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Old 03-18-2023, 01:32 PM   #3521
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You are worried about maintaining your money in the MM as opposed to a bank account? I am leaving mine in the MM so ....
Only I can take money from my bank account...Not so for MM funds..
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Old 03-18-2023, 01:38 PM   #3522
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What banks? Did you research them? Schwab has several short term C.D.'s from banks I've never heard of..I would hope that Schwab would only sell from sound banks..As far as FDIC goes wouldn't the guarantee only apply to Schwab? I don't know if Schwab has a legal obligation to make me whole should the insurance pay off on my C.D.
my understanding is that all CDs are insured so it doesnt matter the bank/credit union. but there is a discussion further back in this thread on how to look up the banks and their ratings.
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Old 03-18-2023, 01:41 PM   #3523
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What banks? Did you research them? Schwab has several short term C.D.'s from banks I've never heard of..I would hope that Schwab would only sell from sound banks..As far as FDIC goes wouldn't the guarantee only apply to Schwab? I don't know if Schwab has a legal obligation to make me whole should the insurance pay off on my C.D.
No, Schwab does not own the CD, you do.
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Old 03-18-2023, 01:41 PM   #3524
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What banks? Did you research them? Schwab has several short term C.D.'s from banks I've never heard of..I would hope that Schwab would only sell from sound banks..As far as FDIC goes wouldn't the guarantee only apply to Schwab? I don't know if Schwab has a legal obligation to make me whole should the insurance pay off on my C.D.
Per Schwab's website:
All CDs in CD OneSource are offered by FDIC-insured banks. The Federal Deposit Insurance Corporation insures deposits at FDIC-insured banks. The basic insurance amount is $250,0001 per depositor per insured bank. Each CD you purchase from a different institution is FDIC-insured in aggregate based on ownership type at that bank. For example, if you own two CDs, $250,000 from one bank and $250,000 from a second bank, and you have no other deposits at those banks, you’re covered for $500,000.

I do not research banks as long as my CD is FDIC insured and I stay within the limits. And yes I bought some CDs from some totally unknown bank to me. Not a problem.

So do you believe your cash sitting in a brokerage or bank account is safer than a FDIC insured CD while you're earning maybe 0.45%?
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Old 03-18-2023, 01:45 PM   #3525
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Prices are expected to rise. This is the normal case. The issue is the rate of rise. That the rate of rise is reduced is exactly the effect the Fed desires and what the economy needs.
Exactly. When we talk about inflation, what we really mean is the rate of inflation. There is virtually always inflation. Prices rise over time. The issue is how quickly they rise.


That annualized rate has been dropping for the past 8 months. That's a good thing and is exactly what the Fed actions are supposed to accomplish, and it's working. None of that means things will get cheaper; it just means they won't get more expensive as quickly. I'd much rather see a 6% inflation rate than a 9% rate. Of course, 3% would be even better but we're not there yet.
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Old 03-18-2023, 01:46 PM   #3526
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So do you believe your cash sitting in a brokerage or bank account is safer than a FDIC insured CD while you're earning maybe 0.45%?
No. I plan to buy short term C.D.'s just like you.
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Old 03-18-2023, 01:47 PM   #3527
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People are not looking at inflation from a savers point of view who does not invest in the stock market casino. One year ago you could earn about $250 a year for every $100K invested in CDs. This past week you could lock income of $5000 per year for the next 4-5 years for every $100K invested. So wouldn't that $4750 difference for every $100K invested compensate for the effects of inflation?
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Old 03-18-2023, 01:52 PM   #3528
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No. I plan to buy short term C.D.'s just like you.
Good plan. You can certainly buy some FDIC CDs from "sound banks" - you just might not make as much. Honestly were not talking about huge basis points differences anyway but I'm trying to safely maximize my return. So if I make a few extra basis points buying from a FDIC insured "no name" bank then so be it.
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Old 03-18-2023, 01:54 PM   #3529
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To be even safer dont buy a 250K CD. The FDIC is not responsible for the earned interest
that might be in the CD and compounding,which would push it over 250K.
Yes,No,Maybe So.
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Old 03-18-2023, 01:56 PM   #3530
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On another note, I meet with friends almost daily at a neighborhood Burger King in the morning. BK always has poster size paper (4' x 6') product advertising on the large windows of the store. The new posters have no prices for the advertised food items like the old ones did.
Soon they will be changing from posting actual prices at the drive-up ordering station to "market price!"
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Old 03-18-2023, 01:59 PM   #3531
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Soon they will be changing from posting actual prices at the drive-up ordering station to "market price!"


Drive thru order: I'll take a whopper.
Response: That will be $6.99
Payment window: It now is $7.49. Sorry.
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Old 03-18-2023, 01:59 PM   #3532
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We are going to be exiting it soon
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Old 03-18-2023, 02:05 PM   #3533
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People are not looking at inflation from a savers point of view who does not invest in the stock market casino. One year ago you could earn about $250 a year for every $100K invested in CDs. This past week you could lock income of $5000 per year for the next 4-5 years for every $100K invested. So wouldn't that $4750 difference for every $100K invested compensate for the effects of inflation?
The answer to that totally depends on what the "effects of inflation" are during the time period specified.
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We are entering a "Golden Period" for fixed income investing
Old 03-18-2023, 02:12 PM   #3534
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We are entering a "Golden Period" for fixed income investing

We’re wandering off topic here. So here’s a nudge back. I will mention that the higher CD rates MAY give us a positive real return on our savings for the first time in years. Good news if it works out that way. Of course, that’s before taxes, if any. After taxes YMMV.
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Old 03-18-2023, 02:15 PM   #3535
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The answer to that totally depends on what the "effects of inflation" are during the time period specified.
Consider also that many have no mortgages or have locked in their mortgage at ultra low rates for the next 15-30 years. So that component of the housing costs are fixed.
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Old 03-18-2023, 02:29 PM   #3536
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We’re wandering off topic here. So here’s a nudge back. I will mention that the higher CD rates MAY give us a positive real return on our savings for the first time in years. Good news if it works out that way. Of course, that’s before taxes, if any. After taxes YMMV.
Good point. The current inflation rate is 6% and falling. I bought a CD the other day for 5.35% for 18 months. If inflation continues to trend down, it won’t be long before the CD rate comes out ahead.
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Old 03-18-2023, 02:30 PM   #3537
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I think it's too much hysteria with Schwab and the stock market casino.

"Schwab hasn’t been hit by people afraid that Schwab is going to go out of business, but they’ve been hit by [customers] going to higher rates...”

Cash sorting appears to be the issue. People are moving their cash balances to higher yielding products. This is forcing Schwab to borrow money at higher rates to cover cash demands in excess of the securities invested with that cash at longer durations. This will impact earnings.

https://www.ft.com/content/9623dde7-...7-76c6d95a8685
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Old 03-18-2023, 02:45 PM   #3538
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Consider also that many have no mortgages or have locked in their mortgage at ultra low rates for the next 15-30 years. So that component of the housing costs are fixed.
Actually, even if you have a high rate fixed mortgage, that component of your housing cost is fixed.
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Old 03-18-2023, 03:24 PM   #3539
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People are moving their cash balances to higher yielding products. This is forcing Schwab to borrow money at higher rates to cover cash demands in excess of the securities invested with that cash at longer durations.

https://www.ft.com/content/9623dde7-...7-76c6d95a8685
Can't read the article but that seems like no small problem to me..
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Old 03-18-2023, 03:33 PM   #3540
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^^^^^
Click on the link in the post. Then when it comes up, cut and past the URL in another window and you should be able to read the article. Works for me.
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