Ridiculous CD rates - where now

[Sue J]

I have a couple of the PenFed 5% CDs from almost 10 years ago. Mine mature in Jan 2021. Sorry to see these come to the end!

[audreyh1]

Well, you had a great run!

[bobbee25]

I have 200k coming due, thinking about leaving 100k at 1% (hurts to even write that). So I will loose $1,000


Then move the other 100k to T. Rowe Price Bond funds
most in TRBUX ultra short and a small amount in PRNSX global

[target2019]

Quote:

Originally Posted by audreyh1 Yes, IMO it’s all about protecting the credit markets (cheap credit!) which protects the stock market. Personally, I’m not sweating super low interest rates for a couple of years.

Until I looked up interest rates, I forgot about that wild ride. Very whee-ish.
https://www.visualcapitalist.com/cha...nterest-rates/

[njhowie]

Quote:

Originally Posted by bobbee25 I have 200k coming due, thinking about leaving 100k at 1% (hurts to even write that). So I will loose $1,000 Then move the other 100k to T. Rowe Price Bond funds most in TRBUX ultra short and a small amount in PRNSX global

You aren't losing anything. You are accepting what the market is offering at this time...just as you did when purchasing whatever time deposit you're currently in.

If you're not in dire need of the $1000/year for the $100k you intend on locking up at 1%, you might consider just letting it sit in cash or money market for the time being and have it available for taking advantage of opportunities which may arise - even if returning close to zero currently. We are almost assured of seeing increased volatility between now and year end. I would go so far as to say the same for whatever you are considering putting in bond funds. All bond funds are pretty risky at this time. They are providing minimal yield yet outsized risk as far as potential to decline with rising rates.

[target2019]

This doesn't help those with the short term problem, but it provides a long-term nostalgic view for those say 65 and older. We experienced almost 20% interest rate when we started careers. Now we hear about -0- or even negative interest rates I'm pretty much numb about what comes next. But we do have decisions coming up.

[mz44]

Quote:

Originally Posted by bobbee25 I have CDs spaced out over the next few years, but with the rates so low where else can you put safe money and get a descent return ? Thinking about some short term bond funds ?

[emoji8][emoji10][emoji9]

[njhowie]

Quote:

Originally Posted by target2019 This doesn't help those with the short term problem, but it provides a long-term nostalgic view for those say 65 and older. We experienced almost 20% interest rate when we started careers. Now we hear about -0- or even negative interest rates I'm pretty much numb about what comes next. But we do have decisions coming up.

I personally believe the Fed is lost, they are shooting in the dark and are gambling with our country's financial well-being. The central banks can do whatever they like in the short term, but in the longer term economic and market fundamentals and dynamics will overpower any policy approach they may choose. In short, they are playing with fire, and (we) will very likely get burned.

[Cayman]

Quote:

Originally Posted by njhowie I personally believe the Fed is lost, they are shooting in the dark and are gambling with our country's financial well-being. The central banks can do whatever they like in the short term, but in the longer term economic and market fundamentals and dynamics will overpower any policy approach they may choose. In short, they are playing with fire, and (we) will very likely get burned.

Agreed. Chaos reigns.This household of savers has decided to wait it out, we don't see much room for creative strategy in this environment. Sitting on many years of cash, equities are at 36% AA. So we're going to wait it out, maybe pick up a few houses next year. Eyeing a big fat Jewelry splurge. Uncharacteristic for me but I'm tired of saving...gonna blow a tiny bit while I feel like it. Plus it's a hard asset, or at least that sounds like a good rationale.


Note- OP, 5 year CDs can be had above 1.25% and the $ amount you'd pay for early withdrawal penalty may be appealing to you, depending on your circumstances.

[jazz4cash]

Quote:

Originally Posted by Sue J I have a couple of the PenFed 5% CDs from almost 10 years ago. Mine mature in Jan 2021. Sorry to see these come to the end!

Yes....I'm savoring those certificates!
I even went back and perused some of the threads where they were discussed. You started one of the first threads and I wrote the last post. There was quite a bit of drama surrounding the way they were offered. They tried to use the promo to encourage renewal of maturing CDs. Is it too much to hope for Penfed to offer a promotion to keep many of us from taking our money and running? Or, maybe Penfed is savoring the date they no longer have to pay 5%! Apparently it was a $240M offering.

https://www.early-retirement.org/for...fer-51751.html

[RenoJay]

Quote:

Originally Posted by kjpliny The system is broken and the Federal Reserve is the root cause.

Amen.

[RenoJay]

Quote:

Originally Posted by audreyh1 Yes, IMO it’s all about protecting the credit markets (cheap credit!) which protects the stock market.

I think protecting the stock market is a side effect of Fed policy and that the goal is simply suppressed interest rates because otherwise America’s mountain of debt would be unserviceable.

[RunningBum]

Quote:

Originally Posted by target2019 This doesn't help those with the short term problem, but it provides a long-term nostalgic view for those say 65 and older. We experienced almost 20% interest rate when we started careers. Now we hear about -0- or even negative interest rates I'm pretty much numb about what comes next. But we do have decisions coming up.

I don't remember it nostalgically. Along with high savings rates came high mortgage and car loan rates, as well as double digit inflation.

[Sunset]

Quote:

Originally Posted by RunningBum I don't remember it nostalgically. Along with high savings rates came high mortgage and car loan rates, as well as double digit inflation.

No kidding.
My first mortgage was around 14% and that was 2% less than the going bank rates since it was a "in the family" deal

[target2019]

Quote:

Originally Posted by target2019 This doesn't help those with the short term problem, but it provides a long-term nostalgic view for those say 65 and older. We experienced almost 20% interest rate when we started careers. Now we hear about -0- or even negative interest rates I'm pretty much numb about what comes next. But we do have decisions coming up.

Quote:

Originally Posted by RunningBum I don't remember it nostalgically. Along with high savings rates came high mortgage and car loan rates, as well as double digit inflation.

And we all survived...

When I said "long-term nostalgic view" I was speaking of the entire period - 1955 through 2020. There are many periods in that time to consider.

[LRDave]

Quote:

Originally Posted by Sunset No kidding. My first mortgage was around 14% and that was 2% less than the going bank rates since it was a "in the family" deal

Our $39K 2BD/1BA first home had a 15.5% FHA loan in the summer of '82.

I don't remember 80s/90s bank CDs and Savings Bonds as the "good ol' days". I remember it as: losing to inflation every single day. Only in hindsight do these look good to me.

[Chuckanut]

Quote:

Originally Posted by Sunset No kidding. My first mortgage was around 14% and that was 2% less than the going bank rates since it was a "in the family" deal

My mortgage back then was 12 3/4 % !!!

I was overjoyed when I managed to refinance at under 10%. No more double digit mortgage rates. Eventually I refinanced a second time at a variable rate of 1.6% over the One Year T-Bill rate. That was very nice.

[MJ]

I'm really glad I invested $500 in GTE 5 year add-on 3% certificate last Aug 2019. As some of my certificates have been and will be maturing, I'll add it to the existing certificate.If I need any money that has been sitting in the GTE certificate for a year or more, I'll be able to withdraw it with only a 6 month interest penalty so the money still earned 1.5% or more.

[pb4uski]

^^^ You make me sad. I wish that I had thought to do that for me and DW.

[John Galt III]

Quote:

Originally Posted by jazz4cash Yes....I'm savoring those certificates! I even went back and perused some of the threads where they were discussed. You started one of the first threads and I wrote the last post. There was quite a bit of drama surrounding the way they were offered. They tried to use the promo to encourage renewal of maturing CDs. Is it too much to hope for Penfed to offer a promotion to keep many of us from taking our money and running? Or, maybe Penfed is savoring the date they no longer have to pay 5%! Apparently it was a $240M offering. https://www.early-retirement.org/for...fer-51751.html

I added $100K to my PenFed 5 year cd's in 2019, so I have 3.5 % until 2024. Woohoo !