2-year CDs at Vanguard and Fidelity Today

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Kevin M
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Fri Jun 22, 2018 12:48 pm

protagonist wrote:
Thu Jun 21, 2018 10:34 pm
Correct me if I am wrong, but I also imagine there would be little incentive to selling brokered CDs when rates increase in order to buy a better brokered CD, since the loss of value of the CD at premature sale would likely counterbalance the advantage of buying a new issue at a better rate. This seems to be the case as there is a rather narrow YTW range at which CDs are selling at Fidelity with similar maturity dates. This is not always the case with CDs purchased directly from an institution since EWPs are fixed regardless of fluctuating interest rates and rates offered at institutions vary quite substantially. Does that make sense?
Yes, probably not going to make sense to sell before maturity. In addition to a drop in price--or at least lower return than expected before maturity--if rates continue to increase, the bid/ask on CDs can be quite large. For 929 CDs I pulled from Fidelity with minimum yield of 2.5% and up to 3y3m maturity, 734 have a bid, with an average spread of 82 basis points and a median spread of 76 bps. The spreads vary widely, with a minimum of 4 bps and maximum of 214 bps. If there is no bid for your CD when you want to sell, you must solicit a bid.

I only buy brokered CDs with the intention of holding to maturity.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Fri Jun 22, 2018 1:02 pm

jeffyscott wrote:
Fri Jun 22, 2018 6:19 am
I would think that in order to sell, the secondary ones would need to be priced to pay at least the same as a new issues after commission?<snip>
You'd think so, but that's not the case. Here's the chart of unfiltered net yields vs. maturity date for the CDs I pulled from Fidelity today:

Image

As we see, the yields vary widely. I don't know who would buy the lower-yielding ones, but I filter only the ones with the highest yields. My filter reduces the list of CDs to evaluate from 929 to 49, and it's easy to pick out the best ones from a chart of those 49.
The only thing I can think of is since Schwab's settlement account pays near nothing :annoyed, that makes the secondary CD's look better because you would then be investing the cash right away instead of getting 0.18% while you wait. I can see that low yield settlement fund is going to be a minor annoyance with interest payments from CDs, it would be nice if they gave an option to automatically invest interest payments in a mutual fund of your choosing.
Can't you hold your cash in a higher-yielding money market fund? That's what I do. Then I just transfer from the higher-yielding MM fund to the settlement fund when my orders for the day are filled, or at least by the settlement date.

At Fidelity, you don't even need to do that, as they will automatically pull from other money market funds to settle the orders, but I do it anyway. At Vanguard, it seems that you do have to transfer from the other MM fund into the settlement fund by the settlement date.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Fri Jun 22, 2018 1:10 pm

Thanks for getting that comparison in time Kevin. There were only 12 when I had looked. They are all gone now, so I did not get a chance to see how they listed it with just one. I am assuming in that case they would include the full $10 minimum commission, but I will have to verify that with another some time.

Now that I know what they are doing, I am glad that Schwab includes the commission in their figures, it'll make it a lot easier to compare. With that, I will probably go for a secondary next time, I saw some candidates I would consider when I was rummaging through for practice, but have to wait for my next increment of rollover.
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Fri Jun 22, 2018 1:19 pm

jeffyscott wrote:
Fri Jun 22, 2018 1:10 pm
Thanks for getting that comparison in time Kevin. There were only 12 when I had looked. They are all gone now, so I did not get a chance to see how they listed it with just one. I am assuming in that case they would include the full $10 minimum commission, but I will have to verify that with another some time.ent of rollover.
FYI, Neither Fidelity nor Vanguard charge a minimum commission for online purchases, so you could buy 1 and pay $1 commission. This is nice if you are willing to mess around with small lots, as the best deals often are for quantities of less than 10. In my Fidelity account I filter out quantities of less than 5, so I sometimes will pick up lots of 7 or 8, for example.

In other smaller family accounts I manage, I'll buy even smaller quantities sometimes.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Fri Jun 22, 2018 1:26 pm

Kevin M wrote:
Fri Jun 22, 2018 1:02 pm
jeffyscott wrote:
Fri Jun 22, 2018 6:19 am
I would think that in order to sell, the secondary ones would need to be priced to pay at least the same as a new issues after commission?<snip>
You'd think so, but that's not the case.
Yeah, in my rummaging today I saw they are all over the map. I was wondering who is setting the prices.
Can't you hold your cash in a higher-yielding money market fund? That's what I do. Then I just transfer from the higher-yielding MM fund to the settlement fund when my orders for the day are filled, or at least by the settlement date.
I'm still learning the ropes and money coming in is increments of a rollover. Also I actually did not look into the interest rate for the settlement account until yesterday, when I realized that CD money would be idle for about a week. From reading warnings on my pretend orders, I think Schwab wants the funds in the settlement account, but that is something I may check on.

Once I am done rolling over, I don't actually plan to keep any cash in this account. I do have an ultra short bond fund that I intend to use for money awaiting future CD ladder rungs and for the interest from them. If I switch to buying secondaries that will eliminate the delay, if I understand things correctly.
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Fri Jun 22, 2018 1:49 pm

jeffyscott wrote:
Fri Jun 22, 2018 10:09 am
Following up on secondary CDs at Schwab, with the market open...

One thing is there are about a billion more secondary CDs there now. But more importantly it appears that they calculate YTM including commission. I looked for CDs yielding at least 2.8% and the earliest maturing one makes for a fairly easy estimate of YTM since it has exactly 2 years to go to maturity.

I went through as if I were ordering Discover 2.75% CD maturing 06/22/2020 (CUSIP 254673QL3). For 10, here is what Schwab shows:

Market Price: $9,975.00
Estimated Markup: $10.00
Principal Amount: $9,985.00
Accrued Interest: $4.52
Estimated Total Cost: $9,989.52

I used this calculator: http://www.investinganswers.com/calcula ... lator-2081

Input face value = $10,000, coupon 2.75%, and $9985 for current bond price (which includes commission) and it give YTM of 2.83%. Schwab lists it as 2.828%.

If Fido ignores commission then I believe that they should be showing this one with YTM of about 2.88%.
I posted recently above Schwab in this same thread. For some reason their *price* shows $0.100 more per CD. It confused the heck out of me. I now deal with Fidelity. Still interested in knowing whether Schwab was really a "worse" deal or not.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Fri Jun 22, 2018 2:07 pm

likashing wrote:
Fri Jun 22, 2018 1:49 pm
jeffyscott wrote:
Fri Jun 22, 2018 10:09 am
Following up on secondary CDs at Schwab, with the market open...

One thing is there are about a billion more secondary CDs there now. But more importantly it appears that they calculate YTM including commission. I looked for CDs yielding at least 2.8% and the earliest maturing one makes for a fairly easy estimate of YTM since it has exactly 2 years to go to maturity.

I went through as if I were ordering Discover 2.75% CD maturing 06/22/2020 (CUSIP 254673QL3). For 10, here is what Schwab shows:

Market Price: $9,975.00
Estimated Markup: $10.00
Principal Amount: $9,985.00
Accrued Interest: $4.52
Estimated Total Cost: $9,989.52

I used this calculator: http://www.investinganswers.com/calcula ... lator-2081

Input face value = $10,000, coupon 2.75%, and $9985 for current bond price (which includes commission) and it give YTM of 2.83%. Schwab lists it as 2.828%.

If Fido ignores commission then I believe that they should be showing this one with YTM of about 2.88%.
I posted recently above Schwab in this same thread. For some reason their *price* shows $0.100 more per CD. It confused the heck out of me. I now deal with Fidelity. Still interested in knowing whether Schwab was really a "worse" deal or not.
You must have missed Kevin's post above.
I see this CD at Fidelity (only 1 available) at 99.747 with yield before commission of 2.881%. When I click buy and look at preview, it shows net yield of 2.829222%.
As you can see price was basically the same, 99.75 at Schwab. But in the search list Schwab includes the commission in the YTM. So, once you know that, it is actually less confusing, as you don't have to figure out how the commission affects YTM, they do it for you. This makes it trivial to compare new issue vs. secondary (as long as you are buying at least 10 or, presumably, all of them if less than 10 available, due to the $10 minimum).
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Fri Jun 22, 2018 2:14 pm

jeffyscott wrote:
Fri Jun 22, 2018 2:07 pm
likashing wrote:
Fri Jun 22, 2018 1:49 pm
jeffyscott wrote:
Fri Jun 22, 2018 10:09 am
Following up on secondary CDs at Schwab, with the market open...

One thing is there are about a billion more secondary CDs there now. But more importantly it appears that they calculate YTM including commission. I looked for CDs yielding at least 2.8% and the earliest maturing one makes for a fairly easy estimate of YTM since it has exactly 2 years to go to maturity.

I went through as if I were ordering Discover 2.75% CD maturing 06/22/2020 (CUSIP 254673QL3). For 10, here is what Schwab shows:

Market Price: $9,975.00
Estimated Markup: $10.00
Principal Amount: $9,985.00
Accrued Interest: $4.52
Estimated Total Cost: $9,989.52

I used this calculator: http://www.investinganswers.com/calcula ... lator-2081

Input face value = $10,000, coupon 2.75%, and $9985 for current bond price (which includes commission) and it give YTM of 2.83%. Schwab lists it as 2.828%.

If Fido ignores commission then I believe that they should be showing this one with YTM of about 2.88%.
I posted recently above Schwab in this same thread. For some reason their *price* shows $0.100 more per CD. It confused the heck out of me. I now deal with Fidelity. Still interested in knowing whether Schwab was really a "worse" deal or not.
You must have missed Kevin's post above.
I see this CD at Fidelity (only 1 available) at 99.747 with yield before commission of 2.881%. When I click buy and look at preview, it shows net yield of 2.829222%.
As you can see price was basically the same, 99.75 at Schwab. But in the search list Schwab includes the commission in the YTM. So, once you know that, it is actually less confusing, as you don't have to figure out how the commission affects YTM, they do it for you. This makes it trivial to compare new issue vs. secondary (as long as you are buying at least 10 or, presumably, all of them if less than 10 available, due to the $10 minimum).
Take 254671M56 as an example right now.

Discover Bank Greenw 2.55% CD 04/16/2021

Schwab shows $98.700 while Fidelity shows $98.600 to me

What does it show in your screen?

Look at the price first, before analyzing what yield they show you. If the price is not the same, Schwab is selling it at a premium.

The premium is $0.100 and it is very consistent.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Fri Jun 22, 2018 3:42 pm

You have to click on buy at Schwab, continue with review order to the confirmation page and you will see they have the same price:

Market Price: $9,860.00
Estimated Markup: $10.00
Principal Amount: $9,870.00
Accrued Interest: $49.60
Estimated Total Cost: $9,919.60

Schwab is showing the price including commission up front.

Fidelity is hiding it until later steps. Schwab is better in this respect.

Fido may be better for less than 10, due to commission. Here's one with only 3 available, Eaglebank Bethesda M 2.4% CD 03/16/2020, CUSIP 27002YDN3, I'd be interested to see what Fidelity's price is for those 3.
Schwab's is:
Market Price: $2,983.29
Estimated Markup: $10.00
Principal Amount: $2,993.29
Accrued Interest: $1.97
Estimated Total Cost: $2,995.26
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Fri Jun 22, 2018 3:42 pm

likashing wrote:
Fri Jun 22, 2018 2:14 pm
Schwab shows $98.700 while Fidelity shows $98.600 to me

What does it show in your screen?

Look at the price first, before analyzing what yield they show you. If the price is not the same, Schwab is selling it at a premium.

The premium is $0.100 and it is very consistent.
What we have determined is that the extra $0.100 is the commission. Again, Schwab shows the price/yield net of commission on the search results screen, while Fidelity shows it before commission. You must do a buy preview at Fidelity (or Vanguard) to see the price/yield net of commission.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Fri Jun 22, 2018 3:51 pm

jeffyscott wrote:
Fri Jun 22, 2018 3:42 pm
Fido may be better for less than 10, due to commission. Here's one with only 3 available, Eaglebank Bethesda M 2.4% CD 03/16/2020, CUSIP 27002YDN3, I'd be interested to see what Fidelity's price is for those 3.
Schwab's is:
Market Price: $2,983.29
Estimated Markup: $10.00
Principal Amount: $2,993.29
Accrued Interest: $1.97
Estimated Total Cost: $2,995.26
It's easier if you just show the price, but we can do the math to see that the price before commission is the same at Fidelity. I see price = 99.443 (before commission), and 99.443 * 3 * 10 = 2,983.29, so same.

Market closed now, so I can see the buy preview, but I can guarantee you that the commission would be $3. I have bought a number of lots of less than 10.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Fri Jun 22, 2018 4:00 pm

Thanks, that confirms that Schwab is giving the same price but charging more commission for less than 10, even when one cannot buy 10.

I wanted to check that they were not, perhaps, giving a lower price to offset the minimum commission when less than 10 are available.
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Fri Jun 22, 2018 4:28 pm

Thanks!

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Mon Jun 25, 2018 8:53 am

Another beginner's question...

CD I bought last week, with settlement date of 6/29 shows an increase in market value (+0.07%). Does this mean anything? I tried looking it up to see if it had changed, but it is no longer available.

I'm just curious what's going on, not planning to day trade CDs or anything :happy .
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Mitchell777 » Mon Jun 25, 2018 12:47 pm

Still not sure I understand the secondary market. When I look at 140420A59 (Vanguard) I see "250 5 3.498%" and just below that 10 10 3.15%. Like there are two choices which I do not follow. When I click on BUY and plug in different quantities to buy I see calculated interest rates that are in the 3.03% to 3.11% range. Nothing that looks like it is based on the 3.498% number on the prior screen. All look like they are based on the 3.15% number. What am I missing? Thanks

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Mon Jun 25, 2018 1:18 pm

I'm still learning, but I think those may be different prices for the same CD.

It doesn't seem to quite match up with what you are seeing, but it sounds like Schwab makes it a little clearer, here's what I see and there is a separate "buy" link for each line:
Image

Edit, just realized I can look on Vanguard, the higher yield is a bid, click show more and you will see:
Image
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Mitchell777 » Mon Jun 25, 2018 3:25 pm

Thanks. So, if you buy through Vanguard, do you get something between the bid and ask price, but you do not know exactly what until the transaction is completed (sort of like a market order on a stock)?

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Mon Jun 25, 2018 3:34 pm

I think you get the ask, but their quotes don't include commission in the listing, so when that is added the yield is lower. But I am new at this, having bought one CD and never a stock or ETF.

I didn't even know that bids could be seen at Schwab. I discovered that Schwab has check box to choose buy, sell, or both. By default buy was checked.
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Mon Jun 25, 2018 3:49 pm

jeffyscott wrote:
Mon Jun 25, 2018 3:34 pm
I think you get the ask, but their quotes don't include commission in the listing, so when that is added the yield is lower.
Correct, you get the ask price/yield. After you enter quantity and click Calculate, Vanguard displays the net (after commission) yield, which will of course be lower. If you don't like it, you can click cancel.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Mon Jun 25, 2018 3:54 pm

jeffyscott wrote:
Mon Jun 25, 2018 8:53 am
Another beginner's question...

CD I bought last week, with settlement date of 6/29 shows an increase in market value (+0.07%). Does this mean anything? I tried looking it up to see if it had changed, but it is no longer available.

I'm just curious what's going on, not planning to day trade CDs or anything :happy .
I think brokers have some sort of price discovery tool they use to display market values. I ignore them, as it probably has little relationship to what you'd actually get if you were to sell your CD. If you can find a bid price for your specific CD, then that is the liquidation value, minus the commission. If you can't find a bid price, then you have little idea about the bids you'd get if you solicited a bid offer.

I think I've shared this already, but bid/ask on CDs generally is quite high, say 70 basis points average when I've looked, and the variation is large.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Mon Jun 25, 2018 4:08 pm

Finished a purchase today at Fidelity.

Wells Fargo 1.60% maturity 08/03/2021

Ask was 95.134 so limit order was for 95.134

"filled" at 95.234. "amount" was $953.39.

I understand the "filled" part being 0.100 more because of the $1 per bond commission.

But why is the final amount $953.39 instead of $952.34?

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Mon Jun 25, 2018 4:11 pm

likashing wrote:
Mon Jun 25, 2018 4:08 pm
Finished a purchase today at Fidelity.

Wells Fargo 1.60% maturity 08/03/2021

Ask was 95.134 so limit order was for 95.134

"filled" at 95.234. "amount" was $953.39.

I understand the "filled" part being 0.100 more because of the $1 per bond commission.

But why is the final amount $953.39 instead of $952.34?
Accrued interest. If you look carefully at the order preview, you'll see that, and you'll see it on your order confirmation.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Mon Jun 25, 2018 4:14 pm

Kevin M wrote:
Mon Jun 25, 2018 4:11 pm
likashing wrote:
Mon Jun 25, 2018 4:08 pm
Finished a purchase today at Fidelity.

Wells Fargo 1.60% maturity 08/03/2021

Ask was 95.134 so limit order was for 95.134

"filled" at 95.234. "amount" was $953.39.

I understand the "filled" part being 0.100 more because of the $1 per bond commission.

But why is the final amount $953.39 instead of $952.34?
Accrued interest. If you look carefully at the order preview, you'll see that, and you'll see it on your order confirmation.

Kevin
Thanks Kevin.

So is my effective yield to maturity 3.22% ($952.34) or 3.18% ($953.39)? Thanks again for your help on this thread. Really appreciate it!

Believe ~3.22% should be right. Just making sure since the extra cost is just accrued interest which I will get back at the next coupon date.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by bayview » Mon Jun 25, 2018 4:28 pm

Kevin M wrote:
Mon Jun 25, 2018 3:54 pm
jeffyscott wrote:
Mon Jun 25, 2018 8:53 am
Another beginner's question...

CD I bought last week, with settlement date of 6/29 shows an increase in market value (+0.07%). Does this mean anything? I tried looking it up to see if it had changed, but it is no longer available.

I'm just curious what's going on, not planning to day trade CDs or anything :happy .
I think brokers have some sort of price discovery tool they use to display market values. I ignore them, as it probably has little relationship to what you'd actually get if you were to sell your CD. If you can find a bid price for your specific CD, then that is the liquidation value, minus the commission. If you can't find a bid price, then you have little idea about the bids you'd get if you solicited a bid offer.

I think I've shared this already, but bid/ask on CDs generally is quite high, say 70 basis points average when I've looked, and the variation is large.

Kevin
So I knew going in to regard brokered CDs as not particularly liquid, but do you have a rule of thumb for deciding when it’s worth selling one early, in terms of comparing the expected loss to x% higher yield?

Asking for a friend. :D Actually, asking to broaden my understanding of brokered CDs..
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Mon Jun 25, 2018 4:48 pm

Kevin M wrote:
Mon Jun 25, 2018 3:54 pm
jeffyscott wrote:
Mon Jun 25, 2018 8:53 am
Another beginner's question...

CD I bought last week, with settlement date of 6/29 shows an increase in market value (+0.07%). Does this mean anything? I tried looking it up to see if it had changed, but it is no longer available.

I'm just curious what's going on, not planning to day trade CDs or anything :happy .
I think brokers have some sort of price discovery tool they use to display market values. I ignore them, as it probably has little relationship to what you'd actually get if you were to sell your CD. If you can find a bid price for your specific CD, then that is the liquidation value, minus the commission. If you can't find a bid price, then you have little idea about the bids you'd get if you solicited a bid offer.

I think I've shared this already, but bid/ask on CDs generally is quite high, say 70 basis points average when I've looked, and the variation is large.

Kevin
Yes, I saw it was nearly 1% on the one that I posted images of above. Apparently this does not keep people from selling them, though. Going in, I had expected to mostly just see new issue CDs.

I did now find that they call it "Evaluated Price" 100.071 and say:
The evaluation-pricing model is a model calculated estimate determined from alternative information in addition to recent trade data. The price may differ from actual market transactions and should be used for approximate account valuation purposes only. Contact us for additional quote information about a particular holding.
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Mon Jun 25, 2018 6:43 pm

likashing wrote:
Mon Jun 25, 2018 4:14 pm
So is my effective yield to maturity 3.22% ($952.34) or 3.18% ($953.39)? Thanks again for your help on this thread. Really appreciate it!

Believe ~3.22% should be right. Just making sure since the extra cost is just accrued interest which I will get back at the next coupon date.
It's about 3.22%. I come up with 3.23% using frequency 2 and daycount convention 1 or 3 (usually a CD is one of these), but if frequency is monthly (as I've typically seen with Wells Fargo), then it's probably closer to 3.22%. Largest value you can set frequency to in the YIELD function is 4, and setting it to 4 I get 3.22%.

At any rate, you don't include accrued interest in calculating yield, since as you say, you'll get this back with the next coupon payment. It does look like that's the accrued interest amount based on monthly coupon payments, so I assume you'll receive it on 7/3/2018 or thereabouts.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Mon Jun 25, 2018 6:49 pm

bayview wrote:
Mon Jun 25, 2018 4:28 pm
So I knew going in to regard brokered CDs as not particularly liquid, but do you have a rule of thumb for deciding when it’s worth selling one early, in terms of comparing the expected loss to x% higher yield?

Asking for a friend. :D Actually, asking to broaden my understanding of brokered CDs..
It's unlikely to ever be worth it to sell a brokered CD before maturity to buy another brokered CD with the same remaining term to maturity, unless for some reason the spread between the ask yields for the CDs is larger than the bid/ask spread for the CD you're selling, including commissions.

There are quite large spreads between the highest and lowest yields for CDs of a given maturity, so I guess it's possible. But when you add commissions on both trades to the probably large bid/ask spread on both trades, it seems unlikely.

Kevin
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by bayview » Mon Jun 25, 2018 6:56 pm

Kevin M wrote:
Mon Jun 25, 2018 6:49 pm
bayview wrote:
Mon Jun 25, 2018 4:28 pm
So I knew going in to regard brokered CDs as not particularly liquid, but do you have a rule of thumb for deciding when it’s worth selling one early, in terms of comparing the expected loss to x% higher yield?

Asking for a friend. :D Actually, asking to broaden my understanding of brokered CDs..
It's unlikely to ever be worth it to sell a brokered CD before maturity to buy another brokered CD with the same remaining term to maturity, unless for some reason the spread between the ask yields for the CDs is larger than the bid/ask spread for the CD you're selling, including commissions.

There are quite large spreads between the highest and lowest yields for CDs of a given maturity, so I guess it's possible. But when you add commissions on both trades to the probably large bid/ask spread on both trades, it seems unlikely.

Kevin
Good, one less thing to ponder. Thanks!
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Mitchell777 » Tue Jun 26, 2018 8:50 am

Still learning. I am looking at 55266CJZ0 in Vanguard secondary market. I see quantities "250 5" and "1 4". When I click on anything that I can click on I get the screen where you enter the quantity but the quantity reads " 1 to 4". No choice for "250 5". But I can key in a quantity of 1 to 4 and also I can key in a quantity of 25 or 50 but I seem to get the interest rate associated with 1 to 4. I thought I could choose which I want and of course I'd be interested in the 250 5 because the interest rate is higher. Thanks

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Tue Jun 26, 2018 9:25 am

The 250 line is bid, the price it would sell for. See posts above, such as:

viewtopic.php?p=3990577#p3989472

Apparently Vanguard, in addition to hiding the commission until later in the process, has no option to see only CDs you can buy?

I am new to this, but I have to say that Schwab seems to make things much clearer and easier. By default you see only what you can buy and you see the actual YTM, including commission, right in the listing. The only negative there is the $10 minimum commission which mostly rules out buying less than 10 on the secondary market (I think that is better that Vg $2 per bond though).
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by bondsr4me » Tue Jun 26, 2018 9:36 am

Mitchell777 wrote:
Tue Jun 26, 2018 8:50 am
Still learning. I am looking at 55266CJZ0 in Vanguard secondary market. I see quantities "250 5" and "1 4". When I click on anything that I can click on I get the screen where you enter the quantity but the quantity reads " 1 to 4". No choice for "250 5". But I can key in a quantity of 1 to 4 and also I can key in a quantity of 25 or 50 but I seem to get the interest rate associated with 1 to 4. I thought I could choose which I want and of course I'd be interested in the 250 5 because the interest rate is higher. Thanks
keep in mind the "Buy" line of the quote is if you are buying (from the dealer that is selling); if you don't already own this CD, the "Sell" word is not in bold type; therefore when you go to the "Buy" screen, you can buy a quantity of "1 to 4" at the price quoted (which is currently 99.365)....I just refreshed my screen and it now shows there none available.

If you currently own this CUSIP, you could sell it (minimum 5) for the price of 99.069; that's what the dealer is willing to buy them from you.

Don

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by doneat53 » Tue Jun 26, 2018 11:38 am

Probably a stupid question but do brokered CD's "roll" at their term or do they just cash out to your account?

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Mitchell777 » Tue Jun 26, 2018 11:40 am

doneat53 wrote:
Tue Jun 26, 2018 11:38 am
Probably a stupid question but do brokered CD's "roll" at their term or do they just cash out to your account?
They cash out

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Tue Jun 26, 2018 12:34 pm

jeffyscott wrote: Apparently Vanguard, in addition to hiding the commission until later in the process, has no option to see only CDs you can buy?
Don't understand this comment. My search results at Vanguard show only CDs I can buy. If there are multiple offers, it shows the one with the highest yield, but that may be for a quantity or minimum quantity that you are not interested in. If there are additional offers, there will be a "Show more" link.

I'll walk though an example. Say I'm looking for a 2-year CD. Once at the "Find bonds and CDs" screen, I click on the 2.80% link in the New issue CDs row (top row), under the 2 year term to maturity heading. This shows me all the 2-year new issue CDs I can buy. Only one is 2.80%, from Wells Fargo, with the rest at 2.75% or less. I wouldn't consider the lower-yielding CDs, unless perhaps I was maxed out on FDIC insurance at Wells Fargo.

I see that there are 4,950 available from WF at 2.80%, with a minimum quantity of 10. For new-issue CDs, there are no bids, so there are just dashes where you would see the bid quantity, price, and yield, and the Sell link is not active (you see Sell, but it is not a link you can click on, unlike the Buy links, which you can click on).

Now I want to expand my search to secondary CDs, so I click the "Edit search criteria" link near the top left above the search results. I see that New issue already is checked, but now I also check Secondary. Since I'm not interested in anything less than 2.80%, I enter 2.80 in the left Yield box (this is the minimum yield). I leave everything else as is. It's worthwhile to look at the other search criteria settings, for example Callable is set to No, as are Zero coupon and Stepped coupon. I could change these if I wanted, but typically I don't. Note that the default sort is Ask yield, descending, which of course you could change, but I leave it when searching this way, since I want to see the highest yields at the top. Now I click Search.

For each CD, we are interested in the second row, since these are the Ask values, which are what are relevant when we want to buy. We see the Buy link at the far left of this second row.

For the top-yielding CD I see, there is only 1 available (with minimum quantity 1, of course), with a yield of 2.861. I guess that this will have a net yield of about 2.76%, since the commission for this account is 0.2%, which amortized over two years is about 0.1% per year. To check, I click the Buy link, then click Buy on the next screen too. This brings me to the Buy order screen. I check the acknowledgement box, enter quantity 1, and click Calculate. I then see the Yield to maturity is 2.759, so close to what I expected. I would not buy this CD in this account, because I can get 2.80% on the new issue. So I click Cancel, and return to the search results screen.

However, in an account with only 0.1% commission, this CD probably would provide a net yield of about 2.81%, because only 0.1% is allocated over two years, or 0.05%/year. But I probably wouldn't bother with this CD because quantity 1 is too small for me to bother with.

Back to the search results screen, I see in the first row, the bid row, that for this CD, if you already owned it, you could sell up to 250 with minimum quantity 1 for a yield of 3.251 before commission. Looking at the prices before commission, you could sell it for 98.139, or buy it for 98.896, which is a spread of 76 basis points before commission (pretty typical from what I've seen). Of course you add 0.1 or 0.2 to the ask price and subtract 0.1 or 0.2 from the bid price to account for commissions, adding 20-40 basis points to the bid/ask spread after commissions.

There are no more offers for this CD, so there is no "Show more" link. However, for the second CD in the list there is. The CD in the search results screen shows Buy (ask) quantity of 20, minimum 1, with ask yield of 2.857%. I click "Show more" to see the other offers. I only look at the right side, the Ask side, since I am buying, not selling. The first one shown is the one that was in the search results screen, so 20(1) at 2.857%. The second one is 14 (min 10) at 2.698%. I don't know why anyone would buy the lower yielding one, since the available quantity is smaller and the minimum quantity is higher, but there's an active Buy link next to it for someone who might want to.

(When I started writing the paragraph above, there were 40 available at the high yield, so someone bought 20 while I was writing).

Again, ignore all the stuff on the left, which is the Bid side, which are offers to buy this CD if you already owned it. Of course the bid prices are lower and bid yields are higher--that's how the CD dealers make their money. Of course you will not see these prices or yields if you click one of the Buy links on the Ask side.

It is possible that the CD you want to buy gets bought between the time you see it in the search results screen and the time you fill in your Buy order screen and click Submit. In this case your order won't be filled, and at some point will be cancelled. This has happened to me several times--the really good deals on smaller quantities go very quickly.

Hope this helps.

Kevin
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by SeekingAPlan » Tue Jun 26, 2018 12:51 pm

doneat53 wrote:
Tue Jun 26, 2018 11:38 am
Probably a stupid question but do brokered CD's "roll" at their term or do they just cash out to your account?
Fidelity offers the option to create a rolling CD ladder.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Tue Jun 26, 2018 1:01 pm

Has anyone tried putting in a bid below ask price, and got filled? Seems to me it is a very illiquid market and you either buy at the ask price, or not buy at all.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Tue Jun 26, 2018 1:06 pm

Kevin M wrote:
Tue Jun 26, 2018 12:34 pm
jeffyscott wrote: Apparently Vanguard, in addition to hiding the commission until later in the process, has no option to see only CDs you can buy?
Don't understand this comment. My search results at Vanguard show only CDs I can buy. If there are multiple offers, it shows the one with the highest yield, but that may be for a quantity or minimum quantity that you are not interested in. If there are additional offers, there will be a "Show more" link.
I meant that they show the sell line. Two people in the last two days were confused by this. Schwab has a check box on the search page that by default has "buy" and "best quote" checked. Why would I want to see sell quotes for CDs I do not own, as Vanguard appears to insist on showing?

Image
I guess that this will have a net yield of about 2.76%, since the commission for this account is 0.2%, which amortized over two years is about 0.1% per year. To check, I click the Buy link, then click Buy on the next screen too.
Since Schwab includes the commission, no guessing, and you can directly compare new issue and secondary in a single search. You don't have to click through to see what your true YTM is on the secondaries. Schwab's list shows you the true YTM including commission right in the search list.
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Tue Jun 26, 2018 1:08 pm

likashing wrote:
Tue Jun 26, 2018 1:01 pm
Has anyone tried putting in a bid below ask price, and got filled? Seems to me it is a very illiquid market and you either buy at the ask price, or not buy at all.
Is there anywhere to even do that? I have not seen anyplace to enter anything, the only option is to click on "buy" isn't it?
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by bondsr4me » Tue Jun 26, 2018 1:20 pm

likashing wrote:
Tue Jun 26, 2018 1:01 pm
Has anyone tried putting in a bid below ask price, and got filled? Seems to me it is a very illiquid market and you either buy at the ask price, or not buy at all.
I have put in below market orders for bonds as "limit"orders; a few have gotten filled as the market changes during the day.

I don't mess with cd's right now.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Tue Jun 26, 2018 1:25 pm

jeffyscott wrote:
Tue Jun 26, 2018 1:08 pm
likashing wrote:
Tue Jun 26, 2018 1:01 pm
Has anyone tried putting in a bid below ask price, and got filled? Seems to me it is a very illiquid market and you either buy at the ask price, or not buy at all.
Is there anywhere to even do that? I have not seen anyplace to enter anything, the only option is to click on "buy" isn't it?
Not at Vanguard, but at Fidelity you can edit the limit price or limit yield. I only recall trying this once or twice, and when I tried it the order was not filled. However, as was pointed out, I left the order type at Fill or Kill (the default), so perhaps one might have a better chance of it being filled if one changes it to Day.

Typically the best deals go quickly at the indicated ask price/yield, so chances of getting a better price/yield are slim for the deals that are already good.

Kevin
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Tue Jun 26, 2018 1:47 pm

jeffyscott wrote:
Tue Jun 26, 2018 1:06 pm
I meant that they show the sell line. Two people in the last two days were confused by this. Schwab has a check box on the search page that by default has "buy" and "best quote" checked. Why would I want to see sell quotes for CDs I do not own, as Vanguard appears to insist on showing?
Ah, understood. Fidelity also shows the bid side quotes in the search results screen.

Agreed that Scwhab has an easier to understand interface for newbies, but once you've bought a secondary CD or two, you know what to focus on.
Since Schwab includes the commission, no guessing, and you can directly compare new issue and secondary in a single search. You don't have to click through to see what your true YTM is on the secondaries. Schwab's list shows you the true YTM including commission right in the search list.
Also agree that the way Schwab does this probably is better for most people.

However, for folks with smaller accounts and/or who are interested in quantities of less than 10, which typically is what the best deals are for, Fidelity is a good choice. Same 0.1% commission as Schwab (as opposed to 0.2% at Vanguard for smaller accounts), but no $10 minimum.

Question: does Schwab provide the capability to download search results to a CSV or Excel file? Fidelity does, but Vanguard does not.

The download capability at Fidelity is what allows me to search a very large number of CDs for the best deals. The best deals may be at odd maturities that you might not search. For example, today I found a 22-month CD with a net yield of about 2.797%, so about the same as the new-issue at 2.8%, but two months shorter maturity. There were no 24-month secondary CDs at even 2.80% net when I looked. I might not have noticed that with the way I search at Vanguard, but having found it at Fidelity, I jumped onto an account at Vanguard that this CD was appropriate for, and it was available there too, so I bought it.

Once the CDs are loaded into my spreadsheet, I can calculate the net yield myself, and then use the net yields for subsequent filtering. So Fidelity works well for me.

Kevin
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Tue Jun 26, 2018 1:50 pm

Kevin M wrote:
Tue Jun 26, 2018 1:25 pm
jeffyscott wrote:
Tue Jun 26, 2018 1:08 pm
likashing wrote:
Tue Jun 26, 2018 1:01 pm
Has anyone tried putting in a bid below ask price, and got filled? Seems to me it is a very illiquid market and you either buy at the ask price, or not buy at all.
Is there anywhere to even do that? I have not seen anyplace to enter anything, the only option is to click on "buy" isn't it?
Not at Vanguard, but at Fidelity you can edit the limit price or limit yield. I only recall trying this once or twice, and when I tried it the order was not filled. However, as was pointed out, I left the order type at Fill or Kill (the default), so perhaps one might have a better chance of it being filled if one changes it to Day.

Typically the best deals go quickly at the indicated ask price/yield, so chances of getting a better price/yield are slim for the deals that are already good.

Kevin
I see, the only thing you can modify after clicking "buy" at Schwab is the quantity and some have a "market order" option. It seems that most of the CDs don't even give an order type choice at all, they show "limit" or "limit - fill or kill" as the only option and price is not changeable.
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Tue Jun 26, 2018 2:17 pm

Kevin M wrote:
Tue Jun 26, 2018 1:47 pm
jeffyscott wrote:
Tue Jun 26, 2018 1:06 pm
Since Schwab includes the commission, no guessing, and you can directly compare new issue and secondary in a single search. You don't have to click through to see what your true YTM is on the secondaries. Schwab's list shows you the true YTM including commission right in the search list.
Also agree that the way Schwab does this probably is better for most people.

However, for folks with smaller accounts and/or who are interested in quantities of less than 10, which typically is what the best deals are for, Fidelity is a good choice. Same 0.1% commission as Schwab (as opposed to 0.2% at Vanguard for smaller accounts), but no $10 minimum.
Yes, Fidelity wins on the commission structure. I sent Schwab a suggestion that they should at least waive the minimum when there are not even 10 available. If there are 3, I should be allowed to buy 3 for $3.
Question: does Schwab provide the capability to download search results to a CSV or Excel file? Fidelity does, but Vanguard does not.
I do not see anything like that, I only see option to print.
The download capability at Fidelity is what allows me to search a very large number of CDs for the best deals. The best deals may be at odd maturities that you might not search.
So in my practicing, since I am going to be willing to buy pretty much any maturity depending on the yield, what I have done is put in a minimum YTM (and YTW) like 2.6%. I get a list of everything, sort that by maturity from shortest to longest. Then go down the YTM column looking for increasing yields as I go down. For example yesterday saw 2.694% for 2/28/20, then a bunch that were lower, then 2.758% for 5/18/20, then the next possibly interesting one was a new issue at 2.8% for 6/29/20, then 2.85% for 7/22/20. Can also go back and modify to thin the ranks, eg. put in 2.85% as minimum yield and see if anything longer than the 7/22/20 one is worthwhile...that found 4/1/21 at 3.002% and then 8/3/21 at 3.115%. In my exercises, I have used a criterion of about 0.02% of additional yield per month of additional maturity.
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Tue Jun 26, 2018 4:15 pm

jeffyscott wrote:
Tue Jun 26, 2018 2:17 pm
So in my practicing, since I am going to be willing to buy pretty much any maturity depending on the yield, what I have done is put in a minimum YTM (and YTW) like 2.6%. I get a list of everything, sort that by maturity from shortest to longest. Then go down the YTM column looking for increasing yields as I go down. For example yesterday saw 2.694% for 2/28/20, then a bunch that were lower, then 2.758% for 5/18/20, then the next possibly interesting one was a new issue at 2.8% for 6/29/20, then 2.85% for 7/22/20. Can also go back and modify to thin the ranks, eg. put in 2.85% as minimum yield and see if anything longer than the 7/22/20 one is worthwhile...that found 4/1/21 at 3.002% and then 8/3/21 at 3.115%. In my exercises, I have used a criterion of about 0.02% of additional yield per month of additional maturity.
This is similar to what I do with my spreadsheet, but the spreadsheet mostly automates it.

The search I've been using is no minimum maturity, 3y3m maximum maturity (because I know the yield curve flattens out too much after that for me to be interested), with minimum yield 2.5%. This search returns on the order of 950 results, which is way too many to scan manually.

This gets loaded into a "CDraw" spreadsheet. I then filter to reduce the list to less than 50 candidates, which go into a CDeval sheet. The eval sheet has a graph of basis points per year of maturity vs. maturity and one of yield vs. maturity. Glancing at these two charts immediately shows me any deals that stand out from the crowd (and the crowd already consists of the best deals).

I filter out quantity less than 5 and minimum quantity greater than 25, as this is the quantity range I'm interested in. I also filter out yields within this quantity range that are less the shorter-maturity yields within this quantity range. That basically skims the cream of the crop for the quantities I'm interested in.

Kevin
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Doc » Wed Jun 27, 2018 9:28 am

jeffyscott wrote:
Tue Jun 26, 2018 2:17 pm
Question: does Schwab provide the capability to download search results to a CSV or Excel file? Fidelity does, but Vanguard does not.
I do not see anything like that, I only see option to print.
Why do you need an option?

I just highlighted the results, right click, copy. Then open new Excel spreadsheet and paste. If for some reason you have to have a CSV file just save your Excel spreadsheet in CSV format.
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Wed Jun 27, 2018 1:15 pm

Doc wrote:
Wed Jun 27, 2018 9:28 am
jeffyscott wrote:
Tue Jun 26, 2018 2:17 pm
Question: does Schwab provide the capability to download search results to a CSV or Excel file? Fidelity does, but Vanguard does not.
I do not see anything like that, I only see option to print.
Why do you need an option?

I just highlighted the results, right click, copy. Then open new Excel spreadsheet and paste. If for some reason you have to have a CSV file just save your Excel spreadsheet in CSV format.
That may work well at Schwab, but in testing it out, it would be somewhat problematical for me at Vanguard or Fidelity. Here are the problems.

First, the typical CD search I do returns over 900 results. At Vanguard you can only display a maximum of 250 per page, so you'd have to copy/paste four screens. Not a showstopper, but inconvenient and slower.

Also problematical is that Vanguard puts the two search result rows (bid and ask) into one spreadsheet row. With some additional spreadsheet manipulation, you could get at the individual items necessary to do the filtering and processing I do, but it's not straightforward as is downloading to a CSV file then importing into the spreadsheet. Examples:

Maturity and coupon appear in the same cell, like this:

10/01/2019 2.150

Bid and ask price appear in same cell like this:

10/01/2019 2.150

Bid and ask yield appear in same cell like this:

"2.904
2.501"

These could all be separated into separate cells with functions like SPLIT, LEFT and RIGHT, but more hassle.

I may go ahead and work on this at some point though, since it would be nice to have similar functionality for Vanguard as I have at Fidelity.

At Fidelity you can display all 950+ results on one page, so the copy/paste is easier. More of the required data items are in a single cell, but Price and Qty(min) are merged into a single cell like this:

"101.100
10(10)"

Again, some spreadsheet manipulation could separate these, but I already have an efficient solution at Fidelity, so no need.

Good idea for a workaround though.

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by Doc » Wed Jun 27, 2018 1:54 pm

Kevin M wrote:
Wed Jun 27, 2018 1:15 pm
These could all be separated into separate cells with functions like SPLIT, LEFT and RIGHT, but more hassle.

I may go ahead and work on this at some point though, since it would be nice to have similar functionality for Vanguard as I have at Fidelity.
I earned my bones with Lotus 123 but it's not as hard as you show even with Excel.

Add cells to the right of the first row and fill them with simple formula "+(cell on 2nd row)". Copy the new partial row along with the blank second row below it to the rest of the spreadsheet. Then copy and paste values of these back to the same cells thus eliminating the references. Finally sort on something to get those rows you don't want at the bottom.

Something else I didn't try and I don't know if it will fit your needs but you can create a "ladder" and you can export that either directly or by a similar technique.

Looking at some 600 CD's is a challenge no matter what. Using the "advanced search" criteria might help here.

Treasuries are a lot simpler and arguably better :) in taxable.
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Wed Jun 27, 2018 2:11 pm

I'm new at this, but have not found it difficult to just go through the CD pile on the Schawb site and find a handful to consider. Maybe partly because their fee structure makes any with much less than 10 non-competitive?

I intend to buy one CD per month at most, so I think my brute force method will suffice for me. It would be harder to do, if YTM didn't include commission.
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Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Wed Jun 27, 2018 4:05 pm

jeffyscott wrote:
Wed Jun 27, 2018 2:11 pm
I'm new at this, but have not found it difficult to just go through the CD pile on the Schawb site and find a handful to consider. Maybe partly because their fee structure makes any with much less than 10 non-competitive?

I intend to buy one CD per month at most, so I think my brute force method will suffice for me. It would be harder to do, if YTM didn't include commission.
One you mean $1000 a month? That is quite a bit of work to invest $1000 a month...

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Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Wed Jun 27, 2018 4:20 pm

No, I mean one CD transaction.

$1000 would be easy, since Schawb's minimum commission would mean looking only at new issues. Pretty sure no secondary would be able to offset a 1% commission, since Kevin indicated even 0.2% for smaller accounts at Vanguard is difficult to overcome.
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