CD Ladders

[oliverdickens]

I am sure this has been asked and answered before, but current conditions begs the question again.

Assuming FDIC banks are the only true safe investment, what is everyone doing as CD's reach maturity? How far out are you going to keep CD ladder intact, income stream coming in to prevent taking more cash out of savings, and position for hopefully return to better CD rates.

I am thinking no more than 18 months to 2 years even though rates stink but what is the alternative?

I see with all the government lending going on, that we could return to the 1980's when inflation was very high, but than again, CD rates were as well.

Thoughts?

Thanks

 

[OAG]

The few I have maturing this year will be put right back into CD's albeit shorter terms at the best rates I can find (like 6 months at 3% APY or 18 months at 4.35% APY - at Navy FCU). I also have a HELOC I could be paying down but as long as the rate remains at 2.75% interest that is not a priority.

 

[Ed_The_Gypsy]

I am trying for a ladder of 5-year CDs. Each year, I buy one 5-year CD for a certain fraction of my total pot. In 5 years, I will have one turning over each year. I don't expect to draw on my pot for at least 5 years. That may change.

 

[Khan]

I have a ladder of 5 year CDs. I 'harvested' the first one Dec '08.

 

[jug]

The few I have maturing this year will be put right back into CD's albeit shorter terms at the best rates I can find (like 6 months at 3% APY or 18 months at 4.35% APY - at Navy FCU). I also have a HELOC I could be paying down but as long as the rate remains at 2.75% interest that is not a priority.

I also ladder CD's. I have one due in over 2 years, I believe at that time rates will creep a bit up. I think your plan is good. I would lean towards the 4.35 if that is good enough for you. Maybe go a little further out if I can.

Almost 3 years ago, I locked in some at 5.6, going 5-7 years out. The banker tried to talk me out of it. He thought I was nuts going so far out and missing on other opportunities such as bonds and equities. I decided that I would rather be safe than make an extra few more points in the market. At the time the market to me was a head game, up and down, should I? Shouldn't I? Don't like head games, rather take less and sleep at nights, head is messed up enough

I figured it would cover my needs, since it supplements my pension and SS doesnt kick in until 6 more years. So 4.35 doesn't look bad to me, yes the market may make a dramatic comeback, despite what is said today, but I prefer to sleep, don't need the rollar coaster anymore.

Jug

You'll never get the best rate, but get one that you can live with.