Which Brokerage to use strictly for Brokered CDs

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dia
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Which Brokerage to use strictly for Brokered CDs

Post by dia » Sat Jul 14, 2018 5:50 am

A family member has a good chunk of $$$ sitting in a rather low-interest rate bank account and is interested in moving into one-year CDs. They will not need the $$ prior to that. They do not want to watch rates at all the internet banks and move money around. They also had a recent bad experience at an internet bank (long telephone wait for customer service). I suggested opening a brokerage account and buy brokered CDs. I suggested either Vanguard, Schwab or Fidelity.

Since this is strictly going to be for cash/CDs -- is there a brokerage that is better/easier for this type of investing? I have accounts at Vanguard and Schwab (not for CDs) My first thought was Vanguard, but I noticed the CDs are not listed during non-trading hours (why?), but CDs are listed on the Schwab site. Schwab and Fidelity also have local offices which might be helpful.

Suggestions on where to open an account...? Thanks very much.
What, Me Worry? --Alfred E. Neuman

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welderwannabe
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Re: Which Brokerage to use strictly for Brokered CDs

Post by welderwannabe » Sat Jul 14, 2018 7:10 am

I have no experience with Schwabb. Between Vanguard and Fidelity I would go with Fidelity for this. Their auto-roll for both CDs and Treasuries makes maintaining this pretty low hassle.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

gmaynardkrebs
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Re: Which Brokerage to use strictly for Brokered CDs

Post by gmaynardkrebs » Sat Jul 14, 2018 7:48 am

welderwannabe wrote:
Sat Jul 14, 2018 7:10 am
I have no experience with Schwabb. Between Vanguard and Fidelity I would go with Fidelity for this. Their auto-roll for both CDs and Treasuries makes maintaining this pretty low hassle.
By auto-roll, you mean buy another brokered CD from the same bank automatically? Personally, I'd want to check the rates again. 12 months later, a different bank might have a higher rates, or rates may have moved unfavorably since you bought initially.

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welderwannabe
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Re: Which Brokerage to use strictly for Brokered CDs

Post by welderwannabe » Sat Jul 14, 2018 7:50 am

gmaynardkrebs wrote:
Sat Jul 14, 2018 7:48 am
welderwannabe wrote:
Sat Jul 14, 2018 7:10 am
I have no experience with Schwabb. Between Vanguard and Fidelity I would go with Fidelity for this. Their auto-roll for both CDs and Treasuries makes maintaining this pretty low hassle.
By auto-roll, you mean buy another brokered CD from the same bank automatically? Personally, I'd want to check the rates again. 12 months later, a different bank might have a higher rates, or rates may have moved unfavorably since you bought initially.
No, it auto rolls you into another CD offering the best available rate of the same term. It does not stay with the same bank unless they happen to have the best available rate.
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

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whodidntante
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Re: Which Brokerage to use strictly for Brokered CDs

Post by whodidntante » Sat Jul 14, 2018 7:52 am

I think Fidelity would be a good choice. I've bought treasuries there before and the interface works great. Their rates seem on the high end for brokered CDs, though there are slight differences day to day and the highest rate crown does get passed around.

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dia
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Re: Which Brokerage to use strictly for Brokered CDs

Post by dia » Sat Jul 14, 2018 8:20 am

I did some prelim research and did find the Fidelity Fixed Income section of their site especially interesting and seemed easy to use. I also like their extremely simple and helpful page on Laddering. I wasn't aware of the auto-roll, will read up on that.

Thanks for the input welderwannabe and whodidntante.

I must say the Interface for this on Fidelity is much clearer than Merrill Edge. The Merrill site can feel intimidating and requires you to really hunt for what you are looking for.
What, Me Worry? --Alfred E. Neuman

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jeffyscott
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Re: Which Brokerage to use strictly for Brokered CDs

Post by jeffyscott » Sat Jul 14, 2018 10:36 am

dia wrote:
Sat Jul 14, 2018 5:50 am
A family member has a good chunk of $$$ sitting in a rather low-interest rate bank account and is interested in moving into one-year CDs.
I think for 1 year, Treasuries might be better, if it is a taxable account? Currently yield is about the same but no state income tax on the Treasuries.

Aside from that, since you have Schwab, you can take a look at their listings, too. I just started on CDs there recently and have found it pretty easy to understand and use.

Aside from appearances, my impression is that the main differences are on the way the secondary CDs are listed and commissions on same. If you will only be looking at new issues, I don't think there is any real difference.

On the secondary market, Vanguard charges $2/1000 unless you have $500K with them, then it is $1. Fidelity and Schwab both charge $1/1000, but Schwab has a $10 minimum (so you would want to buy increments of at least 10 on the secondary market there). Only Schwab shows the price and yield of the secondaries net of commission right in the search listing. With Vanguard and Fidelity, you don't get the adjusted figure until you have proceeded a step or two into the purchase process.

I posted this in the "2-year CDs at Vanguard and Fidelity Today" discussion, regarding Schwab vs. Fidelity:
I guess it all depends on what you value more. To me for CDs, I prefer Schwab because they show the YTM, net of commission, right away in the search table. Fidelity has the better commission structure, but they do not show you the actual YTM including commission on secondary CDs until about 2 screens into the buying process. So while I have to buy at least 10 at a time, at least it is a lot easier to find the best options (without the need for an offline analysis spreadsheet, such as Kevin uses).
press on, regardless - John C. Bogle

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dm200
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Re: Which Brokerage to use strictly for Brokered CDs

Post by dm200 » Sat Jul 14, 2018 10:45 am

Only experience with Vanguard - all good for brokered CDs

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dia
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Re: Which Brokerage to use strictly for Brokered CDs

Post by dia » Sat Jul 14, 2018 3:04 pm

jeffyscott wrote:
Sat Jul 14, 2018 10:36 am
dia wrote:
Sat Jul 14, 2018 5:50 am
A family member has a good chunk of $$$ sitting in a rather low-interest rate bank account and is interested in moving into one-year CDs.
I think for 1 year, Treasuries might be better, if it is a taxable account? Currently yield is about the same but no state income tax on the Treasuries.
It is a taxable account and I'd love to get my feet wet with Treasuries as I read about them on the forum quite a bit, however, I do not understand them and honestly, don't know how to purchase. I'd need a tutorial and someone to tell me what to look for and what to do. CDs are a no brainer for me and something I understand so I stick with what I know. Thank you for the input I do appreciate it.
What, Me Worry? --Alfred E. Neuman

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jeffyscott
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Re: Which Brokerage to use strictly for Brokered CDs

Post by jeffyscott » Sat Jul 14, 2018 3:37 pm

If you decide you want to learn about treasuries, here's one discussion, that helped me with that:

viewtopic.php?f=10&t=250059
press on, regardless - John C. Bogle

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dia
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Re: Which Brokerage to use strictly for Brokered CDs

Post by dia » Sat Jul 14, 2018 4:09 pm

jeffyscott wrote:
Sat Jul 14, 2018 3:37 pm
If you decide you want to learn about treasuries, here's one discussion, that helped me with that:

viewtopic.php?f=10&t=250059
Thank you--I will go through it, I am eager to learn all that I can.
What, Me Worry? --Alfred E. Neuman

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Johnnie
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Re: Which Brokerage to use strictly for Brokered CDs

Post by Johnnie » Sat Jul 14, 2018 6:43 pm

I just bought my first ever brokered CD from Schwab, in an IRA. They don't have that "rollover" feature - I asked. The guy I talked to sounded like he'd heard the question before and said something along the lines of, "Working on it."
"I know nothing."

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dia
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Re: Which Brokerage to use strictly for Brokered CDs

Post by dia » Sat Jul 14, 2018 7:01 pm

Johnnie wrote:
Sat Jul 14, 2018 6:43 pm
I just bought my first ever brokered CD from Schwab, in an IRA. They don't have that "rollover" feature - I asked. The guy I talked to sounded like he'd heard the question before and said something along the lines of, "Working on it."
They are super nice at Schwab and helpful -- I have contacted them during the weekends, etc. I have also stopped in at the office once or twice to drop off stuff. I just helped my mom buy brokered CDs from Merrill Edge for her IRA. I wish I had discovered them sooner. It really is easier than shopping all the banks for the latest "deal." My local bank has CD "deals" for "new deposits" but not for those that have been customers for a while. Nice.
What, Me Worry? --Alfred E. Neuman

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danielc
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Re: Which Brokerage to use strictly for Brokered CDs

Post by danielc » Sun Jul 15, 2018 8:18 am

dia wrote:
Sat Jul 14, 2018 7:01 pm
They are super nice at Schwab and helpful -- I have contacted them during the weekends, etc. I have also stopped in at the office once or twice to drop off stuff. I just helped my mom buy brokered CDs from Merrill Edge for her IRA. I wish I had discovered them sooner. It really is easier than shopping all the banks for the latest "deal." My local bank has CD "deals" for "new deposits" but not for those that have been customers for a while. Nice.
I hope that you and your mome understand that brokered CDs are significantly less liquid than regular CDs. You basically have to hold them to maturity. If you cannot cancel them, and while it possible to sell them in the open market, you can expect to lose a fair chunk of money when you do that, and you might not find a buyer. Treasuries behave similar to CDs but are much more liquid.

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TheTimeLord
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Re: Which Brokerage to use strictly for Brokered CDs

Post by TheTimeLord » Sun Jul 15, 2018 8:20 am

Use Fidelity for CDs.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

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dia
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Re: Which Brokerage to use strictly for Brokered CDs

Post by dia » Sun Jul 15, 2018 11:17 am

danielc wrote:
Sun Jul 15, 2018 8:18 am
dia wrote:
Sat Jul 14, 2018 7:01 pm
They are super nice at Schwab and helpful -- I have contacted them during the weekends, etc. I have also stopped in at the office once or twice to drop off stuff. I just helped my mom buy brokered CDs from Merrill Edge for her IRA. I wish I had discovered them sooner. It really is easier than shopping all the banks for the latest "deal." My local bank has CD "deals" for "new deposits" but not for those that have been customers for a while. Nice.
I hope that you and your mome understand that brokered CDs are significantly less liquid than regular CDs. You basically have to hold them to maturity. If you cannot cancel them, and while it possible to sell them in the open market, you can expect to lose a fair chunk of money when you do that, and you might not find a buyer. Treasuries behave similar to CDs but are much more liquid.
I fully understand that brokered CDs MUST be held to maturity. I only put $$ in brokered CDs that can sit. We have separate cash reserves for emergency situations. Thanks for mentioning that though--it's an important difference from bank CDs.

I have avoided Treasuries because I couldn't grasp how they worked, but thanks to Bogleheads (as of yesterday I read a very helpful post on TBills)--I can now choose that route without being intimidated.
What, Me Worry? --Alfred E. Neuman

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dia
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Re: Which Brokerage to use strictly for Brokered CDs

Post by dia » Sun Jul 15, 2018 11:24 am

TheTimeLord wrote:
Sun Jul 15, 2018 8:20 am
Use Fidelity for CDs.
Any particular reason? I am thinking I will open a Fidelity account because their website doesn't feel as confusing as the others, and I like the rollover feature, but curious why you are recommending them.
What, Me Worry? --Alfred E. Neuman

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dm200
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Re: Which Brokerage to use strictly for Brokered CDs

Post by dm200 » Sun Jul 15, 2018 1:19 pm

dia wrote:
Sun Jul 15, 2018 11:17 am
danielc wrote:
Sun Jul 15, 2018 8:18 am
dia wrote:
Sat Jul 14, 2018 7:01 pm
They are super nice at Schwab and helpful -- I have contacted them during the weekends, etc. I have also stopped in at the office once or twice to drop off stuff. I just helped my mom buy brokered CDs from Merrill Edge for her IRA. I wish I had discovered them sooner. It really is easier than shopping all the banks for the latest "deal." My local bank has CD "deals" for "new deposits" but not for those that have been customers for a while. Nice.
I hope that you and your mome understand that brokered CDs are significantly less liquid than regular CDs. You basically have to hold them to maturity. If you cannot cancel them, and while it possible to sell them in the open market, you can expect to lose a fair chunk of money when you do that, and you might not find a buyer. Treasuries behave similar to CDs but are much more liquid.
I fully understand that brokered CDs MUST be held to maturity. I only put $$ in brokered CDs that can sit. We have separate cash reserves for emergency situations. Thanks for mentioning that though--it's an important difference from bank CDs.
I have avoided Treasuries because I couldn't grasp how they worked, but thanks to Bogleheads (as of yesterday I read a very helpful post on TBills)--I can now choose that route without being intimidated.
In addition, a factor of brokered vs. direct issue CDs is that the interest paid periodically cannot be added (compounded) in the CD. Not a problem for some, but is for others.

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TheTimeLord
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Re: Which Brokerage to use strictly for Brokered CDs

Post by TheTimeLord » Sun Jul 15, 2018 1:53 pm

dia wrote:
Sun Jul 15, 2018 11:24 am
TheTimeLord wrote:
Sun Jul 15, 2018 8:20 am
Use Fidelity for CDs.
Any particular reason? I am thinking I will open a Fidelity account because their website doesn't feel as confusing as the others, and I like the rollover feature, but curious why you are recommending them.
It seems to me that have a wide array of CDs with competitive yields and interface is straightforward enough to suit my needs. Nothing magically, just seems to do a solid job.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]

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