Help with CDs...very new at this...

[CindyBlue]

I went to the local Edward Jones office at the recommendation of two different tax preparers (the one we were using and the one I am moving to for next year (for a variety of reasons)) to get advice about moving the (large amount) money in my bank accounts into cds. She showed me a variety of CDs, and after a conversation with me that (about whether or not I'd need the money and for how long and how much of an "emergency fund" of cash I wanted to keep in the bank, etc.), she picked three CDs, one for 6 months and two for one year each. She said she gets paid by them in some way, that it doesn't cost me. Is this normal operating procedure? Is this how it works if I just went to, say, my local credit union and bought a CD myself? Sorry to be so clueless about all this...

 

[Car-Guy]

Sounds like brokered CD's. They (the broker) skim a little from the CD's they "broker" for the banks. Just be sure you are getting CD's from FDIC banks (most are) and no more than 250k from any one bank.

For such short terms (6mo and 1yr) you might want to consider a MM fund from a broker (like Schwab) They are paying more than CD's at this time and the money is available in one or two days without penalty. But, they are not FDIC protected and rates change frequently.

 

[Surewhitey]

Maybe share more info too. 1 yr CD's should be ~4.15%...My mom's credit union was only giving 3% (thieves). If you are getting lower rates, you are technically "paying" for their services.

If you don't need the money you may want to get a 1-2-3 yr ladder (or longer).

 

[Earl E Retyre]

You should compare the rates of these CDs vs what you can get at Vanguard or Fidelity. Or post the rates here and we can tell you if it is a good deal.

 

[CindyBlue]

Thank you, everyone...so I'm thinking from what you said that this is "normal" procedure, right?
The places and rates are Goldman Sachs, 1 year, 4.15%; Morgan Stanley, one year, 4.15%; and Santander Bank, 6 months, 4.35%

 

[QG67PK00]

You should also consider Treasury bills which are available at most large brokerages like Fidelity, Schwab, etc. At the last auction 6 month t-bill was yielding close to 4.4% and 1 year t-bill was at 4.3%.

 

[mrfeh]

I went to the local Edward Jones office at the recommendation of two different tax preparers (the one we were using and the one I am moving to for next year (for a variety of reasons)) to get advice about moving the (large amount) money in my bank accounts into cds. She showed me a variety of CDs, and after a conversation with me that (about whether or not I'd need the money and for how long and how much of an "emergency fund" of cash I wanted to keep in the bank, etc.), she picked three CDs, one for 6 months and two for one year each. She said she gets paid by them in some way, that it doesn't cost me. Is this normal operating procedure? Is this how it works if I just went to, say, my local credit union and bought a CD myself? Sorry to be so clueless about all this...

You don't need EJ to buy CDs.

I suggest you end your relationship with them ASAP. They are not well regarded.

 

[Earl E Retyre]

Thank you, everyone...so I'm thinking from what you said that this is "normal" procedure, right?
The places and rates are Goldman Sachs, 1 year, 4.15%; Morgan Stanley, one year, 4.15%; and Santander Bank, 6 months, 4.35%

Assuming they are not callable, then these rates seem the same as what Fidelity offers.

 

[Car-Guy]

Thank you, everyone...so I'm thinking from what you said that this is "normal" procedure, right?
The places and rates are Goldman Sachs, 1 year, 4.15%; Morgan Stanley, one year, 4.15%; and Santander Bank, 6 months, 4.35%

I just checked on Schwab's brokered CD's. I saw 1yr CD's from Morgan Stanley being offered at 4.15% and 6mo Santander CD's being offered at 4.4%. Plenty of others are available but those were the ones with the best rates.

 

[Earl E Retyre]

You don't need EJ to buy CDs.

I suggest you end your relationship with them ASAP. They are not well regarded.

I have heard the same thing about EJ. Most folks here would likely suggest either Fidelity, Schwab or Vanguard.

 

[CindyBlue]

I'ver read that Fidelity, Schwab or Vanguard are highly regarded, too. But can I do face to face, i.e., talk with a real person at any of those three? From what I can tell, I'm not sure I can. And I've read that about Edward Jones, too, but then I wondered why the two tax people I respect would have recommended this office? The gal I talked with at Edward Jones did tell me that she's a fiduciary. Do you think it is ok for me to use Edward Jones for just buying CDs?

 

[pb4uski]

Thank you, everyone...so I'm thinking from what you said that this is "normal" procedure, right?
The places and rates are Goldman Sachs, 1 year, 4.15%; Morgan Stanley, one year, 4.15%; and Santander Bank, 6 months, 4.35%

Well to begin with while I have no personal experience with Fast Eddie Jones, but many posters do and my advice would be to not go anywhere near them and go with Schwab or Fidelity instead.

 

[audreyh1]

Schwab and Fidelity have offices for face to face. Generally in major cities.

 

[RetiredHappy]

Fidelity has offices all over the US and in every city. We love Fidelity.

 

[audreyh1]

Fidelity has offices all over the US and in every city. We love Fidelity.

Not in every city, I’m in a large multi-city metropolitan area but there is no Fidelity office down here. The closest is San Antonio 250 miles away. Fidelity offices are definitely in the larger cities. Depends where you live.

 

[GrayHare]

FWIW, many banks also offer CDs, probably including the bank you mentioned originally.

 

[Earl E Retyre]

Can you check google maps and see if there is a Fidelity office or Schwab office close to you?

 

[CindyBlue]

FWIW, many banks also offer CDs, probably including the bank you mentioned originally.

Do CDs count into the FDIC protected total?

 

[CindyBlue]

Can you check google maps and see if there is a Fidelity office or Schwab office close to you?

I did as you suggested, thank you. The closest Fidelity is about 50 minutes south. But Schwab has one only about 30 minutes away.

 

[Car-Guy]

Do CDs count into the FDIC protected total?

You don't want more than 250k in CD's from any one bank. However you can have more than 250k at the same bank, just not in CD's, if you want to be covered. You can have >1m at any one bank if you split it up into different covered account types. e.g. EDITED CDs, checking, savings, IRA's, etc.

Best info: Deposit Insurance At A Glance | FDIC

 

[audreyh1]

I did as you suggested, thank you. The closest Fidelity is about 50 minutes south. But Schwab has one only about 30 minutes away.

Going to talk to at least Schwab if not both is probably a good idea before committing to anything at EJ.

 

[CindyBlue]

Yes, you don't want more than 250k in CD's from any one bank. However you can have more than 250k at the same bank, just not in CD's, if you want to be covered. You can have >1m at any one bank if you split it up into different covered account types. e.g. CD, checking, savings, etc.

I'm not sure about that...

"The $250,000 coverage maximum can apply in different ways. For example, if you have a checking account, a savings account and multiple CDs at one bank, all of which are owned by you as an individual, then they are insured for a combined total of up to $250,000 because they all fall within one ownership category as single accounts."

 

[Earl E Retyre]

Do CDs count into the FDIC protected total?

If you have an account with a firm like Fidelity or Schwab (or EJ even though we do not recommend them), then you can buy multiple CDs that total more than $250k, just do not buy more than $250k from the same underlying bank. So, for example, you can buy a $200k CD Morgan Stanley CD, and another $200k Santander Bank CD and another $200k Goldman Sachs CD, and you are covered. I am just using those examples since those were the CDs you mentioned in the initial thread.

 

[audreyh1]

Right, other types of bank accounts are included in that combined FDIC limit per bank.

 

[CindyBlue]

Going to talk to at least Schwab if not both is probably a good idea before committing to anything at EJ.

I agree. I will cancel my appointment at Edward Jones and make one with Schwab.

If you have an account with a firm like Fidelity or Schwab (or EJ even though we do not recommend them), then you can buy multiple CDs that total more than $250k, just do not buy more than $250k from the same underlying bank. So, for example, you can buy a $200k CD Morgan Stanley CD, and another $200k Santander Bank CD and another $200k Goldman Sachs CD, and you are covered. I am just using those examples since those were the CDs you mentioned in the initial thread.

Got it. Ok...then how do I go about buying those CDs from these different entities? Do I call up each bank on the phone? Can my bank buy these for me even though they are at different banks?