S/T CD's in a Retirement Account

[jazz4cash]

Quote:

Originally Posted by IMATERP I ended up laddering (annually) over the next eight years at a little over 3.25%. Interest will continue to roll into the Fidelity Four in One Fund and annually I'll decide weather to roll Principal over into another Bond/CD or into VWINX. I realize that I can get away with being ultra-conservative as I have a pension that starts in 34 months. At this stage, preservation of Capital RULES. I

That is a sweet deal on an 8 yr ladder! Mind sharing the details?

[njhowie]

Quote:

Originally Posted by jazz4cash That is a sweet deal on an 8 yr ladder! Mind sharing the details?

It's not an 8 year CD ladder...it's a combination bond/CD ladder. He implies this when he says "...I'll decide weather to roll Principal over into another Bond/CD...".

I'm looking at Fidelity's new issue CDs right now, and the earliest maturity you can get a non-callable CD yielding 3.25% is at 12 years. There is one 3.35% at 10 years, but is callable every 6 months beginning after the first year. It is certainly not possible for an 8-year CD ladder to yield 3.25% at this time. For 8-year maturity, highest rate at Fidelity today is 3.05%. Again, not possible for a8 year CD ladder to yield 3.25% today.

He's juicing the yield with bonds, and likely they are lower quality at the 5-8 year mark to get the yields necessary to pull the ladder up to 3.25% overall yield.

[jazz4cash]

Quote:

Originally Posted by njhowie It's not an 8 year CD ladder...it's a combination bond/CD ladder. He implies this when he says "...I'll decide weather to roll Principal over into another Bond/CD...". I'm looking at Fidelity's new issue CDs right now, and the earliest maturity you can get a non-callable CD yielding 3.25% is at 12 years. There is one 3.35% at 10 years, but is callable every 6 months beginning after the first year. It is certainly not possible for an 8-year CD ladder to yield 3.25% at this time. For 8-year maturity, highest rate at Fidelity today is 3.05%. Again, not possible for a8 year CD ladder to yield 3.25% today. He's juicing the yield with bonds, and likely they are lower quality at the 5-8 year mark to get the yields necessary to pull the ladder up to 3.25% overall yield.

OK, Thanks for the clarification. I was thinking along the lines of your statement above in bold type.

[IMATERP]

Quote:

Originally Posted by njhowie It's not an 8 year CD ladder...it's a combination bond/CD ladder. He implies this when he says "...I'll decide weather to roll Principal over into another Bond/CD...". I'm looking at Fidelity's new issue CDs right now, and the earliest maturity you can get a non-callable CD yielding 3.25% is at 12 years. There is one 3.35% at 10 years, but is callable every 6 months beginning after the first year. It is certainly not possible for an 8-year CD ladder to yield 3.25% at this time. For 8-year maturity, highest rate at Fidelity today is 3.05%. Again, not possible for a8 year CD ladder to yield 3.25% today. He's juicing the yield with bonds, and likely they are lower quality at the 5-8 year mark to get the yields necessary to pull the ladder up to 3.25% overall yield.

Howie is absolutely correct. I have two bonds and 5 CDs in this mix. A GE Capital bond which I have had for many years is due in 2020 and I just picked up the 5 year Ford bonds at 3.7%. For myself, I generally hold all of my CD's and Bonds to maturity.

By the way, I did almost get burned once. During the 2008/2009 debacle I had 70 or 80k in GM Smart Notes. Thankfully, in the Govt's eyes GM was too big to fail. That is the new underlying premium which exists nowadays - the too big to fail premium.

[Lsbcal]

I've been thinking of buying some Treasuries in a retirement account. When I look at VFIRX (Vanguard short term Treasury fund) it has a SEC yield of 1.93% and a duration of 2.4 years.

But a better alternative seems to be a direct purchase of maybe 1 year Treasuries. Today they are at 2.08%. If I buy these and rates move up I don't have many months to wait or I could even sell in a very liquid market and buy something else. What do you think?

Here is what you see in the Vanguard screen summary (at VG you can click on the links to see the individual securities):

[Chuckanut]

I noticed that CDs I bought through Schwab go up and down a bit in value. Is this normal?

[Corporateburnout]

Quote:

Originally Posted by Chuckanut I noticed that CDs I bought through Schwab go up and down a bit in value. Is this normal?

Yes. They do before maturity but if you hold until maturity you get face value.

[IMATERP]

Quote:

Originally Posted by Chuckanut I noticed that CDs I bought through Schwab go up and down a bit in value. Is this normal?

Not to worry, they will mature at Par. On a quarterly basis I take the interest and dollar cost average in one of my core funds.

[Chuckanut]

Quote:

Originally Posted by IMATERP Not to worry, they will mature at Par. On a quarterly basis I take the interest and dollar cost average in one of my core funds.

Of course, now that I think about it, since they can be bought and sold in a market place, they would have to vary somewhat. Duh... Foolish me....

[rpguy4]

https://thefinancebuff.com/treasury-...ey-market.html

[Henry Lili]

Just bought a 3 month ladder in my Fidelity IRA. 1.55 average APY.

[njhowie]

Quote:

Originally Posted by Henry Lili Just bought a 3 month ladder in my Fidelity IRA. 1.55 average APY.

In my IRA I no longer buy any CDs yielding below 2.5%.

The high majority of my 1.xx% CDs mature the remainder of this year. As they mature, I'm rolling them out to 2-4 year CDs at 2.55%-3.0% ... which will likely continue climbing.

[jazz4cash]

Quote:

Originally Posted by njhowie In my IRA I no longer buy any CDs yielding below 2.5%. The high majority of my 1.xx% CDs mature the remainder of this year. As they mature, I'm rolling them out to 2-4 year CDs at 2.55%-3.0% ... which will likely continue climbing.

Sounds Great! Sign me up. Who's got 2.55 on a 2yr CD?

[njhowie]

Quote:

Originally Posted by jazz4cash Sounds Great! Sign me up. Who's got 2.55 on a 2yr CD?

Both Wells Fargo and Morgan Stanley through your brokerage account.

[Trooper]

For those of you that own CDs in a traditional IRA, do you pull out the interest at maturity for spending purposes, assuming you're over age 59 1/2? Thinking of replacing some of my VBTLX with CDs, given rates seem to be on the rise.

[LOL!]

Quote:

Originally Posted by Henry Lili Just bought a 3 month ladder in my Fidelity IRA. 1.55 average APY.

1.55% doesn't sound too good for 3-month ladder. Even Vanguard Prime Money Market has a 1.63% yield.

What is the yield on Fidelity's best money market fund today?

[Chuckanut]

Quote:

Originally Posted by jazz4cash Sounds Great! Sign me up. Who's got 2.55 on a 2yr CD?

Some CU in one of the Carolinas was offering 3% in 39 month CDs a few days ago.

Quote:

Coastal Credit Union (NC) Debuts 39-Month CD, 3.00% APY

https://www.depositaccounts.com/bank...-union/offers/

However, with Fed seeming to want to increase rates more this year, I am not sure now is a good time to out much farther than 12 months.

[Trooper]

Quote:

Originally Posted by Chuckanut Some CU in one of the Carolinas was offering 3% in 39 month CDs a few days ago.

Yes, but don't you need to live and/or work in NC to join the CU and purchase the CD?

[Huston55]

Quote:

Originally Posted by Chuckanut Quote: Originally Posted by jazz4cash Sounds Great! Sign me up. Who's got 2.55 on a 2yr CD? Some CU in one of the Carolinas was offering 3% in 39 month CDs a few days ago. https://www.depositaccounts.com/bank...-union/offers/ However, with Fed seeming to want to increase rates more this year, I am not sure now is a good time to out much farther than 12 months.

Fido also currently has 2yr CDs @ 2.55%.

[Chuckanut]

Quote:

Originally Posted by Trooper Yes, but don't you need to live and/or work in NC to join the CU and purchase the CD?

Yes. Hopefully, others will make a similar move to higher rates for shorter terms.