These are brokered cds so I need to reinvest the interest every 6 months from every cd.I will invest it in a vanguard fund either intermediate bond or a balanced fund such as Wellesley or a life strategy fund.
Since you asked for opinions:
1) We continue to be at near historic lows for interest rates, so it is a time when many people would choose to avoid long-term CDs. 7 years is long. But if I
were buying long-term CDs, I would definitely not buy brokered CDs. For almost zero additional cost one can buy an original issue CD, and these can be "broken" at any time just by paying the penalty. The penalties are almost inconsequential at today's low interest rates. If CD rates (and inflation) go up over the course of the next 7 years, I definitely would want the options to "pay" a 12 month interest penalty in order to get possibly much higher interest rates.
2) You have an intermediate time horizon--you don;t need any of this money for 7 years. The CD investments you are contemplating are not low-risk: They are very likely to return less than inflation, and so you are at high risk--of losing some of the buying power of this money. On the other hand and just for perspective, Since 1979 (when Wellington adopted it's current investment strategy) the fund has 33 five-year investment periods and in none of them did it lose money (in nominal dollars). The average annual return for the last 15 years (including some fairly "bad" ones) was 8.67%. On the 85 year history of the fund, the worst 3 year total return was -1.08%
And Wellesley (which has been around for 44 years) hasn't lost (nominal) money over any 5 year period since it started. The average annual return over the last 15 years was 8.27%.
Obviously, the next 7 years (or 14 years) might be nothing like the last 44. But if they are in any way similar, an investment solely in CDs at today's rates will leave an investor far behind where he would have been in many very conservative balanced funds. If your portfolio size is such that you will have enough for your minimal needs even if your nest egg loses up to a few percent every year in real value (to inflation), then long-term CD's might be a good strategy. On the other hand--you've said you plan to put the CD interest (which will not be much) into a balanced fund sometime down the road. If you put some (or all) of the principal in those funds today instead and let it grow over the intervening 7 years, you may find yourself well ahead--and are unlikely to find yourself behind (if history is a guide).
Sorry,
none of that was what you asked. . .