I'm confused. Was this a price mistake?
Best CD, MM Rates & Bank Special Deals Thread 2024 - Please post updates here
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I'm confused. Was this a price mistake?
Their 1-year has dropped in the past week. It was 5.5% recently.
Yes it's a concern...I want to cash some Ibonds that were purchased a few years back, but by the time I get the cash to them, the rate could drop more..not sure it's worth it.
Does this help:
CD Information Guide | Marcus by Goldman Sachs®
Marcus
https://www.marcus.com › savings › cd-info-guide
While it takes a minimum of $500 to open a CD, you can keep adding to your balance for 30 days after opening.
pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Are they paper i-bonds? If they are in Treasury Direct then you get the cash in your linked bank account the next day... rates aren't dropping that fast!
I'm 3-month laddering $300K @ $100K/month and today got 5.35% on secondary market zero coupon treasuries. I login and make the purchase once a month. This is basically practice for the day I ever acquire a great deal of cash from RMD, routine sale or rebalancing. It has been a nice exercise to figure out how this works as there is a certain amount of nuance that I don't get by just looking at it and not trading.
I'm OK with the hassle of logging in once a month to maintain the ladder and I like the ability to choose the expire date based on the yield differences rather than putting this on autopilot. It also gives me a chance to pull the plug on this method when rates drop precipitously at which point I will DCA into SPY-equivalent.
That said, I was a day early and decided to try buying the next 3-month rung on margin and paying 1 day margin. I called the rep and asked what the rate was. It is not published until you actually borrow the money (in this case it is Merrill Edge). He went through the process and let me know it has two rates, a base rate and a markup, today it was 5.436% with markup 7.25% so 12.686%. Effectively borrowed $98.xK one day margin or 1/365th of 12.686% or about $35. My yield on the zero coupon is near $15 so I'm paying $20/day margin for the privilege of not waiting for expiration day.
The cool thing is I now have budgetary numbers in my head, something I did not have before I made this margin buy and phone call to the broker at Merrill Edge. Margin on $100K ladder rung is about $20/day at today's rate. Since my time is highly valued the $20/day is cheap for my imagined budget in my brain. I had no clue, it could have been $5 or it could have been $50, I just had no idea. From that standpoint I am very satisfied with this exercise.
What is the significance of this and why am I taking the time to write this up you may ask? I am sure there are FI people out there who have no idea about the secondary zero coupon market and how it works. I believe the only way to learn this stuff is by actually digging in and doing it. Some might say, "Oh, you just do this or that, it's quite simple" which neglects the fact that many of us FI people got to become FI by studying, observing, listening and VERIFYING our investment and savings methods. Those that don't just use a full service like Edward Jones, pay the fees and are satisfied with their sales rep, all the power in the world to them. I am a disciple of Bob Brinker who highly respects John Bogle and Vanguard but the methods are all similar (diversification, hyper-minimize expense ratios, stay away from annuities, etc.) and I also have an MBA in applied econometrics (math) so the numbers are my comfort zone.
I had no idea that a zero coupon secondary market existed, let alone how it worked. I only heard buzzwords about Treasury Direct which seemed like a hassle to open another account. I only have the Merrill Edge account because of a promotion 7 years ago where they were giving away free money for depositing assets. I don't remember the numbers but it was something like $700 for a $100K deposit, no strings attached. I am a sucker for free money so I transfered some ESPP/RSU shares from my previous employer and they gave me $700 cash for that deposit. A sales rep called me shortly thereafter and offered another $700 for more assets so another $100K went in. I think in total I collected $2100 in "bonuses" for depositing my ESPP shares. The bulk of our investable assets are at Vanguard but I kept Merrill Edge just because they were nice enough to give me this free money. They offer most of the same benefits that VG, Fid and Sch offer so no compelling reason to close the account yet.
I slowly started selling off my ESPP/RSU stock and put it into the Magnificant 7 (minus Tesla as I view that company as radioactive and subject to detonation anytime now) and those 6 tech stocks have all performed very well in that time. This account is like playing with house money at this point as it has increased 500% in 6 years with this DCA approach. Now I'm slowly moving some of that gain into cash, hence the need to put it somewhere for now so the 3 month ladder with zero coupons was tried out.
I would never recommend this method to anyone unless you had the innate curiosity and desire to dabble in short term zero coupons. I plan to exit when rates drop below 4.75%. Why? No other reason than I just made up that number, feel comfortable with it and have a disciplined plan in place. I anticipate I'll start accumulating more cash positions in 3-4 years while being far more risk averse and may be seeking something that is essentially zero risk.
I'm OK with the hassle of logging in once a month to maintain the ladder and I like the ability to choose the expire date based on the yield differences rather than putting this on autopilot. It also gives me a chance to pull the plug on this method when rates drop precipitously at which point I will DCA into SPY-equivalent.
That said, I was a day early and decided to try buying the next 3-month rung on margin and paying 1 day margin. I called the rep and asked what the rate was. It is not published until you actually borrow the money (in this case it is Merrill Edge). He went through the process and let me know it has two rates, a base rate and a markup, today it was 5.436% with markup 7.25% so 12.686%. Effectively borrowed $98.xK one day margin or 1/365th of 12.686% or about $35. My yield on the zero coupon is near $15 so I'm paying $20/day margin for the privilege of not waiting for expiration day.
The cool thing is I now have budgetary numbers in my head, something I did not have before I made this margin buy and phone call to the broker at Merrill Edge. Margin on $100K ladder rung is about $20/day at today's rate. Since my time is highly valued the $20/day is cheap for my imagined budget in my brain. I had no clue, it could have been $5 or it could have been $50, I just had no idea. From that standpoint I am very satisfied with this exercise.
What is the significance of this and why am I taking the time to write this up you may ask? I am sure there are FI people out there who have no idea about the secondary zero coupon market and how it works. I believe the only way to learn this stuff is by actually digging in and doing it. Some might say, "Oh, you just do this or that, it's quite simple" which neglects the fact that many of us FI people got to become FI by studying, observing, listening and VERIFYING our investment and savings methods. Those that don't just use a full service like Edward Jones, pay the fees and are satisfied with their sales rep, all the power in the world to them. I am a disciple of Bob Brinker who highly respects John Bogle and Vanguard but the methods are all similar (diversification, hyper-minimize expense ratios, stay away from annuities, etc.) and I also have an MBA in applied econometrics (math) so the numbers are my comfort zone.
I had no idea that a zero coupon secondary market existed, let alone how it worked. I only heard buzzwords about Treasury Direct which seemed like a hassle to open another account. I only have the Merrill Edge account because of a promotion 7 years ago where they were giving away free money for depositing assets. I don't remember the numbers but it was something like $700 for a $100K deposit, no strings attached. I am a sucker for free money so I transfered some ESPP/RSU shares from my previous employer and they gave me $700 cash for that deposit. A sales rep called me shortly thereafter and offered another $700 for more assets so another $100K went in. I think in total I collected $2100 in "bonuses" for depositing my ESPP shares. The bulk of our investable assets are at Vanguard but I kept Merrill Edge just because they were nice enough to give me this free money. They offer most of the same benefits that VG, Fid and Sch offer so no compelling reason to close the account yet.
I slowly started selling off my ESPP/RSU stock and put it into the Magnificant 7 (minus Tesla as I view that company as radioactive and subject to detonation anytime now) and those 6 tech stocks have all performed very well in that time. This account is like playing with house money at this point as it has increased 500% in 6 years with this DCA approach. Now I'm slowly moving some of that gain into cash, hence the need to put it somewhere for now so the 3 month ladder with zero coupons was tried out.
I would never recommend this method to anyone unless you had the innate curiosity and desire to dabble in short term zero coupons. I plan to exit when rates drop below 4.75%. Why? No other reason than I just made up that number, feel comfortable with it and have a disciplined plan in place. I anticipate I'll start accumulating more cash positions in 3-4 years while being far more risk averse and may be seeking something that is essentially zero risk.
jazz4cash
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Thanks for the write-up. I thought Brinker was great, too. I already knew about zeroes in the secondary market, but now I know more.
njhowie
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Doesn't matter. If you were willing to take a two month CD at 5.1%, why wouldn't you choose the equivalent one yielding 18%? You'd be in the same place in two months, but with more than 3x the return generated in the same amount of time.
njhowie
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Maybe. Probably. Still no call on it.
I've had many instances where I've gotten 8% to 10% short term from a secondary market purchase. When you have just a few months to maturity, any amount the price is lowered, it gets magnified to a greater extent due to the short period remaining. So, for instance, in this case, with only 2 months to maturity, this CD was priced at 98 - two points below face value. The capital gain portion just going from 98 to 100 gives a bit more than 12%. Now, this CD itself has a 5.35% yield. Combine the two, plug into the price yield calculator and you get a smidge over 18%.
I've had instances in the past where I'd get a call on just a difference of $10 and they'd say "The dealer made a typo". Other times, the dealer doesn't want to hassle with it, just accepts they made a mistake, and eats the loss. One time, on a municipal bond purchase, I received a call because the dealer did not own the bonds sold to me...as a result he was short (if that's even imaginable with bonds). In that case, which was unusual, Fidelity said the dealer was willing to pay me the fair value price to give them back, which was a few points above what I paid.
I'm guessing that in this case, maybe the dealer meant to enter the price as 99.8 and he put 98 instead. But, so long as the call doesn't come, it's a win.
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Earl E Retyre
Full time employment: Posting here.
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I was trying to be funny ... guess I should have put a
in my comment
target2019
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I bit on Discover Bank 1-yr CD at 5.2%. The 5K was wallowing in their Hi-Yield at 4.35%.
Now on to the local bank wallowings...
Now on to the local bank wallowings...
Montecfo
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
As predicted. The market anticipates cuts. If you waited till they went full dove in December the best rates were gone.
Chuckanut
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Yes. The “What if they raise rates again?” Crowd had their lunch eaten by somebody else.
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I was trying to be funny ... guess I should have put a
I got it, and laughed when I read it !!
Do you know if Marcus runs credit check to open a CD? I googled and I see that they don't do for savings accounts, so I hope I don't need to unfreeze my credit reports and avoid a hassle.
TIA!
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Boy, Ally is dropping CD rates fast. They dropped several on 1/12, and raised one. They dropped several again on 12/19 and raised one.
I have several CDs maturing in early and mid-Feb so I have been watching this closely. It’s unusual for Ally to change rates that frequently.
You get a 0.05% additional rate as a bonus if you renew into a CD. I’ve already changed renewal instructions several time. I signed up for notifications on Ally from deposit accounts.com.
https://www.depositaccounts.com/banks/ally-bank.html
I have several CDs maturing in early and mid-Feb so I have been watching this closely. It’s unusual for Ally to change rates that frequently.
You get a 0.05% additional rate as a bonus if you renew into a CD. I’ve already changed renewal instructions several time. I signed up for notifications on Ally from deposit accounts.com.
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copyright1997reloaded
Thinks s/he gets paid by the post
I have less than 1k there now, I cashed in all of my no-penalty CD's when rates were higher (mostly went to Nasa FCU).
I will keep the account open (as I've done in past years) to wait for the day they need funds again (and offer good deals).
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Yes, Ally offers good deals often enough to keep some funds there. I loaded up on some of their best deals in Dec, but even more went to Synchrony. Synchrony has also dropped their best deals. Most notably the 15 month 5.5% CD is now 5.2%.
There is a Dec and early Jan pattern where several institutions offer their best CD deals. I guess in anticipation of new money coming available.
There is a Dec and early Jan pattern where several institutions offer their best CD deals. I guess in anticipation of new money coming available.
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calmloki
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I just slid in on the 15 month Synchrony 5.5% CD - I hope. Opened the CD on the 16th and have 15 days to fund it at the 5.5% rate. Funds should be at Synchrony tomorrow from a 2 month T-bill that matured on the 23rd. Fidelity has been great at getting ACHs out fast.
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
My experience with Fidelity transfers is that if you initiate transfer before market closing time it goes out that day, and both Synchrony and Ally will notify you funds available later in the day. I’ve transferred from Fidelity and bought CDs same day.
Also funds from maturing T-Bills seem to be available first thing at Fidelity, so you can do all this same day.
Also funds from maturing T-Bills seem to be available first thing at Fidelity, so you can do all this same day.
