brokered CD with VG - CapOne, Amex, GS.. do I care which one?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
standard7
Posts: 116
Joined: Thu Jul 30, 2015 9:39 am

brokered CD with VG - CapOne, Amex, GS.. do I care which one?

Post by standard7 » Wed Oct 21, 2015 1:46 pm

Choosing a brokered CD with VG - CapOne, Amex, GS..

The CDs' all yield the same 2.25/5yr, Survivor Option, Semi Coupon and FDIC. Do I care which bank?

thanks

Wagnerjb
Posts: 7203
Joined: Mon Feb 19, 2007 8:44 pm
Location: Houston, Texas

Re: brokered CD with VG - CapOne, Amex, GS.. do I care which one?

Post by Wagnerjb » Wed Oct 21, 2015 2:16 pm

Personally, I don't see why one would care which bank offered the CD....as long as the bank was covered by FDIC insurance and you were under the $250k limit per bank.

Best wishes.
Andy

User avatar
dm200
Posts: 22912
Joined: Mon Feb 26, 2007 2:21 pm
Location: Washington DC area

Re: brokered CD with VG - CapOne, Amex, GS.. do I care which one?

Post by dm200 » Wed Oct 21, 2015 3:04 pm

standard7 wrote:Choosing a brokered CD with VG - CapOne, Amex, GS..
The CDs' all yield the same 2.25/5yr, Survivor Option, Semi Coupon and FDIC. Do I care which bank?
thanks
As long as you stay under the $250,000 FDIC limit, probably not.

I am certainly not smart enough to make such a prediction or judgement, but if you were - it would be best to pick the one that is least likely to "fail" (or be taken over) during the term of the CD. In such a case, you would get the CD balance back before the end of the term.

Topic Author
standard7
Posts: 116
Joined: Thu Jul 30, 2015 9:39 am

Re: brokered CD with VG - CapOne, Amex, GS.. do I care which one?

Post by standard7 » Wed Oct 21, 2015 3:17 pm

thank you!

hirlaw
Posts: 324
Joined: Tue Sep 29, 2009 10:20 am

Re: brokered CD with VG - CapOne, Amex, GS.. do I care which one?

Post by hirlaw » Wed Oct 21, 2015 3:19 pm

Question: With a CD at a bank the interest in compounded. When you purchase a brokered CD, does the interest payment roll into the CD (compounded) or is it paid out?

Thanks

Topic Author
standard7
Posts: 116
Joined: Thu Jul 30, 2015 9:39 am

Re: brokered CD with VG - CapOne, Amex, GS.. do I care which one?

Post by standard7 » Wed Oct 21, 2015 3:31 pm

My understanding is that with VG it sweeps to the money market, based upon the coupon schedule. At VG I saw semi yearly and monthly CDs.

The value of the CD will fluctuate within your portfolio as interest rates change, but held to maturity the initial investment amount is automatically deposited back into the same sweep account.

EagertoLearnMore
Posts: 564
Joined: Wed Jun 30, 2010 4:05 pm

Re: brokered CD with VG - CapOne, Amex, GS.. do I care which one?

Post by EagertoLearnMore » Wed Oct 21, 2015 3:32 pm

It WOULD matter if you own CDs directly with any of the aforementioned banks. But if these are your only CDs I do not see any problem as long as all of them are FDIC insured.

ThisTimeItsDifferent
Posts: 247
Joined: Sat Jan 31, 2015 2:51 pm

Re: brokered CD with VG - CapOne, Amex, GS.. do I care which one?

Post by ThisTimeItsDifferent » Wed Oct 21, 2015 3:40 pm

standard7 wrote: The value of the CD will fluctuate within your portfolio as interest rates change, but held to maturity the initial investment amount is automatically deposited back into the same sweep account.
Held to maturity, does the initial investment that the current holder made get deposited back or does the par value get returned?

If the bank is liquidated by the FDIC, one would lose any premium that one paid over par since the FDIC pays back par.

Does that also mean that if one purchased a brokered CD at a discount, that one would still get par value and make a profit?

Topic Author
standard7
Posts: 116
Joined: Thu Jul 30, 2015 9:39 am

Re: brokered CD with VG - CapOne, Amex, GS.. do I care which one?

Post by standard7 » Wed Oct 21, 2015 3:52 pm

Does that also mean that if one purchased a brokered CD at a discount, that one would still get par value and make a profit?
tricky! not sure, but this brings up a good question-

I was only looking at new issue CDs, should I be looking at the secondary market or is it assumed that you would always get a better rate with initial issue CDs when comparing similar maturity dates?

Post Reply