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

[audreyh1]

No, you do it through the brokerage which is what makes it so convenient. The brokerage has CDs available from many different banks. Often the rates available are better than those offered directly by each bank.

Otherwise to buy the CDs directly from each bank you would have to deal with each bank. Banks only offer their own CDs.

 

[Car-Guy]

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."

I didn't write that very well and edited my post. Depends on account categories at each bank. Here's the best info:

Deposit Insurance At A Glance | FDIC

www.fdic.gov

From the FDIC:

If you have two single ownership accounts (such as a checking account and a savings account) and an individual retirement account (IRA) at the same FDIC-insured bank, then you will be insured up to $250,000 for the combined balance of the funds in the two single ownership accounts. You will be separately insured up to $250,000 for the funds in the IRA, because IRAs are in a different account ownership category.

 

[CindyBlue]

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%.

I'm so clueless about all this...sigh...and I have to learn fast. How do I buy Treasury bills? Call up Schwab on the phone (i.e., can this be done on the phone?)

 

[CindyBlue]

I didn't write that very well. Depends on account types.

From the FDIC:

If you have two single ownership accounts (such as a checking account and a savings account) and an individual retirement account (IRA) at the same FDIC-insured bank, then you will be insured up to $250,000 for the combined balance of the funds in the two single ownership accounts. You will be separately insured up to $250,000 for the funds in the IRA, because IRAs are in a different account ownership category.

Are CDs IRAs? All I have at my bank are savings, checking, and two CDs

 

[audreyh1]

Just talk to Schwab. Ask them to explain brokered CDs to you. They will probably also ask what your goals are etc., a good conversation to have.

What’s the rush? You have time to get good advice. You can start with CDs and look into treasuries later. A brokerage can help with both.

No, CDs are certificates of deposit. You can also buy them inside an IRA which is why IRAs were mentioned in the example given above.

 

[Car-Guy]

^^^^agree

 

[Earl E Retyre]

I am guessing that if you call Schwab or Fidelity that they would be able to do everything on the phone with you. Or if you feel more comfortable going in person, sounds like neither office is too far from you. If you simply want to buy a few CDs like your initial post said, then this is fairly straight forward to do. The basic steps would be:
(1) open up a new account with a broker firm (eg, with either Schwab or Fidelity)
(2) send money from your bank to the firm
(3) online on the Fidelity (or Schwab) website, you can search for CDs and select the ones you want to buy and click buy

Someone from Schwab or Fidelity should be able to show you how to do (3) so that the next time you want to do it, you can do it yourself.

I have never used Schwab but use Fidelity all the time and can recommend them. But I know many here have used Schwab and like them.

 

[audreyh1]

Generally folks do stuff like this online via their broker. But in terms of learning the ropes and setting up a new account, sounds like you want to be comfortable meeting face-to-face.

 

[RetiredAndLovingIt]

EDIT, Forgot to mention since this is an older video the rates mentioned are no longer valid.

It's a lot easier to buy CD's at a broker online than buying them all over the place at banks and credit unions like I used to. I've moved most of my money to Fidelity and have closed most of them but I kept a few open just for any local deals that might pop up. Here's a video that shows you how to purchase online, it's basically one stop shopping and you can log onto your brokerage account and see everything in one place. I don't recommend any particular brokerage, I joined Fidelity because I heard they were the best for new investors. I only buy CD's and Treasuries.
This how to video might help and she has tons of others, a lot of people on ER recommend Jennifers videos.

 

[jazz4cash]

What’s the rush? You have time to get good advice. You can start with CDs and look into treasuries later. A brokerage can help with both.

.

Best advice of all. Relax, take a breath. Make sure you are not over FDIC limits at the bank where the funds are now. Call them up and ask. You may wish to move the excess to another account right away. Beyond that take some time to figure things out. Best Wishes.

 

[Al18]

While you are talking to Schwab, you might want to ask them about the hundreds of mutual funds and ETF’s that have been paying more than CD’s for decades - all with no commission fees.

 

[Likes_to_Lurk]

What’s the rush? You have time to get good advice

+1
Please take your time and check with Schwab or Fidelity. After an initial face-to-face meeting, you can do business by phone.
Feel free to ask questions of the knowledgeable folks on this forum.
You’ve got this!

 

[Nuke]

@CindyBlue, if memory serves me correctly, you are just a couple months past a significant life changing event. I suggest that you only make money decisions that absolutely most be made right now. Unless you literally have a million dollars in ones stashed under your mattress, you probably have time to get yourself educated to your own satisfaction and make the best decision for you.

What are your reasons for putting money into CDs? How much are you considering? How does it fit into your overall financial plan?

Above all, give yourself time and grace to work through things.

 

[Earl E Retyre]

I agree with the above advice. One other thought to dip your toe in the water and learn whenever you are ready … open up an account at Fidelity and transfer a small amount into it - like $2,500. Then purchase one, $1,00, one month brokered CD. And purchase a very small amount (maybe $1,000) ETF that is a total stock market. And then do nothing else for a while. You will learn a lot and can’t lose a lot. Just a thought.

 

[Gotadimple]

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

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?

If you want to buy CDs from different banks, you can go/phone each bank and buy the CD. But, be aware that sometimes banks will work through brokers (like Schwab) and offer the same CD as slightly higher rates than you can get directly. Because they pay the broker a commission to sell the CD.

By far the easiest way to buy CDs from different banks is through a broker, and it's relatively seamless if you want to do it yourself online. Online or in person you will need to set up an account with a broker and deposit the $$$.

But for your purposes you want to understand how it works, and then make a decision. An in person meeting with Schwab should help to clear up all your questions. Then you can decide what to do.

HTH,
Rita

 

[RetiredAndLovingIt]

+1, that's the way I learned. I opened a Fidelity account on a promotion at the time where they gave me $50 to open an account and then let it sit there for 3 months before I actually transferred 1K in to buy my first 1 month CD. I loved that the funds dropped back into my core account without me having to worry about automatic renewals. Meantime I watched a lot of YouTube videos and asked a lot of questions in this group until I felt confident enough to buy my first CD. Cindy, just be aware that if you want a brokerage to buy CD's for you they do change a small fee. As others have said no rush, stay in your comfort zone until you're ready to jump.

I agree with the above advice. One other thought to dip your toe in the water and learn whenever you are ready … open up an account at Fidelity and transfer a small amount into it - like $2,500. Then purchase one, $1,00, one month brokered CD. And purchase a very small amount (maybe $1,000) ETF that is a total stock market. And then do nothing else for a while. You will learn a lot and can’t lose a lot. Just a thought.

 

[QG67PK00]

I'm so clueless about all this...sigh...and I have to learn fast. How do I buy Treasury bills? Call up Schwab on the phone (i.e., can this be done on the phone?)

You can learn about t-bills at the TreasuryDirect website linked below.

T-Bills

T-bills are issued by US Treasury and sold by TreasuryDirect and also through most large brokerages (Fidelity, Schwab, Vanguard). They can be found under "fixed income" section on brokerage websites.

T-bills are auctioned once a week. You place a bid on the auction at the brokerage and you will know the interest rate (aka yield) once the auction closes. You do not make any bids yourself, the financial institutions do that and you get the price that they all get the final price accepted by the Treasury.

You can do this over the phone with the brokerage but the they may charge you for phone orders (usually around $25), see link below for Schwab.

Schwab Fees

 

[NomDeER]

Cindy, just be aware that if you want a brokerage to buy CD's for you they do change a small fee.

No, they don't. Vanguard charges me nothing, and I have bought a LOT of brokered CDs from them. And according to Cindy's post, Edward Jones isn't charging her anything either. I suspect that, if she takes the time to do what everybody is recommending, those particular CDs won't be available and rates might be a bit different, but she still will be able to buy other brokered CDs without paying a fee.

 

[Surewhitey]

We've bought dozens of CD's from Fidelity, Etrade and Marcus with no charges and they are usually very close to each other on rates.

We also bought Treasuries from TreasuryDirect and, more recently, Fidelity. All went very smooth. You just gotta do it. I would recommend learning it for yourself just to understand the basics of a very simple process.

Fidelity is easier to me & if I call them, they have always been helpful.

 

[tulak]

I'm so clueless about all this...sigh...and I have to learn fast. How do I buy Treasury bills? Call up Schwab on the phone (i.e., can this be done on the phone?)

You don’t have to learn fast. Take your time and understand what you’re doing. Take breaks as needed. Nothing is in a rush. You can go to Schwab or Fidelity and put the money in a money market fund (MM) yielding over 4%+. Sure, it’s not fixed, but losing +/- 1% isn’t the end of the world and much better than paying hidden fees that you’re not aware of.

Full disclosure: the only downside is MM funds are not FDIC insured, but they are very safe.

I’ll add that you can buy in smaller chunks too. There’s no reason you have to buy a 250k CD right now. Buy one for 50k, or smaller, and see how the process works. After you’ve done it a few times, it’ll be easier.

 

[Badger]

Generally folks do stuff like this online via their broker. But in terms of learning the ropes and setting up a new account, sounds like you want to be comfortable meeting face-to-face.

I have been doing business with the same person at (now) Schwab for 10+ years. I started with Scottrade that was absorbed by TD Ameritrade and then by Schwab. I first started by buying stocks that I vetted with a face to face visit so all my questions would be answered.
Then a few years ago started sheltering the dividends and RMDs in CDs. Initially I scheduled meetings then later as I felt more comfortable I bought CDs on-line. I have about 10 Jumbo CDs at this time with various maturity dates that are spread out over about 10 different banks. Each CD is FDIC insured so all the money is safely covered.
FDIC limit as others have said is $250k. If married and jointly owned there would be a higher limit.

 

[CindyBlue]

I took your advice and yesterday called and cancelled my relationship with Edward Jones. Also called my bank and made an appointment for next week. Also talked to a friend who is a money person (the exact capacity of which I don't know the name, but she used to deal with investments) and pretty much everything she said agrees with what you all here have said. We will meet this weekend to discuss options.

I'm ashamed to tell you all, since I've read so much about it here and should know better, how much money is in the four savings and checking accounts (his and mine, I need to combine them) but it's a lot. We kept meaning to move it to somewhere where it would make more money for us, but we didn't know how and it wasn't very important at the time...I know, silly us. But now that my husband has died (for those who haven't read my post about it, he was killed in a horrific accident two months ago, hit from behind while stopped at a stop sign), I want/need to do something about it, both for him and for me. It's what he wanted.

I did find out and confirm, thanks again to you all here, however, that because I put the accounts into a trust a couple of weeks ago at the suggestion of my lawyer, an unintended benefit is that all the beneficiaries are counted in the FDIC insurance coverage, thus negating my perceived need to get those CDs ASAP. The reason I was in such a hurry is because I'm so very far over the FDIC limit at my bank. I have four beneficiaries listed (my sister and my husband's three children) and with me, that makes five, and according to what I can read that makes me FDIC insured for up to $1,250,000. I can tell you that I heaved a huge sigh of relief when I found this out yesterday, and now I'm not in such a panic mode.

I still have to figure out what to do about the RMDs I'll have to take for him, but as so many kind people here have said, I can slow down, I have time.

Again thanks to you all, I also finally learned what a "brokerage" is (silly me, the name sort of says it all but I didn't understand - this is a while new world for me) and that Schwab, Vanguard, and Fidelity are highly regarded, and that Schwab has a local office relatively close by, and seems to have face to face appointments. I will call them today and make an appointment.

I just don't know how to thank you all here. I know it's an online forum, and that many of you have said that I have to take that into account, but the experienced advice I've gotten here ever since I started reading posts in about 2014 about retirement, through this time of crisis in my life, has been invaluable in my financial journey.

You are such caring - and just plain nice - people. And your patience is legendary to me - so many times you've patiently repeated the same thing over and over in different ways as you try to get across something that is simple to you but was/is just plain out of my mental reach at the time.

My husband was a legendary high school coach around here. One of his favorite sayings was "Treat yourself." He said it to the kids after they'd accomplished a hard workout or competition and should be proud of themselves. He meant to do something nice for yourself, maybe take time to take a long, hot bath, or read a good book (for fun, not school), or eat some ice cream, or take time out to play with your dog, or go for a walk with your family, etc.

You all here need to "Treat yourself." You've had a long hard workout trying to help me, both now and over the past decade (and hopefully for me, more years to come) and you truly deserve it. Of course, we can translate the treats to adult beverages or activities (smile!) I wish I could buy you all a beer in a local pub with good music and good company.

Thank you, so much...

 

[Gotadimple]

CindyBlue,
You are welcome. Figuring out how to manage your money is a road you have to travel. Most here figured it out by themselves or with info from here or other places. Once you have it down, sharing comes naturally.

 

[Earl E Retyre]

Great news, CindyBlue. From your message you seem to be both an intelligent person and an extremely nice and caring person. Both these attributes will serve you well and you should be successful. Glad you are asking for advice here - while everyone here is a stranger, and you do not need to listen to everyone's opinions, at least you know no one here is out to rip you off. Coming here as a sanity check before making any major financial decisions can never be a bad idea.

 

[Still Learning]

CindyBlue;

A lot of good advice above, especially that if your cash is safe in banks with appropriate FDIC insurance, then a slow methodical approach in small steps is very wise.

We retired almost 6 years ago and kept our existing Vanguard retirement accounts which we have been very satisfied with, although transitioning to actively managing our investment accounts would have been easier initially if they had offices to meet face to face. Otherwise extremely happy with Vanguard. Like you we had a lot of cash in local bank accounts which we shifted 50% to Vanguard non-retirement accounts (since we were already retired) 2 years ago and put the remaining cash into 5%+ CDs at that time. With Money Market and fixed CD rates both below 5% we will likely open additional non-retirement accounts at either Fidelity or Schwab which both have offices 45 minutes or less from our home to take advantage of low cost fees and better investment opportunities. Looking to shift $500K but will start with $25K or less initially and see how the relationship/online system works for us before making a larger shift of cash.

Sorry for your loss and understand your concern with selection/management of investments. You mentioned working with a current and potential new tax preparer which is a smart move as you manage your loss and want to understand tax strategy in advance new investment decisions, while also taking age/retirement status into account. I would suggest a combined CPA/Financial Planner on an HOURLY basis (no contract). We live in the lower Hudson Valley of New York State and pay about $500/yr for combined simple tax return and a separate meeting for tax/investing discussion (usually discuss 3-5 items which we develop in advance of meeting).

All the best,