watchman3135
Recycles dryer sheets
- Joined
- Jun 28, 2017
- Messages
- 112
My 4 yr. 250k 3.25% BMO bank CD came due a few days ago and I renewed it with their current 59 mo. 4.50% apy (4.402%) knowing I have the allotted 10 day grace period if I decide to do something else. This is part of my "fixed" asset allocation and like before it will pay monthly but about $240 dollars more at around $915 which like before I'll add to my monthly spending. I have traditional Vanguard IRA's as well as non-tax sheltered brokerage with SCHD, VYM as well as JEPI and a few other monthly payers. Since I have no pension and retired at 53 now 57 I use all these for monthly income and so far I'm getting around $2,700 combined per month which works well since outside of utility bills and groceries we have no other debt outside of a 3 yr. remaining mortgage, and my wife is not retiring for a few more years. None of this included my wife's savings. I pull $250 from that $2,700 per month for year-end taxes so that's around $2,450 net per month so far. Not balling by any means. I'll also be 59.5 in 2025 and the dividends alone from my Wellington, Wellesley and Total Stock market IRA's will pay around 20k additional per year. I also plan to wait to full social security age of 67.
My question is I see many current CD offers 5% and over but for less than two year durations so I'm guessing the banks believe interest rates will start coming down by then. Since I use that 250k CD to generate monthly income and lean like the banks that the interest rates will drop in a few years I don't see an advantage to a 2 year 5% or higher CD since I'm using this money as income. I'd rather not be in the situation where in 2 years I am forced to renew at a substantially lower rate. Fidelity offers higher brokered CD's however many show payment at maturity which won't work for me as I need the supplemental monthly income. I am not an annuity fan with this money.
The funny thing is if someone had offered me a 4.5% CD two years ago I would a jumped quickly for it and if you believe in Vanguard's 10 year earnings projections, 4.5% for a worry-free FDIC return sounds pretty sweet. Any suggestions if I am doing it correctly would be appreciated. Thanks.
My question is I see many current CD offers 5% and over but for less than two year durations so I'm guessing the banks believe interest rates will start coming down by then. Since I use that 250k CD to generate monthly income and lean like the banks that the interest rates will drop in a few years I don't see an advantage to a 2 year 5% or higher CD since I'm using this money as income. I'd rather not be in the situation where in 2 years I am forced to renew at a substantially lower rate. Fidelity offers higher brokered CD's however many show payment at maturity which won't work for me as I need the supplemental monthly income. I am not an annuity fan with this money.
The funny thing is if someone had offered me a 4.5% CD two years ago I would a jumped quickly for it and if you believe in Vanguard's 10 year earnings projections, 4.5% for a worry-free FDIC return sounds pretty sweet. Any suggestions if I am doing it correctly would be appreciated. Thanks.
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