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1st United Credit Union 3% 3 year CD

Posted: Fri Oct 06, 2017 9:21 pm
by Rob5TCP
This ends tomorrow - and you must be in one of the California counties that 1st United operates in.
Story at ... cu/offers/

Re: 1st United Credit Union 3% 3 year CD

Posted: Fri Oct 06, 2017 10:15 pm
by Rob5TCP
This ends by 1PM tomorrow.

Re: 1st United Credit Union 3% 3 year CD

Posted: Tue Oct 10, 2017 9:11 pm
by oofoo2000
Thanks for the heads up! I managed to open an account at the last minute. This is definitely a great deal!

Re: 1st United Credit Union 3% 3 year CD

Posted: Wed Oct 11, 2017 7:25 pm
by dratkinson
BH 1st United Credit Union 3% 3 year CD

I use to play games with my first-year EF money: chasing rates and CC/account opening bonuses. I no longer believe it to be worthwhile. Why? Now it's too much work to avoid the hurdles. And uncle sugar and his nephews at state earned windfalls from this "second job", but never even sent me a "Thank you" card.

For me, a taxable CD 3% APY becomes 2.1% = (3% - (3% x (.25 + .05))) after tax (25% fed, 5% state).

So a few years back, during the process of simplifying my life (a result of forum topic on "simplifying our lives in advance of cognitive decline"), I looked into the possibility that the tax code could be used to reward my work, instead of punishing my work. Muni funds seemed to be the place to start looking.

After a few months of due diligence, I found a suitable single-state muni fund that turned its 2.5% SEC yield into 3.57% (= 2.5% / (1 - (.25 + .05))) after the fed/state tax benefits. (That was in 2015. The SEC yield should be a little higher now.)

Now, when I feel the urge to play games, I just buy more single-state muni fund instead.

Livesoft's idea. I have also embraced livesoft's advice to increase tax efficiency by minimizing our Sch B part I income. The money from playing games---chasing rates and CC/account-opening-bonuses---is taxed here.

I now keep 1yr of living expense (1st-tier EFs) in low-interest checking (<$10/yr in interest), savings (<$10/yr in interest), and TE mmkt; 3yrs in VWIUX (IT national muni: last tier of my formal EFs, home projects, new car, dry powder fund); and everything else in my other tax-efficient 3-fund investments.

Avoiding games with my first-year EFs does result in a cost-of-doing-business to keep my financial life simple. On $20K/yr of living expense, 2.1% after-tax is only $420 (= $20K x 2.1%).

I can give up $420 a year to keep my financial life simple. Especially since every new dollar above that (first-year living expense) is earning the market rate on my AA.

I could go back to playing games with my first-year EF money. My workload would go up. My taxes would go up. My after-tax return on that money would be less than what I'm getting with my single-state muni fund. Naah.

(Added) LT national muni fund. All is not lost if you can't find a single-state muni fund. Before I did, I was using VWLTX/VWLUX (LT national muni) for my retirement bonds in taxable and to scratch the itch to reach for additional yield. Why? With 3yrs of living expenses in VWIUX (IT national muni), I was reasonably certain I would not need to withdraw money from the LT muni fund, so my games-playing money could go there.

Disclosure. I did start my muni investing with the BH-recommended VMLTX (limited-term national muni) as the last tier of my formal EFs, and the BH-recommended VWITX as my retirement bonds in taxable. (But I continued to have the urge to reach for additional yield.)

But as my muni investments grew and I became certain I had more than enough to cover most emergencies, I mentally converted VWITX/VWIUX to be the last tier of my formal EFs, and opened VWLTX (funded by selling VMLTX) as my preferred retirement bonds and play-money target. (I was much happier with this arrangement.)

Finding an acceptable single-state muni was just gravy. (Knock wood.)

(Added) Time. Just starting out and with little invested, what do you do with your time if you are not playing games with your first-year EF money?

"An investment in knowledge pays the best interest." --Benjamin Franklin

--Keep your first year of living expenses simple, to provide more free time and keep your financial life simple.
--Use your increased free time to improve your human capital---ability to earn.
--Use your increased human capital to increase your pay.
--Use your increased pay to more quickly get beyond "...just starting out and with little invested".

(Added) P.S. All of this presupposes you are in the 25%+ fed tax bracket so can reap the tax benefit of muni funds. If not, then see "(Added) Time".

Use your additional free time from keeping your financial life simple, to increase your ability to earn enough to move into higher tax brackets.

Re: 1st United Credit Union 3% 3 year CD

Posted: Mon Oct 16, 2017 7:13 pm
by dratkinson
OP, I'm a little slow and just noticed that you are in New York City. This means all your CD interest is triple-taxed (fed, state, city). I believe you can do better than chase taxable teaser rates. How?

Vanguard has NY muni funds that are triple-tax exempt. One of the senior BHs recommends using Vanguard's limited-term national muni fund (VMLTX) paired 50/50 with its LT NY muni fund. Why? The combination gives an IT duration (reported to be the sweet spot on the total-return investing curve), with most of your distributions exempt from state/city tax.

If interested, Vanguard also has a triple-tax exempt NY mmkt fund.

I use to chase rates, but no longer as I don't believe it's worth the effort. Now I give up the interest on one year of living expenses to keep my investing simple. I do this by keeping that money in low-interest checking, savings, mmkt (national tax-exempt).

But everything above one-year of living expenses I keep in my 3-fund taxable investments... to earn the market return on my AA. (I substitute munis for the recommended TBM.) I believe the money earning the market return more than makes up for the little that I lose by not chasing rates. So more money + simplicity is a win^2.

Now when I have the itch to chase rates, I compare the teaser APY to my single-state muni's TEY. So far no APY has come close; so no reason to resume chasing rates.

N.B. All of this presupposes you are in the 25%+ fed tax bracket so can take advantage of the muni tax benefit.

Disclosure. I started with the BH-recommended VMLTX as the last tier of my formal EFs. But as the total amount in munis grew and I rationalized that I could afford to take more risk, so replaced VMLTX with VWITX/VWIUX (IT national muni).

Today, for simplicity, I keep in taxable:
--1yr of living expenses in low-interest checking, savings, TE mmkt as the first tier of my formal EFs.
--Everything else in a 3-fund portfolio: TSM, TISM, munis (multiple years of living expenses in VWIUX as the last tier of my formal EFs, 50/50 VWLUX (LT national muni) + single-state muni).

Re: 1st United Credit Union 3% 3 year CD

Posted: Mon Oct 16, 2017 7:21 pm
by nalor511
Drat, must not have been paying enough attention, sorry I missed this 3yr/3%!