Purchasing CD's via Vanguards Bond desk

[In-control]

Dose anyone have experience buying CD's via the Bond Desk @ Vanguard? On first glance the interest rates are good and the only risk is that they may be called prior to the expiration date.

 

[saluki9]

Vanguard uses Pershing's bond desk. We use them all the time. Just be aware that if you need to get out early these CDs usually trade at a .5 - 1.5% discount to face. Of course if you hold them to term you don't need to worry about that.

 

[Linney]

I'd like to hear more on this topic as well. I have a CD ladder at ING which I am liquidating as the CDs mature. I'd like to re-establish a ladder at Vanguard where I now have a taxable account and brokerage account. The process of selecting CDs at ING was drop-dead simple. Pick the maturity, like the rate? buy it or don't.

The Vanguard CD/Bond Desk has a comparatively dizzying array of choices. Should I just go with their quick picks? I presume that I should just skip the Callable CDs since I'm trying to build a basic ladder (right?) Conditional puts on death of holder looks like it is standard for every CD so that's to be expected (right?). Other than not selecting callable CD's, is there any reason to select anything but the highest yielding CD? Is there any advantage to calling the Vanguard Bond Desk rather than do an online transaction?

Sorry, lots of questions, I've got a lot to learn in this area....
--Linney

 

[LOL!]

We bought CDs through our TDAmeritrade account earlier this year. The web interface is similar to the WellsFargo, so I surmise that many brokers use the same "platform" to do this. Generally, I just did a search on highest interest rates with the maturity date in the range that I needed. One also has to make sure the CD is for sale in the state you live in.

One thing that amazed me, is that the CD offerings changed daily and how the highest rate CD issues sold out quickly. I did everything online and never called, so I cannot comment on that.

Anyways, I will extrapolate that VG/Pershing will give you the same experience.

 

[saluki9]

I'd like to hear more on this topic as well. I have a CD ladder at ING which I am liquidating as the CDs mature. I'd like to re-establish a ladder at Vanguard where I now have a taxable account and brokerage account. The process of selecting CDs at ING was drop-dead simple. Pick the maturity, like the rate? buy it or don't.

The Vanguard CD/Bond Desk has a comparatively dizzying array of choices. Should I just go with their quick picks? I presume that I should just skip the Callable CDs since I'm trying to build a basic ladder (right?) Conditional puts on death of holder looks like it is standard for every CD so that's to be expected (right?). Other than not selecting callable CD's, is there any reason to select anything but the highest yielding CD? Is there any advantage to calling the Vanguard Bond Desk rather than do an online transaction?

Sorry, lots of questions, I've got a lot to learn in this area....
--Linney

It depends on what is more important to you, yield or certainty? You will get a nice bump by buying the callable CDs (usually) so take a look at them.

You should be find with the quick picks, the computer usually gives you the highest yield. Also, the quick picks give you stuff that has a good amount in inventory. If you do a deeper search you will get issues being sold on the secondary market sometimes in small amounts.

 

[Homebrew]

I'm interested in this also. Can anyone recommend a website or book covering the various aspects including "first issue" vs "secondary issure", etc.? Thanks!

 

[Homebrew]

Okay...after a little searching I found: "The Bond Book" by Annette Thau. It seems to be highly recommended. Has anyone read this book? Any other recommendations?
Thanks!