I-bonds or CDs

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macintosh
Posts: 2
Joined: Tue Apr 02, 2013 11:30 am

I-bonds or CDs

Post by macintosh » Mon Oct 22, 2018 5:07 pm

Retired and CD is maturing this month. We're in 16% tax bracket. Should we buy an i-bond, tips or renew the CD for 3%Y for 5 years. Don't think we'll need the money before 5 years. Thanks for your help.

PFInterest
Posts: 2528
Joined: Sun Jan 08, 2017 12:25 pm

Re: I-bonds or CDs

Post by PFInterest » Mon Oct 22, 2018 9:55 pm

there is no 16% federal bracket.
since you give us no other information, i guess make it another CD.

venkman
Posts: 707
Joined: Tue Mar 14, 2017 10:33 pm

Re: I-bonds or CDs

Post by venkman » Tue Oct 23, 2018 1:46 am

I would definitely wait until Nov. 1 and see what the new fixed rate on I-bonds is before making your decision.

donaldfair71
Posts: 342
Joined: Wed Mar 06, 2013 4:15 pm

Re: I-bonds or CDs

Post by donaldfair71 » Tue Oct 23, 2018 7:41 am

venkman wrote:
Tue Oct 23, 2018 1:46 am
I would definitely wait until Nov. 1 and see what the new fixed rate on I-bonds is before making your decision.
I second this. Right now, on this day, CDs make more sense (all other things being equal, as you give no more info). On November 1, that could change.

Personally, I prefer I Bonds always over CDs unless the CDs pay a lot more, but that's just me.

Darth Xanadu
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Joined: Sat Jan 27, 2018 1:47 am
Location: Middle Earth

Re: I-bonds or CDs

Post by Darth Xanadu » Tue Oct 23, 2018 9:35 am

If you do another CD I wouldn't buy a 5-year term for 3%, you can get a 1 year CD for not much less yield.
"A courageous teacher, failure is."

Jack FFR1846
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Joined: Tue Dec 31, 2013 7:05 am

Re: I-bonds or CDs

Post by Jack FFR1846 » Tue Oct 23, 2018 9:41 am

I've got one of those CIT raised rate savings accounts (saw the offer on BH) that's paying something like 2.16% so long as it stays there till January. Regular account, so I could pull it out tomorrow and the rate would drop to 1.86%, if I remember right.

I do like iBonds, though. I've got something like $350k of them. All paper.
Bogle: Smart Beta is stupid

sport
Posts: 7390
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: I-bonds or CDs

Post by sport » Tue Oct 23, 2018 2:13 pm

First of all, 3% for a 5-year CD is not a good rate. Brokered CDs yield as much as 3.5% for 5 years. Besides that, if he amount of money is significant, I would not want to put it all into a 5-year CD. What if rates are much lower 5 years from now when you want to reinvest? I would suggest dividing the money into a ladder of CDs. Some current rates for brokered CDs are:
1 year 2.60%
2 year 3.05%
3 year 3.15%
5 year 3.50%
These are available at Vanguard with no commissions to buy at original issue.

macintosh
Posts: 2
Joined: Tue Apr 02, 2013 11:30 am

Re: I-bonds or CDs

Post by macintosh » Tue Oct 23, 2018 5:11 pm

Thank you for your responses. We're retired. We do have cds that come due about every six months, and we don't need the money ($10,000) at this time. I must have used the wrong words, instead of 16% tax bracket, the 16% is the tax we pay? Anyway, I get that percentage from Turbo Tax. At what amount of money does one consider a tax exempt account? Thank you too for correcting my assumptions. I have been handling our finances for years. I'm saving so we can leave something to our three kids. I love this forum. I will wait until November to invest the proceeds from the cd.

edvest
Posts: 32
Joined: Sat Oct 06, 2018 3:27 pm

Re: I-bonds or CDs

Post by edvest » Wed Oct 24, 2018 6:24 am

sport wrote:
Tue Oct 23, 2018 2:13 pm
First of all, 3% for a 5-year CD is not a good rate. Brokered CDs yield as much as 3.5% for 5 years. Besides that, if he amount of money is significant, I would not want to put it all into a 5-year CD. What if rates are much lower 5 years from now when you want to reinvest? I would suggest dividing the money into a ladder of CDs. Some current rates for brokered CDs are:
1 year 2.60%
2 year 3.05%
3 year 3.15%
5 year 3.50%
These are available at Vanguard with no commissions to buy at original issue.
Are Vanguard/others FDIC insured?

Gill
Posts: 4727
Joined: Sun Mar 04, 2007 8:38 pm
Location: Florida

Re: I-bonds or CDs

Post by Gill » Wed Oct 24, 2018 7:45 am

macintosh wrote:
Tue Oct 23, 2018 5:11 pm
Thank you for your responses. We're retired. We do have cds that come due about every six months, and we don't need the money ($10,000) at this time. I must have used the wrong words, instead of 16% tax bracket, the 16% is the tax we pay? Anyway, I get that percentage from Turbo Tax. At what amount of money does one consider a tax exempt account? Thank you too for correcting my assumptions. I have been handling our finances for years. I'm saving so we can leave something to our three kids. I love this forum. I will wait until November to invest the proceeds from the cd.
16% is your effective tax, not your marginal tax bracket which is likely higher.
Gill

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William4u
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Joined: Fri Jun 01, 2012 3:02 pm

Re: I-bonds or CDs

Post by William4u » Wed Oct 24, 2018 9:22 am

edvest wrote:
Wed Oct 24, 2018 6:24 am
sport wrote:
Tue Oct 23, 2018 2:13 pm
First of all, 3% for a 5-year CD is not a good rate. Brokered CDs yield as much as 3.5% for 5 years. Besides that, if he amount of money is significant, I would not want to put it all into a 5-year CD. What if rates are much lower 5 years from now when you want to reinvest? I would suggest dividing the money into a ladder of CDs. Some current rates for brokered CDs are:
1 year 2.60%
2 year 3.05%
3 year 3.15%
5 year 3.50%
These are available at Vanguard with no commissions to buy at original issue.
Are Vanguard/others FDIC insured?
Yes. See https://investor.vanguard.com/investing ... y-sell-cds and https://investor.vanguard.com/cd-bond/buy-cds-bonds

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