How Many CD's Are Too Many?

[zaqxsw]

I've run a 6 CD - 3yr ladder for many years with uninvested cash. Quit it 1-2 years ago. Now I just pick the best rate at the shortest term when I need to reinvest. Don't know when I'll get back to an organized ladder. Currently have 7 CD's.

https://www.depositaccounts.com/cd/3-year-cd-rates.html

 

[Freedom56]

The decision to purchase CDs should be based on yield vs other fixed income investments such as treasuries, corporate notes, or municipal bonds. A few years ago purchasing CDs made more sense than corporate bonds. Now we are in a situation where CD yields are so paltry that corporate notes/bonds and treasury notes are better investments. There is nothing wrong with being 100% allocated to CDs if the yields are attractive enough.

 

[foxfirev5]

The decision to purchase CDs should be based on yield vs other fixed income investments such as treasuries, corporate notes, or municipal bonds. A few years ago purchasing CDs made more sense than corporate bonds. Now we are in a situation where CD yields are so paltry that corporate notes/bonds and treasury notes are better investments. There is nothing wrong with being 100% allocated to CDs if the yields are attractive enough.

Yes. Personally I confine my individual fixed investments to CD's or Treasuries which require very little effort. As a matter of fact I have 40k maturing on 4/12 and another 40k on 5/25. I will pick treasuries unless CD's pay over .25% more. I prefer the liquidity of treasuries for longer terms. My biggest point is that it will take less time and effort than I spend posting about the subject on this forum.

 

[Freedom56]

Yes. Personally I confine my individual fixed investments to CD's or Treasuries which require very little effort. As a matter of fact I have 40k maturing on 4/12 and another 40k on 5/25. I will pick treasuries unless CD's pay over .25% more. I prefer the liquidity of treasuries for longer terms. My biggest point is that it will take less time and effort than I spend posting about the subject on this forum.

Corporate bonds/notes also require very little effort.

 

[foxfirev5]

Corporate bonds/notes also require very little effort.

I agree that they are easy to buy but IMHO more difficult to evaluate. I don't have the blind faith in the ratings that I do with CD's and Treasuries. If the corporate spreads grow big enough I may reconsider. However, if that happens it's for a reason. As I age I'm taking more of my risk on the equity side. (for the kids) But all in all it's a minor point.

 

[I am He]

My community bank will allow you to withdraw whatever you need and only apply the penalty on that amount. So put in $250k for 3 years and if you need $25k to do your roof, only pay a penalty on that $25k.

That said, I know people that just have a hodgepodge of CDs without rhyme or reason (such as a ladder with rungs every 6 months).

 

[meleana]

Okay, first off I fully realize that CD's aren't the best investment, especially these days, so hold your comments on that part. But, I've done reasonably well over the years financially along with a great pension and can afford to weather the storm with these lower rates along with the mixed portfolio I have. At least I'll always have my cash.

My question is for those of you that still "ladder" your CD's. Just how many CD's is too many? And yes I fully understand the insured limits that FDIC accounts have. I'm thinking about opening a Synchrony Online Bank CD at 1% currently but I already have several very large ($100k+) CD's with different banks.

Is there a general rule of thumb for CD owners as too how many might make sense when using this laddering approach?

Thanks for your suggestions and thoughts.

I don’t have any. I have cash and a little bit of I Bonds and some old series EE savings bonds.

 

[Sunset]

I saw the thread subject and thought the topic might be about audio CDs. LOL

-gauss

Same here

It's not the number of CD's , but the total value percentage to me that matters.

I have about 20 CD's at Ally, but they are all low value 5K->20K each.

 

[Koolau]

I think I'd look at MYGAs and I-bonds. They're not quite as flexible as CDs, but pay better. There's always a way to get the money out if you need it - even if you lose a bit of interest. YMMV

 

[Koolau]

I saw the thread subject and thought the topic might be about audio CDs. LOL

-gauss

Yeah, I was originally thinking about 500 but then I read the subject matter. YMMV

 

[COcheesehead]

I ladder muni’s and have about 140. I don’t find them difficult to manage. I have that many issues for cash flow reasons. I have bonds maturing almost every month or two for the next 8 years or so. I can use for expenses or reinvest. Lots of flexibility.

 

[jw72]

I have 4 at 3.5% . I believe they mature in 2026. I recall thinking it was a long term but a great rate. As rates rise I can access 50 pct without penalty. Will be interesting to see if that makes sense.

More recently the 1 pct saving account is a better deal than any CDs, though I should perhaps look at secondary mkt. Have not in quite some time.

Also have I-Bonds but I'm not really doing a ladder. Just traditional fixed income alternatives.

Navy federal credit union? 3.5 5 year was a great deal, I kick myself for not buying more

 

[a60dan]

I'm keeping all my few CDs at Schwab. I'm buying 1 per month as the rates rise, with very short terms.

We have a couple years of cash on hand in anticipation of a downturn.

We're still losing quite a bit to inflation, but even that is a "sure thing".

I got my first job in 1983 coming out of some big inflation and retired into more of it this year :-(

 

[Bunker]

My Grandmother, now long gone, would talk to us wide-eyed kids about her CD investments, before Al Gore invented the internet.



Still can't help myself from having at least 1. Consider it in the same basket as the money market account - slack funds and contingency cash.



Ironically, made an effort recently to get a rudderless nephew interested in saving/investing, and muscle memory led me to start him out with a...... CD! Grandma lives on! LOL.

 

[Safe Harbour]

So I look at my AA for my fixed income portion. I decide which accounts I want to hold that % (TRIA, IIRA, and AT, exclude the ROTH). Then I look at having a 5 year ladder in each. If the amount (1/5th of total in each account), is under the FDIC insurance cap, then I buy CD's for that 1/5th that matures each year in a new 5 year CD. I don't see a down side to CD's over Fed instruments. Both are backed by the US government. If the amount is over the FDIC limit then I split into two (multiple) CDs at different institutions. I just take the CD with the highest yield. I also calculate how much I need in cash for the coming year and leave that in my MM. Easy, 1 time per year action required.