How fast from a Mutual Fund to a Brokered CD at Vanguard

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hudson
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Joined: Fri Apr 06, 2007 9:15 am

How fast from a Mutual Fund to a Brokered CD at Vanguard

Post by hudson » Thu Jan 10, 2019 7:40 pm

If I sell shares in a Vanguard Mutual Fund before 4:30, can I place an order for a brokered CD that evening with the proceeds?

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jhfenton
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Location: Ohio

Re: How fast from a Mutual Fund to a Brokered CD at Vanguard

Post by jhfenton » Thu Jan 10, 2019 7:55 pm

Mutual funds orders have to be placed before 4:00 PM ET to be processed at that day's closing price. Mutual funds sales settle T+1. The proceeds won't show as immediately available for making purchases, but you should be fine placing an order for a brokered CD the same day, either before or after the mutual fund sale. In fact, my standard practice is to buy a brokered CD (or other bond), and then place a mutual fund sale order to cover the purchase.

I believe that secondary market brokered CDs settle T+2. New issue brokered CDs can have variable settlement dates.

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hudson
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Joined: Fri Apr 06, 2007 9:15 am

Re: How fast from a Mutual Fund to a Brokered CD at Vanguard

Post by hudson » Fri Jan 11, 2019 3:32 pm

Thanks jhfenton! I'll give it a shot.

sport
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Re: How fast from a Mutual Fund to a Brokered CD at Vanguard

Post by sport » Fri Jan 11, 2019 6:05 pm

Original issue brokered CDs are offered in advance of their "start date". If you buy one, your order sits as pending until they accept it. This usually occurs within 2 or 3 days of the "start date". However, when I bought one last month, it was accepted about a week before the start date, and at the same time, the bank took down the offer for that CD so there could not be any more purchases. The next day, it was offered again, but at a lower rate. So my take is that in a rising or stable interest rate market, the banks will leave the offer open as long as they can, and accept purchases near the end of the offering time. However, in a falling rate market, the offers can disappear without notice. So, if you see one you want, it is best to get the purchase entered as soon as you can.

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