is now the time for 5 year cd?

[Chuckanut]

FWIW, not all of us have 'won the game'. Some of us are in the 4th quarter with a 12 point lead, all our time outs remaining, a great running game, and have control of the ball with 5 minutes left on the clock.

Our big fear is a foolish error such as double digit losses on multiple plays. (Inflation) And perhaps some daring bravado on the part of our opponents, who seem to have the sympathy of the game controlling officials. (Taxes)

 

[John Galt III]

Space Coast Credit Union in Florida has a 21month CD for 3.25%. I did not see any limits. Why would one choose 5 years?

I would prefer a 5 or 7 year term for that 3.25% because my crystal ball says in 3 years rates will be way down, and then the CD holder has to do something with principal. Stocks? Spend it? I'd rather still have my cash chugging away at 3.25 % relatively worry free. My crystal ball says the trillions of U.S. debt will prevent rates from going up much over 4%, if that, for any 5 or 7 year term CD. OK, someone said there are already some 5 year CD's at 4%, so the crystal ball is wrong. Which is OK with me, lol. Maybe I'll wait another month or two.
Sort of like a game of chicken.

 

[pletal]

I would prefer a 5 or 7 year term for that 3.25% because my crystal ball says in 3 years rates will be way down, and then the CD holder has to do something with principal. Stocks? Spend it? I'd rather still have my cash chugging away at 3.25 % relatively worry free. My crystal ball says the trillions of U.S. debt will prevent rates from going up much over 4%, if that, for any 5 or 7 year term CD. OK, someone said there are already some 5 year CD's at 4%, so the crystal ball is wrong. Which is OK with me, lol. Maybe I'll wait another month or two.
Sort of like a game of chicken.

Totally agree with you, my advisor says I’m the only client looking for 5 year and over CD’s right now. Finding some at 3.5 for 7 years

 

[Winemaker]

Are we investing in CDs for the interest they throw off or safety of principal?

Would $5,000 invested in A Capital One Preferred K be similar? Currently at $21.64 goes ex dividend today, currently yielding 5.3429%.

 

[hogwild]

I recently bought 9.62% I-bonds.

 

[Car-Guy]

FWIW, not all of us have 'won the game'. Some of us are in the 4th quarter with a 12 point lead, all our time outs remaining, a great running game, and have control of the ball with 5 minutes left on the clock.

Excellent position to be in, unless you are playing for the Texans, in which case you probably only have a 50/50 chance of "winning the game" at that point.

 

[Dash man]

Excellent position to be in, unless you are playing for the Texans, in which case you probably only have a 50/50 chance of "winning the game" at that point.

Or the Eagles.

 

[PoF]

I'd max out I Bonds first. The rate's not locked in, but it's near 10% for the first six months.

 

[Northforker]

My crystal ball says that the interest rates are no longer controlled by a free market. If the rates rise too high, the federal government cannot pay their note, and would have to declare default. The powers that be will not let that happen. The system is corrupted and politicized. This is not your daddy's 1982 13% CD world anymore. I seriously doubt we will ever see 6% cd's. let alone double digits rates.

 

[Drake3287]

If you think it's safe to say "rates will continue to rise", then you're claiming you do have a crystal ball.

Nobody knows.

When the Feds have already signaled that more rate increases are coming, you don't need a crystal ball. The BIG factor on all this will be the 3rd quarter reports such as the GDP report that comes out in October followed by the future of 2022 holiday shopping and consumer confidence to spend money. That'll be the tipping block of whether we go into a full blown recession or not.

 

[frank]

I noticed the 4.1 credit union cd is now down to 3.65 for 5 year cd. hate to see it go backward.

 

[ShokWaveRider]

I noticed the 4.1 credit union cd is now down to 3.65 for 5 year cd. hate to see it go backward.

Depends, they do go up and down as money is needed by the issuing company. Also, specials come and go.

 

[cnocmmz]

It would seem (to me anyway) that rates will continue to climb, at least for the next 6 to 12 months. I fully expect CD's, for all maturities over 1 year, to be over 4% before year end, especially if the FED raises rates another .75 points in September. Personally I'm looking to start building a ladder when I see 18 to 36 month brokered CD's hit ~4%. I'm not sure I'd feel comfortable buying 4 or 5 year CD's, "this year" unless they were significantly higher, which could happen I guess.

Hi
I too am thinking of using a laddered approach with CD’s. Although only have about 100k in cash and Not sure how to build it. Would appreciate any help. Thanks

 

[watchman3135]

In early 2018 I opened up a 3.25% $250K 4 yr CD with BMO at a local branch and it's been sending around $680 a month to my checking which I use as a portion of income to live on since I retired at 53 in 2019 with no pension or SS. Around the time I opened it they were offering a 5 yr at 3.50% however I decided wait to see if it would go higher but I missed out and it went to 3.25% 4 yr. Since opened I had been a bit worried with rates when it comes due in Feb 2023 trying to figure out what I needed to do to duplicate the monthly income however forcing more risk with something like VYM\SCHD or even RYLD\JEPI\XYLD however with the Fed rate increases they are back up currently offering a 3% 5 yr so I'm hoping to get close to 4% when it comes due Feb 2023. If you like the current rate\term I'd say go for it.

 

[frank]

anyone have any further thoughts as to whether we hit the top of the cd food chain yet? with the markets starting to jump and talk of taming inflation do you thing we've hit the top? I was kind of hoping for a 5% or better 5 year cd, but have not seen it materialize. Maybe I just am getting in too big of a hurry. what do you think?

 

[Freedom56]

anyone have any further thoughts as to whether we hit the top of the cd food chain yet? with the markets starting to jump and talk of taming inflation do you thing we've hit the top? I was kind of hoping for a 5% or better 5 year cd, but have not seen it materialize. Maybe I just am getting in too big of a hurry. what do you think?

They materialized and vanished yesterday. They were transported to our accounts. This was a far better deal than 5 year treasuries.

Symbol 14042RVN8
Description CAPITAL ONE NATL ASSN VA CD 5.00000% 11/16/2027
Shares + 250,000.000
Price 100.00
Amount -$250,000.00
Settlement Date 11/16/2022

We bought 2 lots of $250K each one for my IRA and one for our taxable account. This is a 5 year non-callable CD.

 

[frank]

They materialized and vanished yesterday. They were transported to our accounts. This was a far better deal than 5 year treasuries.

Symbol 14042RVN8
Description CAPITAL ONE NATL ASSN VA CD 5.00000% 11/16/2027
Shares + 250,000.000
Price 100.00
Amount -$250,000.00
Settlement Date 11/16/2022

We bought 2 lots of $250K each one for my IRA and one for our taxable account. These are 5 year non-callable CDs.

I don't have a schwab or fidelity account, just what I can find on the internet. How do you come across these deals? certain websites, accounts, etc.?

 

[erkevin]

Or the Eagles.

This hasn't aged well!

 

[Freedom56]

I don't have a schwab or fidelity account, just what I can find on the internet. How do you come across these deals? certain websites, accounts, etc.?

I bought $250K from Fidelity and $250K from TD Ameritrade. They were on the yield table at both brokerages under new issues. The best deal now are the 4.7% one year CDs (non-callable). After the inflation numbers came out yesterday, I decided to lock the 5 year rate as apparently others did also as they vanished quickly. I would wait and see what happens over the next few months. It's not like the rates are going back to zero anytime soon. This is the "golden period" for fixed income investing.

 

[pletal]

They materialized and vanished yesterday. They were transported to our accounts. This was a far better deal than 5 year treasuries.

Symbol 14042RVN8
Description CAPITAL ONE NATL ASSN VA CD 5.00000% 11/16/2027
Shares + 250,000.000
Price 100.00
Amount -$250,000.00
Settlement Date 11/16/2022

We bought 2 lots of $250K each one for my IRA and one for our taxable account. This is a 5 year non-callable CD.

Good job, I have a large amount of CD's coming due in the next 2 years. Hope the rate for 5 yrs plus is at least 4.5%!

 

[COcheesehead]

A lot of agency bonds in the 6% range flew off the shelf yesterday too.

I picked up some non callable 5% CDs.

 

[Freedom56]

Good job, I have a large amount of CD's coming due in the next 2 years. Hope the rate for 5 yrs plus is at least 4.5%!

Despite all the euphoria, the Fed is still looking at a Fed funds rate of 4.5%-4.75% and hold there through 2023 into 2024. I plan to keep my CD, treasury, and corporate bond ladder rolling.

 

[Freedom56]

A lot of agency bonds in the 6% range flew off the shelf yesterday too.

I picked up some non callable 5% CDs.

I also picked up what was left of the new issue corporate note from Goldman Sachs 6.625% 5 year and 6.25% 4 year callable, Scotia bank 6% 3 year callable, and the Citigroup 6.1% 6 year callable with two year call protection. Then every issue from US and Canadian banks vanished from TDA and Fidelity.

 

[COcheesehead]

I also picked up what was left of the new issue corporate note from Goldman Sachs 6.625% 5 year and 6.25% 4 year callable, Scotia bank 6% 3 year callable, and the Citigroup 6.1% 6 year callable with two year call protection. Then every issue from US and Canadian banks vanished from TDA and Fidelity.

I have some bonds maturing on Tuesday Nov 15th and then two more chunks on Dec 1 and Dec 15th. Interesting to see what rates are going to be like on those dates.

 

[Freedom56]

I have some bonds maturing on Tuesday Nov 15th and then two more chunks on Dec 1 and Dec 15th. Interesting to see what rates are going to be like on those dates.

I would look to the secondary markets for deals as tax loss selling of funds will cause a lot of forced selling of individual bonds.