Brokered CD's

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
windpig
Posts: 20
Joined: Sun Jun 16, 2019 8:58 am

Brokered CD's

Post by windpig » Wed Mar 25, 2020 7:09 pm

I'm looking at using some CD's for part of my wife's portion of her bond portfolio in her Fidelity 401K. Any info on doing this is greatly appreciated. There are multiple banks listed, all have FDIC backing, the best rate has no call protection. What should my considerations be?

Thank you

typical.investor
Posts: 1447
Joined: Mon Jun 11, 2018 3:17 am

Re: Brokered CD's

Post by typical.investor » Wed Mar 25, 2020 7:44 pm

windpig wrote:
Wed Mar 25, 2020 7:09 pm
I'm looking at using some CD's for part of my wife's portion of her bond portfolio in her Fidelity 401K. Any info on doing this is greatly appreciated. There are multiple banks listed, all have FDIC backing, the best rate has no call protection. What should my considerations be?

Thank you
I assume you will never have to try and sell the CD on the market - meaning you will hold it to maturity. In that case, don't mind the bank if it's FDIC insured. I've heard lessor known bank CDs sometimes get discounted a little bit in case you have to go through the hassle of claiming the money via FDIC.

How much are you depending on the yield? If you need it to meet expenses, maybe a bigger bank and call protection is better as they give you more certainty.

I've always just gone with the highest rate and watch them get called. I have one called this week which is fine as I'll up it toward stocks. I've not been buying lately as rates seem too low for the lock-in. Online banks seemed better. Haven't looked in the last couple months though.

Just watch out for stepped-up-CDs. The rates are misleading as often the final year is a much, much higher rate which brings up the average, but likely it'd get called before then.
Last edited by typical.investor on Wed Mar 25, 2020 8:35 pm, edited 1 time in total.

Alan S.
Posts: 9299
Joined: Mon May 16, 2011 6:07 pm
Location: Prescott, AZ

Re: Brokered CD's

Post by Alan S. » Wed Mar 25, 2020 7:51 pm

windpig wrote:
Wed Mar 25, 2020 7:09 pm
I'm looking at using some CD's for part of my wife's portion of her bond portfolio in her Fidelity 401K. Any info on doing this is greatly appreciated. There are multiple banks listed, all have FDIC backing, the best rate has no call protection. What should my considerations be?

Thank you
1) Appropriate term
2) Best rate WITH call protection

Be sure the FDIC limit is not breached if she has other holdings in the selected bank in other retirement plans.
Verify that the CD can be rolled over in kind if she leaves the company

Topic Author
windpig
Posts: 20
Joined: Sun Jun 16, 2019 8:58 am

Re: Brokered CD's

Post by windpig » Wed Mar 25, 2020 8:33 pm

Great info. Thank you for taking the time to respond!

User avatar
indexfundfan
Posts: 2874
Joined: Tue Feb 20, 2007 11:21 am
Contact:

Re: Brokered CD's

Post by indexfundfan » Wed Mar 25, 2020 8:41 pm

Also browse the secondary CDs. In the past week, I could frequently find bargains (higher yields compared to new issue CDs).
My signature has been deleted.

Post Reply