is now the time for 5 year cd?

[Letj]

I snagged the last of the Ally 5.1% 3 year CD from Fidelity yesterday (no longer available).

 

[COcheesehead]

I would look to the secondary markets for deals as tax loss selling of funds will cause a lot of forced selling of individual bonds.

Yep, timing might be good.

 

[Drake3287]

anyone have any further thoughts as to whether we hit the top of the cd food chain yet? with the markets starting to jump and talk of taming inflation do you thing we've hit the top? I was kind of hoping for a 5% or better 5 year cd, but have not seen it materialize. Maybe I just am getting in too big of a hurry. what do you think?

Not done yet. Nearly every "expert" agrees the Feds will be raising rates at least .50% in both the December and Februarys meetings. We're still a longs ways from 2.0% inflation which the Feds are shooting for but of course may never reach.

Don't let yesterdays positive economic news fool you. It takes a long time to correct the situation we're in. Many think even if things go as planned, you won't see 2% inflation until at least 2024. Until then the Feds will be doing everything they can to correct it.

I'm another that's holding out for locking in several $100k CD's at 5%+ in the hopeful near future.

 

[carnivalday]

Ive been building a short term CD ladder, since the rates are so good, to park some cash. Seems like every day that I check Fidelity's cd list, they go up. Today they have a 3 year cd. at 5.1. The shorter ones are 4.65 for a 1 year, 4.6 for 9 months, and 4.4 for 6 months.

 

[lawman]

I don't have a schwab or fidelity account, just what I can find on the internet. How do you come across these deals? certain websites, accounts, etc.?

I'm with you..I only have a Schwab account and they never have any of the good deals a I see Freedom and others getting..I think Schwab must be making a killing off people like me..

 

[pb4uski]

I see a couple 5.0-5.1% 3-year CDs at Schawb. May buy some of those next week.

 

[Another Reader]

All CD inventory over a year now wiped out at Schwab and Fidelity except some 6 year and up callable CD's.

 

[Momcpa]

The longer CDs aren't showing on Vanguards site today either. But they posted a note that more may be listed after Friday or after the markets get going again next week. I hope so as I had my eyes on a 3 yr CD but didn't act quick enough.

 

[mountainsoft]

I picked up a 2 year 4.9% brokered CD (non callable) from Vanguard a few days ago. I also put a little in 2 month 3.7% brokered CD. I looked today and didn't see any of the 4.9% CD's anymore, but they had a lot of shorter duration CD's above 3.5%. I'm getting 3% now on my Discover high interest savings account, so those don't look as attractive anymore.

 

[John Galt III]

I picked up a 2 year 4.9% brokered CD (non callable) from Vanguard a few days ago. I also put a little in 2 month 3.7% brokered CD. I looked today and didn't see any of the 4.9% CD's anymore, but they had a lot of shorter duration CD's above 3.5%. I'm getting 3% now on my Discover high interest savings account, so those don't look as attractive anymore.

I just set up a taxable account at Vanguard. In a few days, after the connection is made to my bank, I'll take advantage of the VMFXX money market at Vanguard. ( 3.2% liquid, can't beat that). Then I'll scope out the CD offerings.

 

[COcheesehead]

I just set up a taxable account at Vanguard. In a few days, after the connection is made to my bank, I'll take advantage of the VMFXX money market at Vanguard. ( 3.2% liquid, can't beat that). Then I'll scope out the CD offerings.

Fidelity’s high yield money market pays 3.75%

 

[cbo111]

I picked up a 2 year 4.9% brokered CD (non callable) from Vanguard a few days ago. I also put a little in 2 month 3.7% brokered CD. I looked today and didn't see any of the 4.9% CD's anymore, but they had a lot of shorter duration CD's above 3.5%. I'm getting 3% now on my Discover high interest savings account, so those don't look as attractive anymore.

I've been buying CDs in $10K chunks the past few weeks on Vanguard and notice the rates dropping the past few days, despite the Fed just adding another .75. This seems odd, like maybe the institutions offering CDs on Vanguard are expecting a near-term (6-12 month) pull-back by the Fed. I was hoping for something in the 5% range by now. Now I am debating to buy a couple more before the rates head further down.

 

[LaDolceVita]

Capital One CD

They materialized and vanished yesterday. They were transported to our accounts. This was a far better deal than 5 year treasuries.

Symbol 14042RVN8
Description CAPITAL ONE NATL ASSN VA CD 5.00000% 11/16/2027
Shares + 250,000.000
Price 100.00
Amount -$250,000.00
Settlement Date 11/16/2022


I got in on this too, but at 4.9%. It’s my first time buying a CD through a brokerage (Fidelity). I have a couple of questions:

1) What does the VA stand for in the description of the CD?

2) It said the interest was paid semiannually. Does the interest go to the cash account every 6 months?

3) Since buying it, it says I have an unrealized capital loss of a couple hundred dollars. How can that be true for a CD?

Thanks for helping this brokered CD newbie.

 

[erkevin]

1. Virginia, where Capital One is headquartered 2. yes, the interest is deposited into your cash account 3.CDs, like bonds, change in principal value as markets dictate. However, you are going to get the full principal back as long as you hold until maturity (you can ignore the day-to-day changes in the CD's value).

 

[Car-Guy]

I got in on this too, but at 4.9%. It’s my first time buying a CD through a brokerage (Fidelity). I have a couple of questions:

1) What does the VA stand for in the description of the CD?

2) It said the interest was paid semiannually. Does the interest go to the cash account every 6 months?

3) Since buying it, it says I have an unrealized capital loss of a couple hundred dollars. How can that be true for a CD?

Thanks for helping this brokered CD newbie.

1) Not sure what VA stands for (maybe Virginia if that's where the bank is that's offering the CD)
2) Yes, that is the way it works on my Schwab brokered CD's
3) Again at Schwab, as I understand it, the "loss" shown is what the CD's estimated worth is, if sold on the secondary market "at this time". However, you still get the full original purchased value back, if it's held until maturity.


Hope that helps/makes sense.

 

[Montecfo]

I think some of these callable CD's and securities may end up being fool's gold.

Just concerned about rate drop. In a slow-growth economy, we should have relatively low rates and that is what the 10-year seems to be signaling (yes, even with "quantitative tightening", how about that?).

And the recent inflation readings are quite low if you annualize.

We may be back to low rates (but not zero of course) fairly quickly.

I definitely am extending maturities out to 5 years where indicated.

Surely we all recall when the short end had the good rates back in what, 2018? Those rates were great but were also a bit of fool's gold as we had to reinvest at much lower rates.

Maybe we get another crack at better long rates, but we will see.

The good news is lower rates will be great for equities.

 

[Car-Guy]

I think some of these callable CD's and securities may end up being fool's gold.

Yep, I expect them to be "called" as soon as new issue equivalent term CD's drop just a few tenths to half a point below the callable rate.

 

[LaDolceVita]

Yep, I expect them to be "called" as soon as new issue equivalent term CD's drop just a few tenths to half a point below the callable rate.

I believe the Capital One CD we are discussing is NOT callable, correct?

 

[Car-Guy]

I believe the Capital One CD we are discussing is NOT callable, correct?

See the details in post 66 for this CD. It's not callable

 

[pletal]

Yep, I expect them to be "called" as soon as new issue equivalent term CD's drop just a few tenths to half a point below the callable rate.

I agree, just picked up a 4.75 5 year at an online bank. Good for now. I have had many callable cd’s and bonds called over the years

 

[Freedom56]

They materialized and vanished yesterday. They were transported to our accounts. This was a far better deal than 5 year treasuries.

Symbol 14042RVN8
Description CAPITAL ONE NATL ASSN VA CD 5.00000% 11/16/2027
Shares + 250,000.000
Price 100.00
Amount -$250,000.00
Settlement Date 11/16/2022


I got in on this too, but at 4.9%. It’s my first time buying a CD through a brokerage (Fidelity). I have a couple of questions:

1) What does the VA stand for in the description of the CD?

2) It said the interest was paid semiannually. Does the interest go to the cash account every 6 months?

3) Since buying it, it says I have an unrealized capital loss of a couple hundred dollars. How can that be true for a CD?

Thanks for helping this brokered CD newbie.

If you bought the 5 year 5% non-callable CD on the secondary market with a YTM of 4.9% you paid slightly over par. This means you get the 5% coupon paid twice annually and deposited in your cash account. At maturity you get $100 face value of the CD back which would be slightly lower than what you paid resulting in the 4.9% yield instead of 5%.

 

[frank]

bought the 5 year 4.97 at pelican state credit union. went pretty smooth and seemed to be easy to deal with time will tell. still withheld some funds to see if there will be further increases in cd rates. time will tell If I did the right thing, but it looked like rates were starting to head south. thanks

 

[Drake3287]

bought the 5 year 4.97 at pelican state credit union. went pretty smooth and seemed to be easy to deal with time will tell. still withheld some funds to see if there will be further increases in cd rates. time will tell If I did the right thing, but it looked like rates were starting to head south. thanks

The Feds have already stated they'll be increasing rates in both December and February. The only question is whether it'll be .50 or .75%. Most agree with .50 being that figure.

Rates may fluctuate week to week but in general, we'll see increased rates well into next year if not further. But yes, always a gamble with chasing interest rates.

 

[jerryo]

Just picked up a one year CD at Citibank paying 4.15%..... Hard to predict where rates will be in a year. If they go up, I'll roll over or add. But if they go down, I expect the stock market will be going up!

 

[COcheesehead]

Buy treasuries if you are concerned about calls.
Also regarding rates, if they drop so too will equities. Rates don’t drop in a booming economy - just the opposite.