Earl E Retyre
Full time employment: Posting here.
- Joined
- Jan 1, 2010
- Messages
- 541
Hi all,
I have some extra cash earning .1% in the bank today that I do not need to touch for a while. At this point, I do not want to add to my stock and bond investments. I want an FDIC insured investment where I am guaranteed principal/interest.
I looked into CDs and found 2 options. Option 1 is a 2.3% CD at Synchrony Bank with a yield of 2.3% and a 6 month penalty for early withdrawal.
Option 2 is a 3.2% CD through Vanguard which purchases a 10 year CD (coincidentally also through Synchrony Bank). My understanding of the Vanguard CD is that I could not withdraw early since it is treated like a bond – but that it is FDIC insured and am guaranteed principal and interest at the end of 10 years.
Of the 2 options, which do you think is a better option?
My initial reason to look into the 2.3% CD is because, if rates go up, I can always withdraw, simply lose 6 months interest and re-invest. For example, if PenFed offers a 3% or higher CD again then I could always move the funds to PenFed. But if rates do not go up within 6 months, then I am better off with the 2.3% CD rather than keeping it earning .1% in the bank today.
Then I saw the Vanguard option of 3.2% FDIC insured (but no early withdrawal). And am trying to decide whether to go for it instead. I already have investments in Wellesley, US and international stock market index funds, bond index funds, municipal bond funds, etc. So, I know I have the option to invest more in those vehicles. But assuming I want a CD, which would you do – option 1 or 2?
I have some extra cash earning .1% in the bank today that I do not need to touch for a while. At this point, I do not want to add to my stock and bond investments. I want an FDIC insured investment where I am guaranteed principal/interest.
I looked into CDs and found 2 options. Option 1 is a 2.3% CD at Synchrony Bank with a yield of 2.3% and a 6 month penalty for early withdrawal.
Option 2 is a 3.2% CD through Vanguard which purchases a 10 year CD (coincidentally also through Synchrony Bank). My understanding of the Vanguard CD is that I could not withdraw early since it is treated like a bond – but that it is FDIC insured and am guaranteed principal and interest at the end of 10 years.
Of the 2 options, which do you think is a better option?
My initial reason to look into the 2.3% CD is because, if rates go up, I can always withdraw, simply lose 6 months interest and re-invest. For example, if PenFed offers a 3% or higher CD again then I could always move the funds to PenFed. But if rates do not go up within 6 months, then I am better off with the 2.3% CD rather than keeping it earning .1% in the bank today.
Then I saw the Vanguard option of 3.2% FDIC insured (but no early withdrawal). And am trying to decide whether to go for it instead. I already have investments in Wellesley, US and international stock market index funds, bond index funds, municipal bond funds, etc. So, I know I have the option to invest more in those vehicles. But assuming I want a CD, which would you do – option 1 or 2?