S/T CD's in a Retirement Account

[Chuckanut]

I noticed that CDs I bought through Schwab go up and down a bit in value. Is this normal?

 

[Corporateburnout]

I noticed that CDs I bought through Schwab go up and down a bit in value. Is this normal?

Yes. They do before maturity but if you hold until maturity you get face value.

 

[IMATERP]

I noticed that CDs I bought through Schwab go up and down a bit in value. Is this normal?

Not to worry, they will mature at Par. On a quarterly basis I take the interest and dollar cost average in one of my core funds.

 

[Chuckanut]

Not to worry, they will mature at Par. On a quarterly basis I take the interest and dollar cost average in one of my core funds.

Of course, now that I think about it, since they can be bought and sold in a market place, they would have to vary somewhat. Duh... Foolish me....

 

[rpguy4]

Posted from another thread - Buying T-Bills through Fidelity

https://thefinancebuff.com/treasury-bills-cd-money-market.html

 

[Henry Lili]

Just bought a 3 month ladder in my Fidelity IRA. 1.55 average APY.

 

[njhowie]

Just bought a 3 month ladder in my Fidelity IRA. 1.55 average APY.

In my IRA I no longer buy any CDs yielding below 2.5%.

The high majority of my 1.xx% CDs mature the remainder of this year. As they mature, I'm rolling them out to 2-4 year CDs at 2.55%-3.0% ... which will likely continue climbing.

 

[jazz4cash]

In my IRA I no longer buy any CDs yielding below 2.5%.

The high majority of my 1.xx% CDs mature the remainder of this year. As they mature, I'm rolling them out to 2-4 year CDs at 2.55%-3.0% ... which will likely continue climbing.

Sounds Great! Sign me up. Who's got 2.55 on a 2yr CD?

 

[njhowie]

Sounds Great! Sign me up. Who's got 2.55 on a 2yr CD?

Both Wells Fargo and Morgan Stanley through your brokerage account.

 

[Trooper]

For those of you that own CDs in a traditional IRA, do you pull out the interest at maturity for spending purposes, assuming you're over age 59 1/2? Thinking of replacing some of my VBTLX with CDs, given rates seem to be on the rise.

 

[LOL!]

Just bought a 3 month ladder in my Fidelity IRA. 1.55 average APY.

1.55% doesn't sound too good for 3-month ladder. Even Vanguard Prime Money Market has a 1.63% yield.

What is the yield on Fidelity's best money market fund today?

 

[Chuckanut]

Sounds Great! Sign me up. Who's got 2.55 on a 2yr CD?

Some CU in one of the Carolinas was offering 3% in 39 month CDs a few days ago.

Coastal Credit Union (NC) Debuts 39-Month CD, 3.00% APY

https://www.depositaccounts.com/banks/coastal-federal-credit-union/offers/

However, with Fed seeming to want to increase rates more this year, I am not sure now is a good time to out much farther than 12 months.

 

[Trooper]

Some CU in one of the Carolinas was offering 3% in 39 month CDs a few days ago.

Yes, but don't you need to live and/or work in NC to join the CU and purchase the CD?

 

[Huston55]

Sounds Great! Sign me up. Who's got 2.55 on a 2yr CD?

Some CU in one of the Carolinas was offering 3% in 39 month CDs a few days ago.



https://www.depositaccounts.com/banks/coastal-federal-credit-union/offers/

However, with Fed seeming to want to increase rates more this year, I am not sure now is a good time to out much farther than 12 months.

Fido also currently has 2yr CDs @ 2.55%.

 

[Chuckanut]

Yes, but don't you need to live and/or work in NC to join the CU and purchase the CD?

Yes. Hopefully, others will make a similar move to higher rates for shorter terms.

 

[njhowie]

Morgan Stanley new issue CDs now 2.65% for 2 years, 2.85% for 3 years.

6 month 1.9%, 9 month 2.0%, 12 month 2.1%

 

[alaska55]

Howie is absolutely correct. I have two bonds and 5 CDs in this mix. A GE Capital bond which I have had for many years is due in 2020 and I just picked up the 5 year Ford bonds at 3.7%. For myself, I generally hold all of my CD's and Bonds to maturity.

By the way, I did almost get burned once. During the 2008/2009 debacle I had 70 or 80k in GM Smart Notes. Thankfully, in the Govt's eyes GM was too big to fail. That is the new underlying premium which exists nowadays - the too big to fail premium.

GM filed chapter 11 and union retirement fund was 1st in line. Bond holders got about 20% of par.

 

[IMATERP]

Seven months out.... Not a bad strategy this year. This and a bit of side hustle $ and I barely notice any decrease.

Again, don't fight the Fed.

I

 

[Lsbcal]

I don't think anyone in this thrad has mentioned TIPS. I purchased April 2020 TIPS which had a real return rate of 1.3%. So if inflation runs 2% one might expect 3.3%.

 

[Spock]

Seven months out.... Not a bad strategy this year. This and a bit of side hustle $ and I barely notice any decrease.

Again, don't fight the Fed.

I

Are you doing any fretting over the GE bonds or are the maturing soon enough to ride it out?

 

[copyright1997reloaded]

GM filed chapter 11 and union retirement fund was 1st in line. Bond holders got about 20% of par.

This bears repeating. The GM bankruptcy turned 165 years of bankruptcy law on its head when the union retirement fund was placed ahead of senior bond holders.


In terms of GE, their debt yield spreads have widened to the point where GE debt is about junk levels. GE also has $26B (as in Billion) in debt coming due in the next two years.

Here's a chart of the GE 5% perpetual, not looking so good:
Domestic bonds: General Electric, 5% perp., USD (US369604BQ57, 369604BQ5)

If one thinks that GE will survive and prosper, this might be a good buy. In my eyes, I'm staying away from GE because they need to sell assets, and it is beginning to look like the next year or so might not be such a great time to have tons of debt and to need to sell assets.

 

[IMATERP]

Are you doing any fretting over the GE bonds or are the maturing soon enough to ride it out?

March 2020. No fretting here. GE has problems - but they can extend the problems a few extra years.

I

 

[njhowie]

I don't think anyone in this thrad has mentioned TIPS. I purchased April 2020 TIPS which had a real return rate of 1.3%. So if inflation runs 2% one might expect 3.3%.

There's a TIPS issue (912828C99) maturing April 15 (4.5 months) that's been trading (secondary market) all day long for 3.1% YTM. Would expect it to be in 2.4% to 2.5% range. Still plenty available.

What gives?