Best CD, MM Rates & Bank Special Deals Thread 2022 - Please post updates here

[aja8888]

I was thinking I posted my question in the CD thread .. this link talks about bonds. Maybe its the same thing. VG makes it very simple its either callable or not. On fido it just says Call Protection and its either yes or no.

When i asked Google about "Call Protection on CD" I didnt see that term used and thought I would let the experts help me out.

Sorry, I thought you were asking about bonds.

 

[11522914]

Quick question.

I want to have spare cash in my Schwab accounts earning more than their .25% interest.

But I want it to be available quickly if needed to buy something.

I haven't bought a MM or mutual fund in a long time. If I buy, for instance SWVXX, it gets filled at the end of the day and starts earning interest the next day. If I choose to sell it by end of the day, the funds will be available to trade the next business day. And if I held it for 10 days I would earn interest for those 10 days.

Is my understanding correct?

 

[lawman]

Quick question.

I want to have spare cash in my Schwab accounts earning more than their .25% interest.

But I want it to be available quickly if needed to buy something.

I haven't bought a MM or mutual fund in a long time. If I buy, for instance SWVXX, it gets filled at the end of the day and starts earning interest the next day. If I choose to sell it by end of the day, the funds will be available to trade the next business day. And if I held it for 10 days I would earn interest for those 10 days.

Is my understanding correct?

I move a lot of money through SWVXX and as I understand you are correct.

 

[Dash man]

I move a lot of money through SWVXX and as I understand you are correct.

+1
It’s been my experience.

 

[11522914]

I move a lot of money through SWVXX and as I understand you are correct.

Thanks

 

[John Galt III]

I was on hold with Vanguard fixed income forever today. When I got through, the woman was apologetic and said that they have been slammed and are hiring a bunch of new people to help. She was very helpful. I find that the Vanguard folks almost always are. So, try calling them on Monday when you've got something to do while on hold.

BTW, if you've got a brokerage account, you should have a settlement fund set up for you already, even if it shows zero dollars. That settlement fund is VMFXX. On the right hand side of where that account is, there should be an option of "transfer money" with three dots. If you click on the dots, you should be able to transfer from your checking account to your settlement account. That's how I do it on a monthly basis.

If you don't already have your checking account set up for transfers, click on the three dots by the "More account information" on the left hand side of your settlement account and you'll see an option to add a new bank account.

I agree that their site is not very intuitive.

OK, I found the three dots 'more acct info' and clicked, but it sent me into the same netherworld as before, and will only let me select my IRA, and not VMFXX when adding a bank. Why they are mentioning my IRA is beyond me. I just want to link a bank account. Why can't they make sense?

Thanks for your help.

I will try the chat function Monday when it is back up, lol.

 

[MarieIG]

OK, I found the three dots 'more acct info' and clicked, but it sent me into the same netherworld as before, and will only let me select my IRA, and not VMFXX when adding a bank. Why they are mentioning my IRA is beyond me. I just want to link a bank account. Why can't they make sense?

Thanks for your help.

I will try the chat function Monday when it is back up, lol.

The VMFXX would either be within the IRA - or within a non-retirement brokerage account, not hanging out there by itself. So, a fund within an account.

I find the Vanguard site has a learning curve. The IRA, and the non-IRA brokerage both have a choice of investments (think sub accounts). I believe when I linked to a bank account, it went to the settlement account within the IRA or within the non-IRA brokerage. The sweep account is the equivalent to the VMFXX and earns the same rate. Once the money comes in you can transfer it from the settlement account to VMFXX. You should then be able to set up transfers directly to VMFXX, or any other fund, but I don't recall if you need to start with the settlement account.

You may want to leave a message for someone to call you back so that they can talk you through it while you are actually commencing the linking process.There is a tab to link bank accounts. After you begin the process you will get tiny deposits into the account and you will need to confirm the amount before the accounts are linked.

 

[NomDeER]

Once the money comes in you can transfer it from the settlement account to VMFXX. You should then be able to set up transfers directly to VMFXX, or any other fund, but I don't recall if you need to start with the settlement account.

The settlement fund is a VMFXX fund. At least, that is the case for both my IRA and non-IRA accounts. I no longer use the VMFXX fund account I had before I got the brokerage settlement fund because I can do more with my settlement fund.

John Galt III, I definitely recommend calling Vanguard while you are in front of your computer. The advisors are very good at explaining things and walking you through the process. You may want to take notes as they explain it so that you can refer back to them until you are comfortable with the site.

 

[MarieIG]

The settlement account is a VMFXX account. At least, that is the case for both my IRA and non-IRA accounts. I no longer use the VMFXX account I had because I can do more with my settlement account.

John Galt III, I definitely recommend calling Vanguard while you are in front of your computer. The advisors are very good at explaining things and walking you through the process. You may want to take notes as they explain it so that you can refer back to them until you are comfortable with the site.

Yes. This is one of the things that I like best about Vanguard. You are not loosing interest by having money in the settlement account and it is always available for trades.

 

[NomDeER]

The yield curve is the direction of rates from the lowest instrument to the highest. For Treasuries, 1 month T bill, then the 2 month, then the 3 month , 6 month, 1 year, 2 year note, 5 year note, 10 year note and the 30 year bond. Each of those would typically have a higher yield as you go out in duration so a 2 month should have a higher yield than a 1 month, a 2 year should have a lower yield than a 5 year. But what we have today is the opposite, shorter duration instruments have higher yields than longer, that is not good, that is an inverted yield curve. You should expect to get a higher rate for a longer dated instrument as you are investing longer and need to be compensated for that longer time where rates could rise. Today the the yield curve is not steepening and it is inverted.

As to locking in rates now vs months from now, that would be something someone would say when they think the shorter rates will drop so they want to "lock in" the higher rate of the longer dated instrument. Bottom line is, no one knows what will happen. I think the rates will rise for the shorter maturity bills over the next few months so I am not buying anything longer than 3 month T bills but I could be wrong. Maybe next week the shorter term rates will drop making those longer rates of today look better.

Thanks. I think what is confusing me is the various potential parts or causes of a steeper inverted yield curve. I assume that it is steepening at least partly because the Treasury keeps increasing rates and is expected to do so at least two or three more times in the next four months.

But, a lot of people don't expect the rates to go higher after that and many expect it to come down fairly soon. Will the increase in the next few months just affect the short terms Treasuries and lead to higher short term interest rates (and a steepening because of that)? Or, will the expectation that Fed rates are going to come down mean that interest rates on mid-term and long-term bonds will come down in the next few months? This makes me wonder if, for example, I want some 5-year bonds in my IRA, I should be buying them now.

 

[lawman]

Thanks. I think what is confusing me is the various potential parts or causes of a steeper inverted yield curve. I assume that it is steepening at least partly because the Treasury keeps increasing rates and is expected to do so at least two or three more times in the next four months.

But, a lot of people don't expect the rates to go higher after that and many expect it to come down fairly soon. Will the increase in the next few months just affect the short terms Treasuries and lead to higher short term interest rates (and a steepening because of that)? Or, will the expectation that Fed rates are going to come down mean that interest rates on mid-term and long-term bonds will come down in the next few months? This makes me wonder if, for example, I want some 5-year bonds in my IRA, I should be buying them now.

No one knows but Schwab is advising clients to lock in some longer rates now.

 

[NomDeER]

No one knows but Schwab is advising clients to lock in some longer rates now.

Ah. Okay. By longer rates, does that mean three or four years? Five years? Seven?

 

[Car-Guy]

No one knows but Schwab is advising clients to lock in some longer rates now.

Personally, I think it's a little early to lock in longer (years) term/rates now... I expect (hope) they will continue to rise for another 6mos to a year. Maybe even longer... Anyway, as I've said before, I've bought a lot of CD's the past month and most of those will mature in ~6 mos but some I've got go out to 18mos. As those mature I'll probably buy more at longer terms and hopefully at higher rates. Who knows for sure, but that's my play. Sure beats what we've been able to get the last ~decade. Of course even that doesn't come close to keeping up with current inflation.

 

[lawman]

Ah. Okay. By longer rates, does that mean three or four years? Five years? Seven?

They did not get specific but I take that advice with a grain of salt.

 

[aja8888]

No one knows but Schwab is advising clients to lock in some longer rates now.

Schwab just wants clients to keep buying and not move your money to another brand!

 

[audreyh1]

No one knows but Schwab is advising clients to lock in some longer rates now.

Ah. Okay. By longer rates, does that mean three or four years? Five years? Seven?

Schwab’s recent analysis on Fed interest rates and inflation here
https://www.schwab.com/learn/story/fomc-meeting

My instincts are that there will be plenty of time in 2023 to lock in longer rates certainly in CDs, but what do I know?

 

[Car-Guy]

My instincts are that there will be plenty of time in 2023 to lock in longer rates certainly in CDs, but what do I know?

More than most I think!

 

[lawman]

Schwab’s recent analysis on Fed interest rates and inflation here
https://www.schwab.com/learn/story/fomc-meeting

My instincts are that there will be plenty of time in 2023 to lock in longer rates certainly in CDs, but what do I know?

I'm just not sure what 3 - 7 yr. rates will be next year..The inverted yield curve
could mean a 4 year 4% treasury now could likely be a 4 year 3% treasury next year..

 

[audreyh1]

Impossible to know.

Sometimes the curve remains inverted, but moves up in unison as shorter rates rise.

Smart Money once had an animated graph that showed how the interest rate curve changed over many decades.

 

[ShokWaveRider]

Schwab MM funds are looking up every day.

SWVXX - 2.87%
SNAXX - 3.02%

 

[audreyh1]

Schwab MM funds are looking up every day.

SWVXX - 2.87%
SNAXX - 3.02%

These usually catch up close to the new Fed Funds rate (currently 3.25%) within a month.

FDZXX is 2.94%

 

[Car-Guy]

Schwab MM funds are looking up every day.

SWVXX - 2.87%
SNAXX - 3.02%

Unlike CD's, it's pretty easy to see/find the fees Schwab gets for these funds. I may park another 250 to 500k in SWVXX for a short while... Beats just sitting there collecting dust.

 

[Another Reader]

These usually catch up close to the new Fed Funds rate (currently 3.25%) within a month.

FDZXX is 2.94%

Thanks, Audrey, for pointing this fund out. I moved some money into it when you first mentioned it. It's a bit more risky than a treasury only fund, but I can live with that for now.

 

[Momcpa]

Help me on this........I follow local banks and credit unions for their C.D.rates. But I see that Edward Jones and Vanguard have C.D. rates substantially higher. (I have a couple Vanguard accts.) How do I know how much these 2 take as "commission (or whatever) off the top of their good rates Is it a set percentage, or is it based on my total investments with them? Thanks for educating me !!!

 

[copyright1997reloaded]

Unlike CD's, it's pretty easy to see/find the fees Schwab gets for these funds. I may park another 250 to 500k in SWVXX for a short while... Beats just sitting there collecting dust.

Given 4-week T-Bills are around 2.8% YTM, I'm also tempted to just use SWVXX for the very short end of the ladder.