obgyn65
Thinks s/he gets paid by the post
Over the last few months I have been busing a few 10-year CDs. The rates have been around 2.3% or 2.5%. However, last week I found one at 2.75%. Are the long term CD rates finally going up?
And if so, that begs the question as to whether locking a whole mess 'o money in at 2.75% for 10 years is a good idea if the reason why the rates are increasing is that we're on the verge of an inflationary phase.
There was one last week at Schwab @ 3%/10yr, it sold out almost as soon as it was listed. Higher rates are seen occasionally for promotions. If rates really shot up, break the CD, take the penalty and reinvest.
Or break the CDs when rates go up, and put half of the money in higher rate CDs, and the other half of the money in deferred annuities - while I am still in my 40s. My FIRE spreadsheet likes this approach very much.
I think if I had the income you have , I'd take the suze orman approach. Find a muni bond specialist, buy individual munis and let it ride.
Everyone should be aware that brokerage-sold CDs generally cannot be surrendered early. If you want out before maturity, you have to sell on the open market for whtever you can get and possibly take your lumps.
That's what I was told a few years back when I enquired about Vanguard's VBS available CD from some banks. Makes it sound like you are really buying a bond that reflects the forward expected interest rates.Everyone should be aware that brokerage-sold CDs generally cannot be surrendered early. If you want out before maturity, you have to sell on the open market for whtever you can get and possibly take your lumps.
I think if I had the income you have , I'd take the suze orman approach. Find a muni bond specialist, buy individual munis and let it ride.
I think if I had the income you have , I'd take the suze orman approach. Find a muni bond specialist, buy individual munis and let it ride.
Nobody is tying up my cash for 10 years for that kind of interest rate!
Disclaimer: My cash allocation is ~15% of NW.
I don't think anyone knows what the income is around here.
Wow, you'd be willing to lock up money for 10 years? TEN? You'd have to be able to bail anytime after 1 year without giving up any earned interest or I wouldn't do this. .
Yes. I can break any CD at any time and buy another higher rate CD or buy a deferred annuity since I am still in my 40s.
Are you absolutely sure about that? Did you read the fine print on this contract?
Yes. I have done it several times already. Edward Jones lets me sell them if I want to. I need to pay a small penalty though.