InvisibleAerobar wrote: ↑
Sat Jun 16, 2018 6:21 pm
Do you know if there are minimum purchase requirements? And how does one go about purchasing these products? Do I open a CD directly, or is it as part of a taxable account?
Also, how easy would it be to purchase similar products from Schwab/Fidelity/Vanguard? For example, I attempted doing a CD ladder in my Schwab Roth IRA account, but realized that I needed to put in a minimum amount of $1000/order. Given that i'm capped at $5500/year, it really won't work too well.
Lastly, where would you suggest one look to get good deals on brokered CDs? Many thanks in advance
For brokered CDs (and bonds), a quantity of 1 = $1,000 face value, so you can't buy less than $1,000 worth of a new issue. On the secondary market it could be a little less, but not much less.
At Vanguard the minimum quantity for new-issue CDs seems to be 10. At Fidelity it seems to be 1. I don't have a Schwab account, but based on what you say, perhaps it also is 1.
On secondary market, it depends on the particular offer. Minimum quantity could be 1 or it could be 50.
I'm not necessarily recommending it, but with $5,500 you could buy five CDs and put the leftover in a fund of some sort, or just leave it in a money market account. I have been buying small quantities of CDs for family member's relatively small accounts. I wouldn't worry about a ladder, but just buy some 2-year CDs, as those are the best deal now.
For new issue CDs you'll probably find about the same deals everywhere, which is 2.80% on 2-year and 3.00% on 3-year, for example. Sometimes one broker might have a slightly higher rate for a day or two, or they might come out with a higher rate a day or two before another broker. This is based on just watching Fidelity and Vanguard.
I seem to generally find better deals on secondary market at Fidelity than at Vanguard, but good deals on very small quantities sometimes pop up at Vanguard. Also, secondary market commission for small accounts at Fidelity is 0.1%, while at Vanguard it is 0.2% unless you have at least $500K of Vanguard products. There is no commission at either for new-issue CDs.
No recent experience with Schwab.