CDs coming due. Where to reinvest proceeds?

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pfb3326
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CDs coming due. Where to reinvest proceeds?

Post by pfb3326 »

I have a number of CDs maturing in the next few months. These served as bond alternatives, emergency fund and capital preservation. I do not depend upon their income for living expenses. Renewal rates are pathetically low (typically: 0.60% for 12 months) and are trending further down.
What alternate instruments would you suggest that would achieve all or most of the same goals? Thanks.
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arcticpineapplecorp.
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Re: CDs coming due. Where to reinvest proceeds?

Post by arcticpineapplecorp. »

pfb3326 wrote: Thu Aug 20, 2020 10:02 am I have a number of CDs maturing in the next few months. These served as bond alternatives, emergency fund and capital preservation. I do not depend upon their income for living expenses. Renewal rates are pathetically low (typically: 0.60% for 12 months) and are trending further down.
What alternate instruments would you suggest that would achieve all or most of the same goals? Thanks.
Ally has a 12 month for 0.90%:
https://www.ally.com/bank/high-yield-cd/

their savings pays 0.80%:
https://www.ally.com/bank/online-savings-account/

that any better?

if not, what kind of interest are you hoping to earn on money you're not willing to take any risk with?
It's "Stay" the course, not Stray the Course. Buy and Hold works. You should really try it sometime. Get a plan: www.bogleheads.org/wiki/Investment_policy_statement
dbr
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Re: CDs coming due. Where to reinvest proceeds?

Post by dbr »

Reinvest in CDs?

Honestly, you can read all the threads already on the forum dealing with this question and find that there is no answer other than to grin and bear it.

There are tons of suggestions for all the different flavors of vanilla.

If it is not a lot of money then maybe I bonds seem to float to the top of a dismal list, but there is a purchase limit there that makes the option useless for people trying to reinvest.

This dilemma is what is called reinvestment risk. It also is an example of the fact that things like CDs are not risk free. Risk is the variation in annual return, which considering reinvestment might be a few percent, meaning that CD interest rates vary between 1% and 5% over time, or more than that.
retired@50
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Re: CDs coming due. Where to reinvest proceeds?

Post by retired@50 »

pfb3326 wrote: Thu Aug 20, 2020 10:02 am These served as bond alternatives, emergency fund and capital preservation.
Thanks.
If the goals for the money haven't changed, then neither should the investment. Continue with CDs while shopping around for the best rate.

Regards,
This is one person's opinion. Nothing more.
tashnewbie
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Re: CDs coming due. Where to reinvest proceeds?

Post by tashnewbie »

Like others have said, there aren't really many other options that have no risk to principal.

You could play the bank account bonus game with some of the money. You'll have to decide if it's worth your time. Doctor of Credit website has a good list of current bonuses that are available.
7eight9
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Re: CDs coming due. Where to reinvest proceeds?

Post by 7eight9 »

You might want to look into multi-year guaranteed annuities (MYGAs). They pay significantly more than CDs.

Example --- Fixed Annuity Rates for August 2020 --- https://www.blueprintincome.com/fixed-annuities

Five year rates per above link are as high as 3.45%.
I guess it all could be much worse. | They could be warming up my hearse.
dbr
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Re: CDs coming due. Where to reinvest proceeds?

Post by dbr »

A tongue-in-cheek option when faced with a situation that punishes savers and reward spenders and borrowers is to spend more now and save less.

That is not actually meant to be ridiculous. The overall utility function on home improvements, accelerated maintenance, replacing automobiles, or even buying a yacht might be positive, not to mention the low interest rates on mortgages. Keeping old cars too long can be another dubious exchange. One can also consider increased charitable giving given the lack of utility in keeping the money. Naturally you don't want to do something stupid on a whim or lose sight of the long term plan.

One thing I noticed a couple of years ago having major concrete work done around our house was how stupid we were not to have done it twenty years sooner. Same comment on remodeling our shower area.
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batpot
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Re: CDs coming due. Where to reinvest proceeds?

Post by batpot »

7eight9 wrote: Thu Aug 20, 2020 10:20 am You might want to look into multi-year guaranteed annuities (MYGAs). They pay significantly more than CDs.

Example --- Fixed Annuity Rates for August 2020 --- https://www.blueprintincome.com/fixed-annuities

Five year rates per above link are as high as 3.45%.
I wouldn't go less than an A+ company.
Beats a CD by quite a bit, but not sure the risks are equivalent, even with an A+ company.

I'm going to take a stab at this:
3% FDIC insured savings...too good to be true?
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batpot
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Re: CDs coming due. Where to reinvest proceeds?

Post by batpot »

dbr wrote: Thu Aug 20, 2020 10:48 am A tongue-in-cheek option when faced with a situation that punishes savers and reward spenders and borrowers is to spend more now and save less.

That is not actually meant to be ridiculous. The overall utility function on home improvements, accelerated maintenance, replacing automobiles, or even buying a yacht might be positive, not to mention the low interest rates on mortgages. Keeping old cars too long can be another dubious exchange. One can also consider increased charitable giving given the lack of utility in keeping the money. Naturally you don't want to do something stupid on a whim or lose sight of the long term plan.

One thing I noticed a couple of years ago having major concrete work done around our house was how stupid we were not to have done it twenty years sooner. Same comment on remodeling our shower area.
great points!
:sharebeer
dbr
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Re: CDs coming due. Where to reinvest proceeds?

Post by dbr »

batpot wrote: Thu Aug 20, 2020 10:52 am
7eight9 wrote: Thu Aug 20, 2020 10:20 am You might want to look into multi-year guaranteed annuities (MYGAs). They pay significantly more than CDs.

Example --- Fixed Annuity Rates for August 2020 --- https://www.blueprintincome.com/fixed-annuities

Five year rates per above link are as high as 3.45%.
I wouldn't go less than an A+ company.
Still, beats a CD by quite a bit, but not sure the risks are equivalent, even with an A+ company.

I'm going to take a stab at this:
3% FDIC insured savings...too good to be true?
You can see the yield varies quite a lot with the rating.

I have no idea how to judge the risk of default relative to a CD, which under FDIC can probably be taken to be zero. I would think a decision like this would depend on the importance of the money to the investor.

Isn't there also optionality involved in a commitment to a time span and also a liquidity risk in that the annuity can't be redeemed early -- or not? Remember CDs can usually be redeemed early with or without some penalty.
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Stinky
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Re: CDs coming due. Where to reinvest proceeds?

Post by Stinky »

7eight9 wrote: Thu Aug 20, 2020 10:20 am You might want to look into multi-year guaranteed annuities (MYGAs). They pay significantly more than CDs.

Example --- Fixed Annuity Rates for August 2020 --- https://www.blueprintincome.com/fixed-annuities

Five year rates per above link are as high as 3.45%.
This can be a good option if you meet the criteria.

Positives - rates are significantly higher than CDs or most any alternative; taxes on interest are deferred until interest is withdrawn.

Negatives - state guaranty fund protection, rather than FDIC; significant penalties for withdrawal prior to the end of the term; tax penalty for interest withdrawal prior to age 59.5 from a taxable account.

There have been several recent threads on MYGAs. Post back if you have questions.
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hudson
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Re: CDs coming due. Where to reinvest proceeds?

Post by hudson »

pfb3326 wrote: Thu Aug 20, 2020 10:02 am I have a number of CDs maturing in the next few months. These served as bond alternatives, emergency fund and capital preservation. I do not depend upon their income for living expenses. Renewal rates are pathetically low (typically: 0.60% for 12 months) and are trending further down.
What alternate instruments would you suggest that would achieve all or most of the same goals? Thanks.
Best available 3-5 year CD.
High yield savings account
Maybe take 30% and put it Vang. Intemed Muni...or the like...if the taxes work out. I'm sure you'd first do you homework.

I've read about all of the annuity type products and other alternative investments. I can't warm up to any of them. I'd rather invest in real estate.

Larry Swedroe wrote a book about alternative investments...may be worth a look....here's a summary:

viewtopic.php?p=23364#p23364

EDIT: a link to Larry's book: https://www.amazon.com/Only-Guide-Alter ... B003NE61GC
Last edited by hudson on Fri Aug 21, 2020 9:39 am, edited 1 time in total.
BlueRidgePro
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Re: CDs coming due. Where to reinvest proceeds?

Post by BlueRidgePro »

No need to lock in low CD rates for a time period. Keep the money liquid in savings or money market funds. When CD rates go back up, you can easily get back in. Chasing a small interest difference is not worth the effort when choosing where to park the money. Stick with your existing broker or bank for convenience.
MikeG62
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Re: CDs coming due. Where to reinvest proceeds?

Post by MikeG62 »

pfb3326 wrote: Thu Aug 20, 2020 10:02 am I have a number of CDs maturing in the next few months. These served as bond alternatives, emergency fund and capital preservation. I do not depend upon their income for living expenses. Renewal rates are pathetically low (typically: 0.60% for 12 months) and are trending further down.
What alternate instruments would you suggest that would achieve all or most of the same goals? Thanks.
You should be able to do quite a bit better than 0.60% for 12-months. I have suggested Barksdale Federal CU (assume you can qualify - may be easier than you think) in another thread (see below):

viewtopic.php?f=2&t=292085&p=5442842&hi ... e#p5442842

I have found some sporadic decent (in this environment) deals this past month. Barksdale was one, the Asian Bank was another (that promo rate is no longer available). I would suggest bookmarking Deposit Accounts and checking it daily. Look for deals in your area as well as national deals.

https://www.depositaccounts.com/blog/

Minimally, I'd get the funds into Marcus and into their AARP 8-month special CD (rate is 1.10%) while you search for a longer-term (better) landing spot. Anyone can join AARP for $12.
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Re: CDs coming due. Where to reinvest proceeds?

Post by indexfundfan »

I have stuffed recently available cash into 3-yr, 4-yr and 5-yr MYGAs, all rated at least AM Best A- and paying at least 3%.
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jackb1117
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Re: CDs coming due. Where to reinvest proceeds?

Post by jackb1117 »

I'm curious if age plays a factor here (and apologies if OP mentioned age or situation and I missed it). I had not previously heard of MYGA's, and after some cursory research it sounds like they may be more appropriate for those closer to retirement.

In boglehead fashion, I have everything automated being pumped into 3 (ish) fund portfolio and never change this. In non-boglehead fashion I have been saving 'extra' money (unexpected cash bonus, unpredictable side hustle money, fun money win like TSLA, etc.) into money market in brokerage account as 'dry powder's as I feel like the market does not currently reflect reality (yes, yes, time in the market beats timing the market, but I'm human so...).

I, like OP, would like to earn a better 'safe' return on cash. That being said I want it to still be cash-like since my timeline to retirement is (optimistically) 10 away at a minimum and want the liquidity to take advantage of that liquidity should the opportunity present itself.

All that being said (and not intending to hijack thread, will delete and start new if that looks to happen), are the recommendations thus far what the community would advise irrespective of age / time to retirement?
fatcoffeedrinker
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Re: CDs coming due. Where to reinvest proceeds?

Post by fatcoffeedrinker »

jackb1117 wrote: Fri Aug 21, 2020 8:27 pm I'm curious if age plays a factor here (and apologies if OP mentioned age or situation and I missed it). I had not previously heard of MYGA's, and after some cursory research it sounds like they may be more appropriate for those closer to retirement.

In boglehead fashion, I have everything automated being pumped into 3 (ish) fund portfolio and never change this. In non-boglehead fashion I have been saving 'extra' money (unexpected cash bonus, unpredictable side hustle money, fun money win like TSLA, etc.) into money market in brokerage account as 'dry powder's as I feel like the market does not currently reflect reality (yes, yes, time in the market beats timing the market, but I'm human so...).

I, like OP, would like to earn a better 'safe' return on cash. That being said I want it to still be cash-like since my timeline to retirement is (optimistically) 10 away at a minimum and want the liquidity to take advantage of that liquidity should the opportunity present itself.

All that being said (and not intending to hijack thread, will delete and start new if that looks to happen), are the recommendations thus far what the community would advise irrespective of age / time to retirement?
I started this thread a few days ago regarding MYGAs for those nearing retirement. Some good info in here.

viewtopic.php?p=5435656
hudson
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Re: CDs coming due. Where to reinvest proceeds?

Post by hudson »

jackb1117 wrote: Fri Aug 21, 2020 8:27 pm I'm curious if age plays a factor here (and apologies if OP mentioned age or situation and I missed it). I had not previously heard of MYGA's, and after some cursory research it sounds like they may be more appropriate for those closer to retirement.

In boglehead fashion, I have everything automated being pumped into 3 (ish) fund portfolio and never change this. In non-boglehead fashion I have been saving 'extra' money (unexpected cash bonus, unpredictable side hustle money, fun money win like TSLA, etc.) into money market in brokerage account as 'dry powder's as I feel like the market does not currently reflect reality (yes, yes, time in the market beats timing the market, but I'm human so...).

I, like OP, would like to earn a better 'safe' return on cash. That being said I want it to still be cash-like since my timeline to retirement is (optimistically) 10 away at a minimum and want the liquidity to take advantage of that liquidity should the opportunity present itself.

All that being said (and not intending to hijack thread, will delete and start new if that looks to happen), are the recommendations thus far what the community would advise irrespective of age / time to retirement?
I wouldn't buy an MYGA because I don't think that they are that safe. Maybe as safe as an investment grade corporate bond...maybe not.

I think the old safe answers are still appropriate. My opinion is up-thread: viewtopic.php?p=5446678&sid=788f4d2c03b ... 1#p5446678
Moneybags1
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Re: CDs coming due. Where to reinvest proceeds?

Post by Moneybags1 »

I have a Jumbo 18 Mo CD paying 3.2% now offering .55% for same term. Got my heart set on Vanguard Ultra Short Term Bond fund Admiral yielding .96% as a parking place. CD is up Sept 9, 2020. Anyone here like the VG Ultra Short Term?

Thanks,
Mike
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Stinky
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Re: CDs coming due. Where to reinvest proceeds?

Post by Stinky »

Moneybags1 wrote: Sat Aug 22, 2020 6:20 am Anyone here like the VG Ultra Short Term?
Yes, I have money in Vanguard Ultra Short. 1.07% current SEC yield. Very limited price volatility because of the extremely short duration of the assets.
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sycamore
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Re: CDs coming due. Where to reinvest proceeds?

Post by sycamore »

Moneybags1 wrote: Sat Aug 22, 2020 6:20 am I have a Jumbo 18 Mo CD paying 3.2% now offering .55% for same term. Got my heart set on Vanguard Ultra Short Term Bond fund Admiral yielding .96% as a parking place. CD is up Sept 9, 2020. Anyone here like the VG Ultra Short Term?

Thanks,
Mike
VUSFX (Admiral shares) is a reasonable choice with its low ER and good (for now) yield. I'd use it over ICSH / iShares Ultra Short-Term Bond ETF.
frugalecon
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Re: CDs coming due. Where to reinvest proceeds?

Post by frugalecon »

I am in the same boat. One possibility I was considering was pre-paying my mortgage prepayment. I have been paying enough extra every month to retire the loan by my projected retirement date. I may direct at least part if maturing CDs to that project, and allocate the monthly savings to a HYSA.
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JeremiahS
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Re: CDs coming due. Where to reinvest proceeds?

Post by JeremiahS »

I recently ran into a similar problem.

At the beginning of the year I was earning ~1.60% on my money market fund. Right now that fund is offering a rate of 0.05%. Clearly it was time to move that money somewhere. Now, one important factor here is that this is a pile of short term savings I have been actively adding to every month. What I did was was open up a new savings account at at my bank at 0.01%. This didn't improve my return any, but it did increase the liquidity of the money. Before it would take me 3-5 days to transfer money between my money market account and my checking account. Now I can carry a lower balance in my checking account, because I can more easily top it off when needed. I took this now excess money and paid down principle on long term debt (mortgage rate at 2.99%). With all new money I'm now allocating it 50% to my savings account and 50% to debt pay off this effectively gets me an interest rate of 1.50% on all new savings. (0.01%+2.99%)/2=1.50%

It's not as clean as I would like, but It's not adding any risk to money that is designated as short term savings, and it makes me feel like I'm at least earning something. I haven't seen any other options for savings that I've liked any better.
am
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Re: CDs coming due. Where to reinvest proceeds?

Post by am »

sycamore wrote: Sat Aug 22, 2020 7:24 am
Moneybags1 wrote: Sat Aug 22, 2020 6:20 am I have a Jumbo 18 Mo CD paying 3.2% now offering .55% for same term. Got my heart set on Vanguard Ultra Short Term Bond fund Admiral yielding .96% as a parking place. CD is up Sept 9, 2020. Anyone here like the VG Ultra Short Term?

Thanks,
Mike
VUSFX (Admiral shares) is a reasonable choice with its low ER and good (for now) yield. I'd use it over ICSH / iShares Ultra Short-Term Bond ETF.
Credit profile of this fund is not the best. Guess yield has to come from somewhere. Years back, Schwab had a fund of this type which lost a ton during the great financial crisis. I think it’s because it was holding Lehman debt.
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JeremiahS
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Re: CDs coming due. Where to reinvest proceeds?

Post by JeremiahS »

MikeG62 wrote: Fri Aug 21, 2020 9:31 am Minimally, I'd get the funds into Marcus and into their AARP 8-month special CD (rate is 1.10%) while you search for a longer-term (better) landing spot. Anyone can join AARP for $12.
They call it an association for retired people, but the actual requirements for joining is being 55+.

It'll be another 2 decades before they let me into their club. 8-)
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JeremiahS
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Re: CDs coming due. Where to reinvest proceeds?

Post by JeremiahS »

Another important point for consideration here is to make sure that you are not majoring in the minors. The ratio of the value of my long term retirement accounts to the value of my short term savings accounts is ~14:1. The older I get the larger this ratio will become. At a certain point playing around with maximizing return on a minor part of your overall net worth really doesn't justify the time needed for research and moving funds around from institution to institution.
sycamore
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Re: CDs coming due. Where to reinvest proceeds?

Post by sycamore »

JeremiahS wrote: Sat Aug 22, 2020 8:03 am
MikeG62 wrote: Fri Aug 21, 2020 9:31 am Minimally, I'd get the funds into Marcus and into their AARP 8-month special CD (rate is 1.10%) while you search for a longer-term (better) landing spot. Anyone can join AARP for $12.
They call it an association for retired people, but the actual requirements for joining is being 55+.

It'll be another 2 decades before they let me into their club. 8-)
Not quite 55+. https://www.aarp.org/membership/faqs/
How old do I have to be to join?

All people age 50 and older are eligible for full membership with AARP. As an AARP member, you will get a free secondary membership for your household, access to hundreds of carefully chosen discounts, programs and services, AARP The Magazine, and much more.

I’m not 50 yet, but I want to join, can I?

Yes, AARP offers Associate Memberships for people under 50. As an Associate member, you'll get all of the great benefits that come with membership that aren't restricted by vendor offer requirements, such as age-restricted insurance products.

After you turn 50, your membership will automatically convert to a full membership with no effort on your part.
aqan
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Re: CDs coming due. Where to reinvest proceeds?

Post by aqan »

Feed the bubble for a week? Pretty good chance you can make 1% in a week as opposed to full year in a CD.
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vineviz
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Re: CDs coming due. Where to reinvest proceeds?

Post by vineviz »

iShares iBonds Dec 2025 Term Corp ETF ( IBDQ) has a SEC yield of 1.25%.
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retired@50
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Re: CDs coming due. Where to reinvest proceeds?

Post by retired@50 »

JeremiahS wrote: Sat Aug 22, 2020 8:03 am
They call it an association for retired people, but the actual requirements for joining is being 55+.

It'll be another 2 decades before they let me into their club. 8-)
You can join AARP at 50.

See link: https://www.help.aarp/s/article/How-old ... -join-AARP

Regards,
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Re: CDs coming due. Where to reinvest proceeds?

Post by Stinky »

aqan wrote: Sat Aug 22, 2020 12:56 pm Feed the bubble for a week? Pretty good chance you can make 1% in a week as opposed to full year in a CD.
This sounds like taking a walk on the wild side to me. :D
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anon_investor
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Re: CDs coming due. Where to reinvest proceeds?

Post by anon_investor »

Stinky wrote: Sat Aug 22, 2020 1:53 pm
aqan wrote: Sat Aug 22, 2020 12:56 pm Feed the bubble for a week? Pretty good chance you can make 1% in a week as opposed to full year in a CD.
This sounds like taking a walk on the wild side to me. :D
How about buy Tesla for a week :twisted: :twisted: :twisted: .
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Re: CDs coming due. Where to reinvest proceeds?

Post by aqan »

anon_investor wrote: Sat Aug 22, 2020 2:04 pm
Stinky wrote: Sat Aug 22, 2020 1:53 pm
aqan wrote: Sat Aug 22, 2020 12:56 pm Feed the bubble for a week? Pretty good chance you can make 1% in a week as opposed to full year in a CD.
This sounds like taking a walk on the wild side to me. :D
How about buy Tesla for a week :twisted: :twisted: :twisted: .
Oh that will be more like 25% (at least it was last week)
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anon_investor
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Re: CDs coming due. Where to reinvest proceeds?

Post by anon_investor »

aqan wrote: Sat Aug 22, 2020 3:48 pm
anon_investor wrote: Sat Aug 22, 2020 2:04 pm
Stinky wrote: Sat Aug 22, 2020 1:53 pm
aqan wrote: Sat Aug 22, 2020 12:56 pm Feed the bubble for a week? Pretty good chance you can make 1% in a week as opposed to full year in a CD.
This sounds like taking a walk on the wild side to me. :D
How about buy Tesla for a week :twisted: :twisted: :twisted: .
Oh that will be more like 25% (at least it was last week)
25% sounds better than 1% :twisted: :twisted: :twisted:
aqan
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Re: CDs coming due. Where to reinvest proceeds?

Post by aqan »

anon_investor wrote: Sat Aug 22, 2020 3:52 pm
aqan wrote: Sat Aug 22, 2020 3:48 pm
anon_investor wrote: Sat Aug 22, 2020 2:04 pm
Stinky wrote: Sat Aug 22, 2020 1:53 pm
aqan wrote: Sat Aug 22, 2020 12:56 pm Feed the bubble for a week? Pretty good chance you can make 1% in a week as opposed to full year in a CD.
This sounds like taking a walk on the wild side to me. :D
How about buy Tesla for a week :twisted: :twisted: :twisted: .
Oh that will be more like 25% (at least it was last week)
25% sounds better than 1% :twisted: :twisted: :twisted:
That will be a lot more than what OP is looking for...
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anon_investor
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Re: CDs coming due. Where to reinvest proceeds?

Post by anon_investor »

aqan wrote: Sat Aug 22, 2020 3:56 pm
anon_investor wrote: Sat Aug 22, 2020 3:52 pm
aqan wrote: Sat Aug 22, 2020 3:48 pm
anon_investor wrote: Sat Aug 22, 2020 2:04 pm
Stinky wrote: Sat Aug 22, 2020 1:53 pm

This sounds like taking a walk on the wild side to me. :D
How about buy Tesla for a week :twisted: :twisted: :twisted: .
Oh that will be more like 25% (at least it was last week)
25% sounds better than 1% :twisted: :twisted: :twisted:
That will be a lot more than what OP is looking for...
My real response would be to put 80% in another CD and 20% into VTSAX.
RCL
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Re: CDs coming due. Where to reinvest proceeds?

Post by RCL »

See, this is why the stock market is currently going up....people looking for yield
TravelforFun
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Re: CDs coming due. Where to reinvest proceeds?

Post by TravelforFun »

Have you looked into worthybond.com? It pays me about 5% a year and I can withdraw any time.

TravelforFun
am
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Re: CDs coming due. Where to reinvest proceeds?

Post by am »

RCL wrote: Sat Aug 22, 2020 6:03 pm See, this is why the stock market is currently going up....people looking for yield
Stock market going up mostly because of mega tech. Most sp500 not doing well.
hudson
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Re: CDs coming due. Where to reinvest proceeds?

Post by hudson »

TravelforFun wrote: Sat Aug 22, 2020 6:17 pm Have you looked into worthybond.com? It pays me about 5% a year and I can withdraw any time.
TravelforFun
Here's a Boglehead discussion on worthy bonds. viewtopic.php?t=268828

Where would you rate it as far as safety?
safe as CDs?
safe as a total bond fund?
investment grade corporates?
total stock market?
Nowizard
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Re: CDs coming due. Where to reinvest proceeds?

Post by Nowizard »

You can take more risk or simply grin and bear it.

Tim
dbr
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Re: CDs coming due. Where to reinvest proceeds?

Post by dbr »

Nowizard wrote: Sun Aug 23, 2020 8:17 am You can take more risk or simply grin and bear it.

Tim
One of life's most valuable lessons is that it is not always a bowl of cherries but just the pits.
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Sandtrap
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Re: CDs coming due. Where to reinvest proceeds?

Post by Sandtrap »

7eight9 wrote: Thu Aug 20, 2020 10:20 am You might want to look into multi-year guaranteed annuities (MYGAs). They pay significantly more than CDs.

Example --- Fixed Annuity Rates for August 2020 --- https://www.blueprintincome.com/fixed-annuities

Five year rates per above link are as high as 3.45%.
How much of that 3.45% annual return is a return of principal?

Curious
j :happy
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Sandtrap
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Re: CDs coming due. Where to reinvest proceeds?

Post by Sandtrap »

dbr wrote: Sun Aug 23, 2020 8:30 am
Nowizard wrote: Sun Aug 23, 2020 8:17 am You can take more risk or simply grin and bear it.

Tim
One of life's most valuable lessons is that it is not always a bowl of cherries but just the pits.
Nice!
I have never heard this before.

"Pits" seems more appropriate than the "lemonade out of lemons" thing.
Thanks!!
j :happy
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Stinky
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Re: CDs coming due. Where to reinvest proceeds?

Post by Stinky »

Sandtrap wrote: Sun Aug 23, 2020 8:37 am
7eight9 wrote: Thu Aug 20, 2020 10:20 am You might want to look into multi-year guaranteed annuities (MYGAs). They pay significantly more than CDs.

Example --- Fixed Annuity Rates for August 2020 --- https://www.blueprintincome.com/fixed-annuities

Five year rates per above link are as high as 3.45%.
How much of that 3.45% annual return is a return of principal?

Curious
j :happy
None of that is return of principal.

These MYGAs are similar to a CD, except they are issued by an insurance company. So in the example mentioned above, you would make a deposit of $X at a certain time. You would earn interest at 3.45% on the compounding balance for 5 years. At the end of 5 years, you could take the accumulated value in cash, roll it to an annuity with another insurance company, or leave it with the same company for a new term period.
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Sandtrap
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Re: CDs coming due. Where to reinvest proceeds?

Post by Sandtrap »

Stinky wrote: Sun Aug 23, 2020 8:50 am
Sandtrap wrote: Sun Aug 23, 2020 8:37 am
7eight9 wrote: Thu Aug 20, 2020 10:20 am You might want to look into multi-year guaranteed annuities (MYGAs). They pay significantly more than CDs.

Example --- Fixed Annuity Rates for August 2020 --- https://www.blueprintincome.com/fixed-annuities

Five year rates per above link are as high as 3.45%.
How much of that 3.45% annual return is a return of principal?

Curious
j :happy
None of that is return of principal.

These MYGAs are similar to a CD, except they are issued by an insurance company. So in the example mentioned above, you would make a deposit of $X at a certain time. You would earn interest at 3.45% on the compounding balance for 5 years. At the end of 5 years, you could take the accumulated value in cash, roll it to an annuity with another insurance company, or leave it with the same company for a new term period.
Great info.
Thanks!

j :D
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dbr
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Re: CDs coming due. Where to reinvest proceeds?

Post by dbr »

Stinky wrote: Sun Aug 23, 2020 8:50 am
Sandtrap wrote: Sun Aug 23, 2020 8:37 am
7eight9 wrote: Thu Aug 20, 2020 10:20 am You might want to look into multi-year guaranteed annuities (MYGAs). They pay significantly more than CDs.

Example --- Fixed Annuity Rates for August 2020 --- https://www.blueprintincome.com/fixed-annuities

Five year rates per above link are as high as 3.45%.
How much of that 3.45% annual return is a return of principal?

Curious
j :happy
None of that is return of principal.

These MYGAs are similar to a CD, except they are issued by an insurance company. So in the example mentioned above, you would make a deposit of $X at a certain time. You would earn interest at 3.45% on the compounding balance for 5 years. At the end of 5 years, you could take the accumulated value in cash, roll it to an annuity with another insurance company, or leave it with the same company for a new term period.
It would be interesting to see a historical chart of how MYGA interest has behaved. This may be a point in time where this sort of instrument has a unique advantage for placing some fixed income. One should carefully study the advantages and disadvantages.
TravelforFun
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Re: CDs coming due. Where to reinvest proceeds?

Post by TravelforFun »

hudson wrote: Sun Aug 23, 2020 8:01 am
TravelforFun wrote: Sat Aug 22, 2020 6:17 pm Have you looked into worthybond.com? It pays me about 5% a year and I can withdraw any time.
TravelforFun
Here's a Boglehead discussion on worthy bonds. viewtopic.php?t=268828

Where would you rate it as far as safety?
safe as CDs?
safe as a total bond fund?
investment grade corporates?
total stock market?
I'd rate it as risky as investment grade corporates. WorthyBonds has been around for years but I've only been with them for over a year. I've deposited twice and withdrawn once and everything worked fine. Their website is easy to use. I now have more money at WorthyBonds than in my saving account.

TravelforFun
DrCheese
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Re: CDs coming due. Where to reinvest proceeds?

Post by DrCheese »

I know some people here hate premier notes but Dukes Energy notes are paying 1.40% for balances above $50k. You can take out your money at any time. Write checks against the balance (Checks must be $250 or above). https://www.duke-energy.com/our-company ... investment

This is NOT FDIC insured and is only guaranteed by Duke Energy.

If you really want to risk it, GM is paying 2% on all balances. https://www.rightnotes.com/ Again, NOT FDIC insured, guaranteed by GM.
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indexfundfan
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Re: CDs coming due. Where to reinvest proceeds?

Post by indexfundfan »

DrCheese wrote: Sun Aug 23, 2020 10:41 am I know some people here hate premier notes but Dukes Energy notes are paying 1.40% for balances above $50k. You can take out your money at any time. Write checks against the balance (Checks must be $250 or above). https://www.duke-energy.com/our-company ... investment

This is NOT FDIC insured and is only guaranteed by Duke Energy.
There are quite a few of these notes

GM https://www.rightnotes.com/
Mercedes https://www.firstclassdemandnotes.com/
Ford https://www.ford.com/finance/investor-c ... -advantage

I don't have experience in any of these.
My signature has been deleted.
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