted by copyright1997reloaded View Post
The way rates have been rising, six-months is too long!
(I've been mostly buying six-month T-Bills.) Three months ago (so half way through a six-month T-Bill), the rate was about 2.41%. Today 3.904%. A six month T-Bill maturing now (i.e. purchased 6 months ago) had a yield of 0.95%. Ouch. I made my first 6-month purchase less than a month ago (8/23/22) @ 3.22%. So quite the jump since then.
I've mostly been buying 3 months or less T-Bills. I bought a very few 4,5 and 10 year CDs, Agency and Corporate Bonds but right now that is only 4.5% of my income earning assets so I still have 95.5% to invest.

On the longer term I have been mainly investing in non-callable as I hate the interest rates drop I lose-you win but as you know it doesn't appear rates will be dropping anytime soon.

I'm having a hard time deciding when to really start investing in longer term. I'm really waiting for a corporate bond crash a la March 2020. Learned about that from Freedom56. And some preferred financials are getting tempting.
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Old 09-22-2022, 03:54 PM   #1749
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Ally up to 2.1%
I moved $10 into my Ally Money Market account just to make sure it doesn't get closed (I've had a zero balance for months). At some point my money market fund at Fidelity will drop (quickly?), so might as well have an open Ally account just in case.

I don't have enough cash available to make any of this worth much, but next year we will start taking distributions and at that point we will take a closer look at what's available.
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Old 09-22-2022, 04:04 PM   #1750
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Why when 2 year treasuries are 4.xx%


It could be logical if you have a need that is five years out and you believe the rate cycle may peak in 2 yrs. Rates to reinvest those 2 yr maturities could be lower than todayís rates.

My ladder has a rung that is 5 yrs out and i need to put something there.
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Old 09-22-2022, 05:06 PM   #1751
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Personally, I can't see going out much farther than 2 years max with a bond or CD these days. Unless we are very lucky and inflation take a quick dive and stays down, I think we are in for at least another year of rates inching up.

I view the ladder as being similar to dollar cost averaging when buying a stock index fund. I won't buy at the bottom or the top, it will keep my most of my money earning more than bank savings or MM rates, and I get to monitor and adjust every three months or so. Unless I can get my time machine working that's the best I can do.
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Old 09-22-2022, 05:20 PM   #1752
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Any reason you are not in an online savings account, paying maybe 2% or a little more now? Not much, but better than nothing.
Maybe now (recently) but for years and years it was almost nothing.

The good thing about all that spare cash was I could use it for swing trading. Which I did a lot of the past several years.

The bad thing about all that spare cash was I could use it for swing trading. Which I did a lot of the past several years.

Anyway, I've decided that swing trading has become too much like work and/or the fun/excitement is waning. So, now that CD's are paying something, I'll put the money in that and maybe reduce the temptation... Although I'll hold some out just in case
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Old 09-22-2022, 05:52 PM   #1753
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Which bank stays at highest rate savings account? I’ve had Vio for couple years. I don’t want to change often for few percentage points.
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Old 09-22-2022, 11:40 PM   #1754
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Which bank stays at highest rate savings account? Iíve had Vio for couple years. I donít want to change often for few percentage points.
You have to be nimble. Some places are good for a while then fall off. Never rest in one place.
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Old 09-22-2022, 11:41 PM   #1755
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You have to be nimble. Some places are good for a while then fall off. Never rest in one place.
How often should I switch? I only keep $3k in EF.
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Old 09-22-2022, 11:47 PM   #1756
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How often should I switch? I only keep $3k in EF.
Wouldn't make much of a difference on $3K.
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Old 09-23-2022, 05:33 AM   #1757
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Personally, I can't see going out much farther than 2 years max with a bond or CD these days. Unless we are very lucky and inflation take a quick dive and stays down, I think we are in for at least another year of rates inching up.

I view the ladder as being similar to dollar cost averaging when buying a stock index fund. I won't buy at the bottom or the top, it will keep my most of my money earning more than bank savings or MM rates, and I get to monitor and adjust every three months or so. Unless I can get my time machine working that's the best I can do.
+1 I have a mis-mash of maturities... some 3-3.5% 5-year credit union CDs bought in 2019 that mature in 2024... plus some more recently purchased UST and agency bonds that mature in 2022, 2023 and 2025 (2025 are 4% GSE bonds)...plus some I Bonds. Weighted average yield of about 3.5% and weighted average maturity of 1.5 years.

As they mature I'll fill in the gaps in the ladder but at this point not going out very far. I plan to extend the ladder to perhaps 5 years when it appears that the Feds are done raising rates to combat inflation depending on what the yield curve looks like. I may also look into TIPs as a complement to I Bonds for a portion of my fixed income portfolio.
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Old 09-23-2022, 06:38 AM   #1758
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I have 'rate watch fatigue'. I think I'll just not look for a month, then revisit, lol.
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Old 09-23-2022, 06:55 AM   #1759
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^^^^^
That's funny but I'm starting to feel that way too... They (CD's) sure have been moving, especially over the past few weeks. However, unlike equities, they have only been going up. I've said I'd start buying once they hit 4% and I did... Laddered over 3 to 18mos so far... I should be done with my initial investment plans in a week or so. Now, the problem is with such short term maturities, I'll still need to keep an eye on rates for reinvestment planning, but maybe not everyday.
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Old 09-23-2022, 07:01 AM   #1760
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+1 I have a mis-mash of maturities... some 3-3.5% 5-year credit union CDs bought in 2019 that mature in 2024... plus some more recently purchased UST and agency bonds that mature in 2022, 2023 and 2025 (2025 are 4% GSE bonds)...plus some I Bonds. Weighted average yield of about 3.5% and weighted average maturity of 1.5 years.
A mis-mash of maturities? I prefer to call it a ladder with variable rungs.
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As they mature I'll fill in the gaps in the ladder but at this point not going out very far. I plan to extend the ladder to perhaps 5 years when it appears that the Feds are done raising rates to combat inflation depending on what the yield curve looks like. I may also look into TIPs as a complement to I Bonds for a portion of my fixed income portfolio.
I think it's important to stay flexible, but consistent. As the environment changes you have to change along with it.

One word of warning. If you buy TIPs, but individual TIP bonds. TIPs ETFs have gotten hit hard (e.g. the TIP ETF has gone down over 16% since March) but not as hard as bond ETFs (e.g. TLT is down 19% since March and 32% since the December high). Adjusting for distributions the gap is even greater.

Right now all bond ETFs are a landmine. Individual bonds and short maturities are the way to go NOW. In 6 months that could all change.
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