Do Bogleheads Ladder CDs Anymore?

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Do Bogleheads Ladder CDs Anymore?

No
39
51%
Yes
37
49%
 
Total votes: 76

john94549
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Do Bogleheads Ladder CDs Anymore?

Post by john94549 » Sat Jul 26, 2014 9:58 pm

Just curious.
Last edited by john94549 on Sat Jul 26, 2014 10:01 pm, edited 1 time in total.

John3754
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Re: Do Bogleheads Ladder CDs Anymore?

Post by John3754 » Sat Jul 26, 2014 10:01 pm

Indeed.

john94549
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Re: Do Bogleheads Ladder CDs Anymore?

Post by john94549 » Sat Jul 26, 2014 10:04 pm

Just asking because some have advocated going long and breaking as a strategy.

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Rob5TCP
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Re: Do Bogleheads Ladder CDs Anymore?

Post by Rob5TCP » Sat Jul 26, 2014 10:12 pm

I still ladder - i wait every year for cd "specials" - they usually exceed what the current yield is for bonds.
Though bond funds, of course, can have a higher return when yields go down.
PenFed had a special Dec-Feb of 3% for 5 years.
Currently another bank has a special of 3.04% for 7 years THAT YOU CAN ADD to.
Last edited by Rob5TCP on Sun Jul 27, 2014 5:57 pm, edited 2 times in total.

Wayson
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Re: Do Bogleheads Ladder CDs Anymore?

Post by Wayson » Sat Jul 26, 2014 11:31 pm

I don't; yields are so low that I don't see the point. I keep a cash emergency fund, a certain amount of liquid cash in savings for larger-than-average credit card bills, and the rest goes into retirement savings. If rates ever go up to around 2% I will change my tune, but until then nope.
Last edited by Wayson on Sun Jul 27, 2014 3:21 am, edited 2 times in total.

LeeMKE
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Re: Do Bogleheads Ladder CDs Anymore?

Post by LeeMKE » Sat Jul 26, 2014 11:34 pm

I don't right now, but did in 2008 when I got 5.5% on CDs over 12 months.

I usually have a ladder going, but not at the current rates!
The mightiest Oak is just a nut who stayed the course.

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Leif
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Re: Do Bogleheads Ladder CDs Anymore?

Post by Leif » Sat Jul 26, 2014 11:58 pm

Yes. I'm building a paycheck for my early retirement years. I still have bonds, but this will be my safe money in a taxable account.

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obgyn65
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Re: Do Bogleheads Ladder CDs Anymore?

Post by obgyn65 » Sun Jul 27, 2014 7:25 am

Yes. I am building a ladder of CDs expiring every year over the next 10 years. Last week, the rate of 10-year CDs was 2.35%. I like the predictability of CDs.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell

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in_reality
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Re: Do Bogleheads Ladder CDs Anymore?

Post by in_reality » Sun Jul 27, 2014 7:28 am

obgyn65 wrote:Yes. I am building a ladder of CDs expiring every year over the next 10 years. Last week, the rate of 10-year CDs was 2.35%. I like the predictability of CDs.
Isn't the 10 yr rate about 3.3%?

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obgyn65
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Re: Do Bogleheads Ladder CDs Anymore?

Post by obgyn65 » Sun Jul 27, 2014 7:58 am

Sorry for the typo. Yes, it was 3.25%.
in_reality wrote:
obgyn65 wrote:Yes. I am building a ladder of CDs expiring every year over the next 10 years. Last week, the rate of 10-year CDs was 2.35%. I like the predictability of CDs.
Isn't the 10 yr rate about 3.3%?
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell

Cprman
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Re: Do Bogleheads Ladder CDs Anymore?

Post by Cprman » Sun Jul 27, 2014 8:15 am

High yield savings isn't that far off from short term CDs. 10 yr CDs too long of horizon, given the decent chance of rates going no where or up from here.

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in_reality
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Re: Do Bogleheads Ladder CDs Anymore?

Post by in_reality » Sun Jul 27, 2014 8:32 am

Cprman wrote:High yield savings isn't that far off from short term CDs. 10 yr CDs too long of horizon, given the decent chance of rates going no where or up from here.
That's why you do a ladder. After they go up and you keep buying, they come down and you are still holding your ladder paying more. Ok market time it your way...

gkaplan
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Re: Do Bogleheads Ladder CDs Anymore?

Post by gkaplan » Sun Jul 27, 2014 10:03 am

Yes. I am building a five rung CD ladder.
Gordon

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nedsaid
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Re: Do Bogleheads Ladder CDs Anymore?

Post by nedsaid » Sun Jul 27, 2014 10:10 am

I am not doing this now, my fixed income investments are mostly in Intermediate Term Bonds. I have suggested the five year CD ladder for retirees and near retirees. At some point, I might consider doing this myself as part of my fixed income retirement portfolio. It is a great idea. I have been suggesting this because many people are considered about rising interest rates and the resulting drop in bond fund net asset values when that happens. With CDs held to maturity, you don't have to worry about fluctuation in principal.
A fool and his money are good for business.

Dandy
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Re: Do Bogleheads Ladder CDs Anymore?

Post by Dandy » Sun Jul 27, 2014 10:16 am

For me the purpose of my fixed income allocation in retirement is for stability and the risk is mostly on the equity side. Cds fit that purpose very well. So, along with Intermediate and short duration bond funds I have a decent allocation to a CD ladder.

While working I had access to a good Stable Value fund. So, in retirement I decided to use a 5 year CD ladder with each rung equal to one year's drawdown needs. I plan to always have this ladder as a base. As interest rates have dropped I have expanded the ladder a bit. When a rung matures I will decide whether to go beyond the 5 year ladder or "invest" it. These are all brokerage CDs that I plan to hold to maturity. The interest payments also provide opportunity to "invest" or add to the expanded ladder.

There seems to be a bit of a bias toward CDs. They aren't sexy as in my grandmother buys them. Each fixed income product has pros and cons if you are aware of all of them you can usually make good choices -- ones that meet your specific needs.

sscritic
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Re: Do Bogleheads Ladder CDs Anymore?

Post by sscritic » Sun Jul 27, 2014 10:24 am

I didn't answer. I inferred that you were thinking of still although you didn't use the word. Since I never did, I can neither still nor not still.

Or was your question one for the collective and not for the individual? If your question was for the collective, you can count my vote as no, not now, not then, not ever.

Sidney
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Re: Do Bogleheads Ladder CDs Anymore?

Post by Sidney » Sun Jul 27, 2014 10:47 am

sscritic wrote:I didn't answer. I inferred that you were thinking of still although you didn't use the word. Since I never did, I can neither still nor not still.

Or was your question one for the collective and not for the individual? If your question was for the collective, you can count my vote as no, not now, not then, not ever.
I hereby plagiarize this reply.
I always wanted to be a procrastinator.

Mitchell777
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Re: Do Bogleheads Ladder CDs Anymore?

Post by Mitchell777 » Sun Jul 27, 2014 10:57 am

Although I did not for years, I started laddering several years ago. They are 5 year, with one special that was 50 months. They do not always exactly fit the ladder perfectly but they have been close. They have been in the 2.2% to 2.32% range, with one at 1.9%, but the 1.9% allowed me to add to it at any time. I've been fortunate to get them all in either the county I live or the county I work. Most at credit unions but one at a bank. The most recent was a credit union in my work county at 2.25%. The first one matures next year as I recall.

Sagenick48
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Re: Do Bogleheads Ladder CDs Anymore?

Post by Sagenick48 » Sun Jul 27, 2014 11:24 am

I used to but let my ladder run out a year ago. Didn't seem worth the work since rates were so low.
The market goes up, the market goes down.

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LadyGeek
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Re: Do Bogleheads Ladder CDs Anymore?

Post by LadyGeek » Sun Jul 27, 2014 12:59 pm

I got a 7 x 7-year CD ladder at 3.49% with PenFed a few years ago. The idea was that I could break one early if the rates went up, or I could hold if the rates when down. I'm still holding.
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Rysto
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Re: Do Bogleheads Ladder CDs Anymore?

Post by Rysto » Sun Jul 27, 2014 1:22 pm

Here in Canada, I found that a 5-rung CD ladder has a higher yield than a intermediate term government bond fund, so I have 50% of my fixed income allocation in a CD ladder. The rest is in a bond fund (mostly for rebalancing purposes).

* They're actually called Guaranteed Investment Certificates (GICs) here.

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arthurdawg
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Re: Do Bogleheads Ladder CDs Anymore?

Post by arthurdawg » Sun Jul 27, 2014 1:23 pm

I don't, but I think it is a reasonable option if you have a set amount of money you'll need in 5 years and want to hold it with a pretty much guaranteed return.

The CD is just one of the many tools out there.
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GerryL
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Re: Do Bogleheads Ladder CDs Anymore?

Post by GerryL » Sun Jul 27, 2014 2:31 pm

I'm just starting a CD ladder with some of the cash I have set aside for the next 3.5 years of expenses between retirement (this month) and filing for SS.

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cfs
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Re: Do Bogleheads Ladder CDs Anymore?

Post by cfs » Sun Jul 27, 2014 2:36 pm

Not me.

The last time I had a certificate of deposit was back in the early 1980s when they were paying a decent percentage.

Thanks for reading.
~ Member of the Active Retired Force since 2014 ~

Van
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Re: Do Bogleheads Ladder CDs Anymore?

Post by Van » Sun Jul 27, 2014 3:33 pm

LeeMKE wrote:I don't right now, but did in 2008 when I got 5.5% on CDs over 12 months.

I usually have a ladder going, but not at the current rates!

DITTO

John3754
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Re: Do Bogleheads Ladder CDs Anymore?

Post by John3754 » Sun Jul 27, 2014 4:02 pm

For those of you saying "I no longer use CDs because rates are too low"...what are you using instead?

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