hoops777 wrote:I was going back in forth with a bond expert in some emails.I told her that the high grade munis in a 10 year ladder are so bad that this 3 yr cd at 1.8 in an IRA was a much better option.She warned me that their has to be a catch in terms of being insured/guaranteed to have such a high yield.I have read some things on the web and a lot of people seem to hate PenFed because of their customer service and hassles.My main concern is are they worry free in terms of safety for our investments.Any PenFed bogleheads with some words of wisdom?
BrandonBogle wrote:Specifically about VIPSX, I'm still reading up on how to "read" the numbers. The SEC Yield on that is currently negative. She asked me (and I told her I don't know) if any yield/appreciation of this holding would be a better return than the the 1.85% CD we have access to? The CD carries a 6-month interest penalty on it and we can get a multi-year term on it. I don't know enough to tell her NOT to go with the CD, but I think based on what I read so far that the TIPS are the better choice. With the CD, we are guaranteed not to keep up with inflation and isn't that exactly what TIPS are trying to accomplish?
MikeRes wrote:All the PenFed CDs have a six month penalty for early withdrawal except for the seven year CD which has a 12 month penalty.
SSSS wrote:Wow, PenFed's rates are really good right now.
Term Dividend Rate APY
6 Month 0.75% 0.75%**
1-Year 1.238% 1.25%
2-Year 1.583% 1.60%
3-Year 1.829% 1.85%
4-Year 1.830% 1.85%
5-Year 1.879% 1.90%
7-Year 1.980% 2.00%
I got a Penfed 4-year in September and it was only 1.5%
PenFed's 3-7 year CDs are almost as high as the current highest 10-year I could find (2% at Discover Bank).
crowd79 wrote:10 year CD at Discover for 2%. That is crazy long for such a small yield.....
Your money might actually be safer in a credit union than in a bank, though it's a fine point of distinction.
NCUA is an agency of the federal government, just as the FDIC is. NCUA insures your accounts at credit unions to the same limits as FDIC does for banks.
The difference is that credit unions capitalize their insurance fund, and carry this as an asset on their books. That means they have a vested interest in keeping the insurance fund solvent. If one credit union takes unwarranted risks, it affects them all.
Also, credit unions are more tightly regulated than banks. They simply are not allowed to invest in many of the riskier securities that banks are.
My money is in a credit union.
Worked for all types of financial institutions since 1977.
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