CD and MMF thoughts?

[stephenson]

Hi All,

I'm a somewhat less than process based investor ... I've been buying CDs (50K) since the rates moved above 5%. Nothing like a pattern, given the 5% money market rates (most of my cash is now in SPAXX).

I have been doing the easiest thing - buying from Fidelity. Have a few with JP Morgan Chase (without call protection) as they usually are highest yielding in the one year maturity.

Is there anything wrong with simply buying more of these from JPM Chase? I know I am very small potatoes

Always looking for better ideas - as long as they don't require a lot of w*rk

 

[pb4uski]

Probably not, but I would stay within the FDIC limits since there are so many different brokered CDs out there.

 

[jazz4cash]

My simple process is a ladder that goes out about 10 yrs but mostly concentrated in 5 yr maturities or less. You may wish to consider locking in some of the relatively high rates available right now for more than 1 year.

 

[pletal]

My simple process is a ladder that goes out about 10 yrs but mostly concentrated in 5 yr maturities or less. You may wish to consider locking in some of the relatively high rates available right now for more than 1 year.

I agree, go out as long as you can. Rates may go up a little, but could go down a lot. I also have CD and MYGA ladder going out 10 years. Not the most exciting was to invest, but keeps the stress level down

 

[Chuckanut]

I just had a 2.9% CD I had bought before starting my first ladder mature. So, yes, I could have done better. But, I also have CD's in the 5%+ area, non callable in the 3, 4 and 5 year steps of my ladder. it is what it is.

Locking in some higher rates on longer term CD's is not a bad idea. Look at the 10 Year Treasury rate. It nearly breached 5% for a short time a few weeks ago and is now down to about 4.5%. Those who waited for it to go even a bit higher lost out. And the drop in the yield happened quickly within a week or two.

There is no law that says you have to invest it all once. I sometimes split the difference 50/50 at times. But, mostly when a CD expires, I just invest it at the current rate for whatever maturity I am looking for.

 

[flyingaway]

I am in the same boat, have been in a Fidelity money market fund for quite some time (just lazy in retirement), I am now considering to build a CD ladder or two. Not want to make a lot of difference, just want to have some certainty for the next few years.

 

[pb4uski]

I think that makes sense From what I'm reading it sounds like rates are close to plateauing and then may stay flat for a while and then decline so I think it's a good time to lengthen maturities.

I helped a friend put 2/3rds of his IRA in a 5-year, 10-rung brokered CD ladder earlier this week with a 5.38% weighted average yield replacing a MM fund yielding 5.25%.

 

[Chuckanut]

CD/bond Ladder weight average yield

I see a few people here who calculate a weighted average yield for the CD/bond ladders.

How is that done? Is there an app or site that will do it if we enter our investments? Or do people use Excel? Or, something else?

Oh, what do you do if some of your bonds are TIPS?