Pro's and Con's of Vanguard CD's for CD Ladder

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Ckprocker
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Pro's and Con's of Vanguard CD's for CD Ladder

Post by Ckprocker » Tue Jan 29, 2019 1:21 pm

Would you build a CD Ladder over 5 years with Vanguard CD's or go elsewhere?
Thanks
Last edited by Ckprocker on Tue Jan 29, 2019 2:45 pm, edited 1 time in total.

chazas
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Re: Pro's and Con's of Vanguard CD's for CD Ladder

Post by chazas » Tue Jan 29, 2019 2:17 pm

I've only been doing CDs for the last year year or so while saving to build a house. But at least at Schwab the available brokered CDs aren't currently competitive with the interest rates offered by some internet banks. Also with bank direct CDs you can break them with the applicable interest penalty, whereas you have to sell brokered CDs and may not recover as much.

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dunkmachine
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Re: Pro's and Con's of Vanguard CD's for CD Ladder

Post by dunkmachine » Tue Jan 29, 2019 2:42 pm

I currently have a brokered CD with Vanguard but no experience with a CD ladder. I don't find Vanguard's website necessarily useful or even intuitive for purchasing CD's. If I was building a 5 year CD ladder, I'd just go to Ally and follow their step-by-step process, which is very easy to follow. They offer the same rates as Vanguard from a quick search I just did. Plus Ally offers a raise your rate option which can be beneficial depending upon how you structure your ladder.

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David Jay
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Re: Pro's and Con's of Vanguard CD's for CD Ladder

Post by David Jay » Tue Jan 29, 2019 2:58 pm

Is this inside a tax-advantaged account, or are these regular, taxable funds?
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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RickBoglehead
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Re: Pro's and Con's of Vanguard CD's for CD Ladder

Post by RickBoglehead » Tue Jan 29, 2019 3:19 pm

dunkmachine wrote:
Tue Jan 29, 2019 2:42 pm
I currently have a brokered CD with Vanguard but no experience with a CD ladder. I don't find Vanguard's website necessarily useful or even intuitive for purchasing CD's. If I was building a 5 year CD ladder, I'd just go to Ally and follow their step-by-step process, which is very easy to follow. They offer the same rates as Vanguard from a quick search I just did. Plus Ally offers a raise your rate option which can be beneficial depending upon how you structure your ladder.
Not as clear cut as that... With the current yield of Vanguard Prime Money Market hovering around 2.5%, I'd argue that most of these rates aren't worth taking.

Ally 3 month - 0.75% ==> Vanguard offers 2.25%, Vanguard wins, but Vanguard Prime Money Market beats this
Ally 6 month - 1% ==> Vanguard offers 2.4%, Vanguard wins, but Vanguard Prime Money Market beats this
Ally 9 month - 1.25% ==> Vanguard offers 2.45%, Vanguard wins, but Vanguard Prime Money Market beats this
Ally 11 month No Penalty CD - 2.3% ($25,000+) ==> Vanguard has no comparable offer, but Vanguard Prime Money Market beats this
Ally 1 year - 2.75% ==> Vanguard offers 2.55%, Ally wins
Ally 18 month - 2.7% ($25,000+) ==> Vanguard offers 2.55%, Ally wins
Ally 2 year Raise Your Rate - 2.6% ==> Vanguard offers 2.65%, but Ally you can change rate one time.
Ally 3 year 2.75% ($25,000+) ==> Vanguard offers 2.9%, Vanguard wins
Ally 4 year Raise Your Rate - 2.6% ==> Vanguard offers no 4 year CD. Ally allows 2 rate changes.
Ally 5 year - 3.1% ==> Vanguard offers 3.1%. Tie
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