copyright1997reloaded
Thinks s/he gets paid by the post
Anyone know why they do this?
Because the value of that asset is marked to market. Just because you intend to hold to maturity doesn't mean its underlying value hasn't changed.
Anyone know why they do this?
I certainly agree with you. Which is why outside of buying those under par 4.7 to 6% bonds, I've been purchasing 1-3 months treasuries.Not that I question your judgement, I have no idea what the future holds and your situation is undoubtedly different from mine......
But, with inflation at 9+% why lock in money for five years knowing that in real terms it may lose a lot of value? Are people that certain that the Fed will get inflation under control?
I look at the recent Tech bill that started at 76 Billion to build more semiconductors in the USA and is now edging towards 280 Billion dollars.
How can the Fed reduce interest rates or even hold them still in the face of such profligate spending?
Am I missing something?
I've never bought a brokered CD (until this week) but I am planning to buy maybe 500k in CD's between now and the end of the year if rates go up like I expect. 4% will do for anything 24 months or less.
So as a test case, I bought a $10k CD to see how it worked at Schwab... Everything went as expected (very easy to do) until the CD posted on my account.
Then I found, I really don't like the way the accounting is done.
So if I buy a share of any stock or an ETF they post it as an asset in my brokerage account in separate categories. I would expect that stock or ETF to change values every day with the rise and fall of their market prices. The CD is posted in a separate category too (as expected) but it has a daily price change too . (Unexpected) So the CD shows my original purchase price (or cost basis) as 10k (as expected) but then, each day, they show the current value of the CD based on what it could be sold for on the secondary market rather than leave it at the original 10k cost basis. This is going to mess up my total account value tracking since I intended to hold my CD's until maturity and not sell on the secondary market.
So if I hold until maturity, I get my 10k back and all interest. So using the secondary market as a valuation of the CD really doesn't mean anything but makes it look like the CD is worth more or less than it really is and it changes daily.
Confused yet?
Anyone know why they do this?
How do other brokerage firms handle the accounting of brokered CD's"? Same as Schwab?
Anyone have an idea where the 5 year rates will top out at? I'm hoping more than 3.5%.
But, with inflation at 9+% why lock in money for five years knowing that in real terms it may lose a lot of value? Are people that certain that the Fed will get inflation under control?
Anyone have an idea where the 5 year rates will top out at? I'm hoping more than 3.5%.
I'm skeptical that they are FDIC insured. My understanding is that they basically make loans to people and businesses who have trouble getting conventional bank loans and then sell you a slice of that loan. Akin to junk bonds IMO.
What are you referring to?
I was searching for high-yield savings account and found LendingClub, which is offering 2.07%. I've never heard of them before. They're FDIC insured and look good based on their website. Anyone have any experience with them?
https://www.lendingclub.com/personal-banking/high-yield-savings
What are you proposing instead?
Good question.
My idea (not really a proposal) is to maintain an total market index equity position, and keeping at least 50% of my CD money in shorter term CD's (say two years max) just in case we get prolonged high inflation. FWIW, My current ladder extends out to 18 months. My crystal ball is cracked, I can't read minds, and my time machine is broken. So, I hedge my bets.
I think they must’ve added the FDIC feature. I thought they were only P2P lenders also.
If you belong to AARP, Marcus gives you an extra 0.10% on the savings account (so it's 1.60% at the moment). I suspect Marcus is just slow to get their interest rate up to that of the competition.I have to say I am a little irritated that Marcus did not raise their rate closer to the upper end of the competition (currently at 1.5% after yesterday's bump compared to now 2%+ from others). For the most part, these HYSAs are somewhat of a commodity and you would think they would run a little tighter relative to their yields offered to bring in new customers as well as keep the current ones. They are still 33% below the leaderboard as we sit today. It seems like in the past they were typically one of the leaders. None the less, I am too lazy to open multiple accounts and chase yield every time we have a new front runner.
So how does one figure out how much to invest at any one time?
If you belong to AARP, Marcus gives you an extra 0.10% on the savings account (so it's 1.60% at the moment). I suspect Marcus is just slow to get their interest rate up to that of the competition.
The 10 year treasury has dropped dramatically which is being interpreted as a signal that the market believes inflation has peaked.
Yeah, maybe the "market" believes this, but the market is not the economy. I believe it's too early to tell if inflation is heading down. And, as we all know, treasury rates are manipulated by the FED.
Just FYI, assuming you wanted to pull some money from GTE, you have access to all the interest earned so far penalty free. I called them a couple of months ago asking about withdrawal penalties and customer service was kind enough to let me know the interest amount I could pull penalty free if needed.So how does one figure out how much to invest at any one time? I've that problem with interest bearing accounts or stocks, or really any investment. If I have 100k and a bank offers a 3.5% 5 year CD do I stick the whole 100k in? Should I put in 10k and wait a year or a month, losing potential earnings, to see if the rate goes higher? If I nail the highest interest but only have a small portion of my investible cash in it are the tiny high interest earnings big enough to matter at all?
We have a substantial chunk in GTE and similar CDs paying about 3%, but locked up with hefty early withdrawal penalties until the end of 2024. Another amount equal to about 70% of the 3% accounts is busily getting shifted around to the 1.5% interest paying bank accounts du jour - woohoo! I'm getting 1.5% instead of 1.4% - But we could be getting twice that if I just stuck it in GTE - but what if 4.5% or 8% CDs come on the market in 6 months or a year?
How do you decide how much to invest of what you have available?
I agree the market is not the economy. I agree it’s too early to tell. That’s why I am laddering fixed income maturities. I certainly don’t know that treasury rates are manipulated by the Fed. Far from it.
In the U.S., The Federal Reserve (The Fed) exists to maintain a stable and growing economy through price stability and full employment – its two legislated mandates.
Historically, the Fed has done this by manipulating short-term interest rates, engaging in open market operations (OMO) and adjusting reserve requirements.
I dunno... if they can manipluate rates then that would mean that they can manipulate the entire short end of treasury yield curve and I'm skeptical of that... or at least if they do have that capability they are doing a damn lousy job of manipulating the yield curve because right now it is a mess.