Timing - What to do with current CD renewals?

[Drake3287]

Okay, the million dollar question and yes, I'm already well invested in a wide range of investments besides this cash.

I currently have 3 large CD's ($100k+) that are going to renewal in the coming weeks. Currently rates are hovering around 2.5% for online banks (Capital One) but we all know rates are heading up in the coming weeks and even months.

I can certainly keep these CD's in lower paying liquid accounts such as a MM or savings until thing reach a plateau, but of course I'll be losing money on these lower rates.

Any words of wisdom or suggestions in the timing or locking-in of these CD's? I also fully realize that once I lock-in a CD I have the option of simply paying an early withdrawal penalty which many times makes perfect sense.

Realistically, CD rates will be in the 3% or higher range by next month at this time.

 

[npage]

Brokered CD's have been above 3% for some time now? How long are you looking for?

 

[jebmke]

What is the maturity? 1 year CDs and Treasuries are already trading over 3%

 

[freedomatlast]

What is the maturity? 1 year CDs and Treasuries are already trading over 3%

Please let us know where we can get a 1 year CD over 3%.

 

[madatrub]

Please let us know where we can get a 1 year CD over 3%.

Treasuries are over 3, CDs, not yet.

 

[foxfirev5]

Went long on treasuries last month. STRIPS with maturities from 2030 -2039. 3.4-3.5%. LMP portfolio. If the yield curve is correct we're in for a recession and declining rates. If not I still get XX guaranteed at maturity. Hedged with a bunch of Series I bonds.

 

[Car-Guy]

Just checked Schwab's brokered CD's. I expect (hope) they will jump another .5 to .75% in the next 30 days for the longer maturity dates. Maybe more.

Schwab's Highest-Yielding CDs by Maturity


Maturity 1 Mo- 3 Mo- 6 Mo- 9 Mo- 1 Yr-- 18 Mo- 2 Yr- 3 Yr
APY(%) 1.612 2.015 2.364 2.558 2.800 3.000 3.150 3.300

 

[pb4uski]

...If the yield curve is correct we're in for a recession and declining rates. ...

For the OPs decision, it depends on one's investment hypothesis.

If the OP believes in foxfirev5's investment hypothesis that rates will decline from here then it would be best to lock in rates now buying longer term CDs now.

The other investment hypothesis is that the Fed will decide that fighting inflation is more important than avoiding a recession and will continue to increase rates until inflation is subsiding. If the OP believes this investment hypothesis then he can invest in a 3/6/9 month CD ladder and reassess things in 3/6/9 months.

Pick your poison, no right answer.

 

[Freedom56]

I think the 10 year note is going to trade in a range from 2.5% to 3.5% for the next 18 months while the stock market bubble deflates. The crypto bubble has popped but it has a long way down. The casino mentality is alive and well. Look at Revlon after filing for bankruptcy. In what universe does a stock not go to near zero after declaring bankruptcy? The 2000 bubble took 3 years to deflate. This one will be no different.

 

[Dtail]

IMHO, 5 yr call protected CD's will be hard pressed to reach the 5% yield level, even with the Fed rate increases.

 

[Graybeard]

3 month, 6 month and 1 year T bills vs CDs? As the 3 and 6 month T bills mature, it will allow you to take advantage of what probably will be rising rates over the next several months. Right now I would not lock up money for 1 year. I have been buying 3 and 6 month T bills but now I am waiting to see what happens at the next Fed meeting at the end of the month. I'm parking cash in the Vanguard Settlement fund, today the 7 day SEC yield is 1.46%.

 

[Drake3287]

The other investment hypothesis is that the Fed will decide that fighting inflation is more important than avoiding a recession and will continue to increase rates until inflation is subsiding. If the OP believes this investment hypothesis then he can invest in a 3/6/9 month CD ladder and reassess things in 3/6/9 months.

Pick your poison, no right answer.

I certainly believe the Fed will continue increasing the rate later this month at the July 26/27 meeting. As period of investing, I don't have any planned need of this cash anytime soon so I'm looking well into the 1 to 3 year time frame with the simple knowledge of paying an early withdrawal fee if needed.