2-year CDs at Vanguard and Fidelity Today

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Wed Jun 27, 2018 7:23 pm

CD yields for 2-year and 3-year maturities seem to have plateaued. We had been seeing increases of about 5 basis points every couple of weeks or so, but these yields have not increased at Vanguard or Fidelity since mid-May. On May 17, the 2-year at Fidelity increased from 2.75% to 2.80%, and Vanguard followed a day or two later as I recall. Also on May 17 the 3-year increased to 3% at both Fidelity and Vanguard. Almost a month and a half later, these still are the new-issue yields.

Also, there is only one bank, Wells Fargo, offering these yields, with the competition offering 5 basis points less for both 2-year and 3-year new-issue CDs. Earlier today, the top 2-year yield at Fidelity was 2.75%, but since then a new, large batch of Wells Fargo 2-year CDs at 2.80% has become available again.

Prior to the last week or so, I was regularly finding 2-year secondary CDs at 2.85% or higher, but not lately. Still have been seeing 3-year CDs at 3.1% or more though. These yields are net of commission at Fidelity.

Perhaps not coincidentally, the 2-year and 3-year Treasury yields are a bit lower now than they were in mid-May, after having been climbing fairly steadily before then. These yields dropped sharply toward the end of May, and although the CD yields didn't drop then, they haven't risen either. The Treasury yields regained much (3-year) if not all (2-year) of the lost ground through mid-June, but have declined a bit since then.

Image

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Wed Jun 27, 2018 8:40 pm

Thanks Kevin!

I started buying from secondary late, but I have monitored the secondary rates for around 2 months, and have pretty much the same observations.

It feels like the brokered CDs are quite illiquid and is an in-efficient market. It lags and/or loosely tracks the treasuries of the same terms. I guess that is why there are "deals" and for the same secondary CDs maturing in 3 years, you can get from ~3% to 3.1x% and even 3.2% (<- which I got 1 CD a couple of days ago).

This market is maybe not big enough for institutions to work on, so small investors can cherry pick "deals" and end up with a portfolio of CDs that will outperform a diversified bond fund in yield, while having a risk profile close to a short term treasury bond fund.

The yields are definitely getting lower recently, and I have been loosening up my "buy" criteria. Initially I was using a 0.285% per year premium from my reference point. Now there have been no CD meeting that requirement for 3 days (actually saw 1 but by the time I clicked through the purchase screens, it was gone). I have been reducing it and may need to strike on CDs at 0.260% per year from my reference point.

Need to weigh the opportunity cost to wait for "deals", and how long it takes to deploy all capital. While waiting, the core position is at around 1.51% only.

gips
Posts: 475
Joined: Mon May 13, 2013 5:42 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by gips » Thu Jun 28, 2018 11:42 pm

purchased 2-year cd @2.8% today on fidelity.

Mitchell777
Posts: 1032
Joined: Mon May 21, 2007 6:32 am

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Mitchell777 » Fri Jun 29, 2018 5:13 am

I purchased my first CD on the secondary market at Vanguard. 36 months at 3.109% Discover Bank. I'm nervous to go out longer than that. I used to buy all my CD's locally, usually at credit unions one county over, because the rates were better than Vanguard. Not the case any longer. I'm losing the option to get out easily if rates increase, or at least we hope easily, with a six month penalty. But to get 3% locally I now need to go out five years.

User avatar
jeffyscott
Posts: 7366
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Fri Jun 29, 2018 7:39 am

likashing wrote:
Wed Jun 27, 2018 8:40 pm
This market is maybe not big enough for institutions to work on, so small investors can cherry pick "deals" and end up with a portfolio of CDs that will outperform a diversified bond fund in yield, while having a risk profile close to a short term treasury bond fund.
I think it is the $250,000 FDIC insurance limit that is the barrier to institutions. Someone mentioned that in one of the discussions and because of that, the CDs would be like a bond but with a lower interest rate.

While I guess it's a small market, I am surprised at how many people are apparently willing to bail out of their CDs when they lose maybe 0.5% to 1% on the spread, pay a 0.1% commission, and lose on the market value since prices reflect current interest rates.
press on, regardless - John C. Bogle

protagonist
Posts: 5463
Joined: Sun Dec 26, 2010 12:47 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by protagonist » Fri Jun 29, 2018 12:22 pm

If you are holding multiple secondary CDs purchased through Fidelity, at tax time, will you receive 1099s from each institution that issued the CD? Or just one 1099 from Fidelity?

User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Fri Jun 29, 2018 12:40 pm

protagonist wrote:
Fri Jun 29, 2018 12:22 pm
If you are holding multiple secondary CDs purchased through Fidelity, at tax time, will you receive 1099s from each institution that issued the CD? Or just one 1099 from Fidelity?
Just one from Fidelity.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Fri Jun 29, 2018 1:39 pm

jeffyscott wrote:
Fri Jun 29, 2018 7:39 am
likashing wrote:
Wed Jun 27, 2018 8:40 pm
This market is maybe not big enough for institutions to work on, so small investors can cherry pick "deals" and end up with a portfolio of CDs that will outperform a diversified bond fund in yield, while having a risk profile close to a short term treasury bond fund.
I think it is the $250,000 FDIC insurance limit that is the barrier to institutions. Someone mentioned that in one of the discussions and because of that, the CDs would be like a bond but with a lower interest rate.

While I guess it's a small market, I am surprised at how many people are apparently willing to bail out of their CDs when they lose maybe 0.5% to 1% on the spread, pay a 0.1% commission, and lose on the market value since prices reflect current interest rates.
$250k is one of the reasons. In taxable people might prefer Treasury and/or Muni, which is another thing.

Volume and CDs available too. I believe the $ volume for CDs is tiny vs treasury. It is just not scale-able for institution level of money.

For the same 3-year maturity new issue @ 3.00%, you can get from secondary between 3-3.2%. That is a huge spread. It just shows how inefficient this market is. And we have listed some of the reasons.

What we are giving up though, is obviously liquidity, because if we want to bail out, we need to pay a relatively steep price like you mentioned. On the flip side, we get premium on top of treasuries.

User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Mon Jul 09, 2018 1:29 pm

The highest new-issue 2-year CD yield at both Fidelity and Vanguard still is 2.80%, and still only offered by Wells Fargo, with the closest competition at 2.75% at Fidelity, and 2.70% at Vanguard.

Highest secondary net yield for ballpark 2-year maturity I saw today was about 2.81% for 23.9-month, with only 7 available. I am down to the last bit of cash in the IRA in which I've been buying CDs, and today bought five 26.7-month at about 2.92% net. By contrast, about a month ago I bought six 26.5-month at about 2.98% net.

Yield summary pages at both Fidelity and Vanguard still show the highest new-issue 3-year CD yield at 3.00%, but when I click it at Fidelity, I see 3,000 (now 2,790 just before submitting) offered at 3.05% by Goldman Sachs, with five banks offering a 3-year at 3.00%. At Vanguard four banks are offering the 3-year at 3.00%.

I see a 3-year secondary at about 3.12% net at Fidelity, which is consistent with what I've been seeing lately.

The 2-year and 3-year Treasury yields are about the same as the were a month ago.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

User avatar
jeffyscott
Posts: 7366
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Mon Jul 09, 2018 2:49 pm

At Schwab, I took about 35 months at 3.05% and ~3.5 year at ~3.2% at the end of last week. But with their commission structure on secondary, only those with 10 or more available tend to be worthwhile.

If I had waited to today, I may have done a little better from what I see. I had figured the market might be a little thinner during a holiday week but decided to go ahead, anyway. Friday happened to be the day the latest increment of cash arrived.
press on, regardless - John C. Bogle

gips
Posts: 475
Joined: Mon May 13, 2013 5:42 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by gips » Mon Jul 09, 2018 5:58 pm

In the past, I'd found competitive CD's at Merrill edge. This morning, looked like the best rate was %2.15 for one year. hopefully just a temporary aberration. three year was more competitive but not willing to go out that far.

protagonist
Posts: 5463
Joined: Sun Dec 26, 2010 12:47 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by protagonist » Mon Jul 09, 2018 7:41 pm

I think it is important to remember that, unless you are talking about really large investments, small differences in yield over a 2 or even a 3 year period are rather trivial. For each $10K invested, only $10/yr. per each 0.1% yield difference.

For that reason, I just accepted the best
yields I could get a a month or so ago when I found myself sitting on $150K of cash. If I wait long enough for interest rates to rise before I invest (and I do expect they will rise), what I lose in interest while waiting will probably be more than what I will gain in yield by waiting. And if interest rates do progressively rise over the next year or two (as I expect they likely will), the sooner my CDs mature the sooner I can get a better rate.

Not to mention the hassle factor of checking interest rates every few days. Time has value as well.

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Fri Jul 13, 2018 12:29 pm

After buying, does Fidelity's "estimated yield" mean anything? It looks like it is based on the last trading price, and not the purchase price if held to maturity.

Is there an easy way to get Fidelity to show the yield to maturity based on the purchase price?

User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Fri Jul 13, 2018 1:58 pm

likashing wrote:
Fri Jul 13, 2018 12:29 pm
After buying, does Fidelity's "estimated yield" mean anything? It looks like it is based on the last trading price, and not the purchase price if held to maturity.

Is there an easy way to get Fidelity to show the yield to maturity based on the purchase price?
I don't see the term "estimated yield" used anywhere in the CD buying process. If you do a buy preview, they show "effective yield", which is the net yield after commission based on the purchase price. This is what you want, since this is the net yield you'll get if the order is filled.

Fidelity uses the term "estimated yield" for Treasuries bought at auction. Is this what you're thinking of?

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

bondsr4me
Posts: 935
Joined: Fri Oct 18, 2013 7:08 am

Re: 2-year CDs at Vanguard and Fidelity Today

Post by bondsr4me » Fri Jul 13, 2018 3:45 pm

jeffyscott wrote:
Mon Jul 09, 2018 2:49 pm
At Schwab, I took about 35 months at 3.05% and ~3.5 year at ~3.2% at the end of last week. But with their commission structure on secondary, only those with 10 or more available tend to be worthwhile.

If I had waited to today, I may have done a little better from what I see. I had figured the market might be a little thinner during a holiday week but decided to go ahead, anyway. Friday happened to be the day the latest increment of cash arrived.
I don’t buy bonds at Schwab specifically because of their required minimums...will be transferring most of our accounts from Schwab to Fidelity to get free trades and Fido will also reimburse the Schwab transfer fee too.
Fidelity has the best bond platform IMHO.

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Fri Jul 13, 2018 3:57 pm

Kevin M wrote:
Fri Jul 13, 2018 1:58 pm
likashing wrote:
Fri Jul 13, 2018 12:29 pm
After buying, does Fidelity's "estimated yield" mean anything? It looks like it is based on the last trading price, and not the purchase price if held to maturity.

Is there an easy way to get Fidelity to show the yield to maturity based on the purchase price?
I don't see the term "estimated yield" used anywhere in the CD buying process. If you do a buy preview, they show "effective yield", which is the net yield after commission based on the purchase price. This is what you want, since this is the net yield you'll get if the order is filled.

Fidelity uses the term "estimated yield" for Treasuries bought at auction. Is this what you're thinking of?

Kevin
What I meant was after purchase. Go to "positions". Click on any brokered CD you own. Click on link called "View fixed income analysis for your bond holdings."

In there, it lists out all your fixed income positions including brokered CD, and there is an "estimated yield" column.

On that column, it shows a lower yield than the "effective yield" when I purchased.

User avatar
jeffyscott
Posts: 7366
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Fri Jul 13, 2018 4:44 pm

bondsr4me wrote:
Fri Jul 13, 2018 3:45 pm
jeffyscott wrote:
Mon Jul 09, 2018 2:49 pm
At Schwab, I took about 35 months at 3.05% and ~3.5 year at ~3.2% at the end of last week. But with their commission structure on secondary, only those with 10 or more available tend to be worthwhile.

If I had waited to today, I may have done a little better from what I see. I had figured the market might be a little thinner during a holiday week but decided to go ahead, anyway. Friday happened to be the day the latest increment of cash arrived.
I don’t buy bonds at Schwab specifically because of their required minimums...will be transferring most of our accounts from Schwab to Fidelity to get free trades and Fido will also reimburse the Schwab transfer fee too.
Fidelity has the best bond platform IMHO.
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).

I think I read a comment today that Schwab also has smaller spreads on treasuries than Fido?
press on, regardless - John C. Bogle

User avatar
Ricchan
Posts: 60
Joined: Wed Jan 27, 2016 12:26 am

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Ricchan » Fri Jul 13, 2018 6:00 pm

I've been recording the highest new issue CD rates available at Vanguard once a week since mid May. Basically, I just look up the highest available new issue CD rates each Saturday and record them in an Excel sheet. Based on my records, the (rough) dates when rates changed are as follows:

Code: Select all

New issue CD rates from 5/12 - 7/12 (weekly)

1 yr:
5/12  2.20%
5/19  2.25%
6/2   2.30%
6/23  2.40%

2 yr:
5/12  2.75%
5/26  2.80%

3 yr:
5/12  2.90%
5/19  3.00%
Now, not only have 2 yr and 3 yr rates not moved since May, but I checked today and saw this:

Image

The 1 yr rate actually decreased to 2.30%. Interestingly, that same table also shows 1 yr treasuries going for 2.36%.

EDIT: The decrease in 1 yr rate might be a non-issue, since there are higher yielding new issue 1 yr CDs coming in the near future. This may just be a temporary lull. However, it does feel like rates have been pretty stagnant for at least a month now compared to earlier this year.

Image

User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Fri Jul 13, 2018 7:25 pm

likashing wrote:
Fri Jul 13, 2018 3:57 pm
What I meant was after purchase. Go to "positions". Click on any brokered CD you own. Click on link called "View fixed income analysis for your bond holdings."

In there, it lists out all your fixed income positions including brokered CD, and there is an "estimated yield" column.

On that column, it shows a lower yield than the "effective yield" when I purchased.
Here's what I find in the help for this screen:
Please also note that the Fixed Income Analysis Tool utilizes a third party price to calculate an estimated yield for individual bond and CD positions entered into the tool and this price may be different than the price at which the bond or CD may be purchased(ask price).
I wouldn't pay any attention to this, especially if you got a good deal on the CD. Looking at my most recent purchase, my net yield was about 2.92%, but the FI analysis tool is showing 2.843%. Since I only buy CDs that have the highest available yields for the given maturity, I'm not surprised that a 3rd party pricing tool would be showing a lower yield for this CD.

I've shown how wide the range is for CDs of a given maturity. If you buy only the highest yields, any pricing tool that looks at all CDs of similar maturity will show a lower yield.

If you hold to maturity it doesn't matter--you'll earn about the initial yield, with your reinvestment rate being the only variable. if you sell before maturity, all that matters is the price/yield you can get for your particular CD at the time you sell, and that probably has little relationship to what you see in the tool.

A lower yield means a higher price, so that would be a good thing if you sold. I paid 98.47, so 98.57 with commission, but I see recent price of 98.728 in the tool. That would be 98.628 after commission, meaning I could sell the CD for a small profit if that price meant anything, but I don't believe the tool is meaningful for determining this.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Sat Jul 14, 2018 4:30 pm

Thanks Kevin as always.

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Sat Jul 14, 2018 4:30 pm

Thanks Kevin as always.

User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Wed Jul 25, 2018 11:58 am

As of now, the top 2-year new-issue yield at Fidelity and Vanguard is 2.75%, down from 2.80% for some weeks now. Wells Fargo had been offering the 2.80% CD, but as of now, they are not offering a top 2-year rate. Perhaps WF will come back to market with some 2-year 2.80% CDs later in the day--I've seen this before. Or perhaps WF no longer has as much need for cash.

The top 3-year yield remains at 3.00% at both VG and Fido, with several banks offering this yield at both. Wells Fargo is not among them, as it has been consistently in recent weeks.

The top 1-year yield is 2.35%, down from 2.45% recently (yesterday I believe). By comparison, the 1-year Treasury is at about 2.4%--a bit higher for large quantities.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Wed Jul 25, 2018 6:37 pm

Kevin M wrote:
Wed Jul 25, 2018 11:58 am
Perhaps WF will come back to market with some 2-year 2.80% CDs later in the day--I've seen this before.
I once again see 2-year Wells Fargo offerings at 2.80% at Vanguard, but not yet at Fidelity. Would expect to see WF 2.80% at Fidelity by tomorrow.
The top 3-year yield remains at 3.00% at both VG and Fido, with several banks offering this yield at both. Wells Fargo is not among them, as it has been consistently in recent weeks.
Similarly, WF now has a 3-year offering at 3.00% at Vanguard, but not yet at Fidelity.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Wed Jul 25, 2018 6:57 pm

Got some 3.141% 07/26/21 maturity from Discover through Fidelity this morning.
Last edited by likashing on Thu Jul 26, 2018 12:21 am, edited 1 time in total.

gips
Posts: 475
Joined: Mon May 13, 2013 5:42 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by gips » Wed Jul 25, 2018 8:55 pm

I purchased 2 year wf @2.80 on Fidelity today.

User avatar
jeffyscott
Posts: 7366
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Wed Jul 25, 2018 9:01 pm

likashing wrote:
Wed Jul 25, 2018 6:57 pm
Got some 3.141% 07/25/18 maturity from Discover through Fidelity this morning.
Pretty good rate, too bad it's only for less than a day :wink:
press on, regardless - John C. Bogle

doneat53
Posts: 70
Joined: Tue Jul 04, 2017 1:23 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by doneat53 » Wed Jul 25, 2018 9:43 pm

7/25/18?? or do you mean 7/25/19? I don't see anything close to this at 1 or two year maturity.

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Thu Jul 26, 2018 12:20 am

jeffyscott wrote:
Wed Jul 25, 2018 9:01 pm
likashing wrote:
Wed Jul 25, 2018 6:57 pm
Got some 3.141% 07/25/18 maturity from Discover through Fidelity this morning.
Pretty good rate, too bad it's only for less than a day :wink:
Lol sorry I meant 7/26/2021. 07/25/2018 was the purchase date obviously. Effectively 3-year 3.141%.

User avatar
jeffyscott
Posts: 7366
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Thu Jul 26, 2018 6:47 am

likashing wrote:
Thu Jul 26, 2018 12:20 am
jeffyscott wrote:
Wed Jul 25, 2018 9:01 pm
likashing wrote:
Wed Jul 25, 2018 6:57 pm
Got some 3.141% 07/25/18 maturity from Discover through Fidelity this morning.
Pretty good rate, too bad it's only for less than a day :wink:
Lol sorry I meant 7/26/2021. 07/25/2018 was the purchase date obviously. Effectively 3-year 3.141%.
That's a good rate, is that net of commission? The best I could find when I was buying last week was 3.064% for ~3 year (same maturity date, so might even be the same Discover CD as yours). That would still be just under 3.1% before commission, I think. Not sure how much the YTM would increase due to the effective maturity being a week less at the time you bought?
press on, regardless - John C. Bogle

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Thu Jul 26, 2018 9:55 am

jeffyscott wrote:
Thu Jul 26, 2018 6:47 am
likashing wrote:
Thu Jul 26, 2018 12:20 am
jeffyscott wrote:
Wed Jul 25, 2018 9:01 pm
likashing wrote:
Wed Jul 25, 2018 6:57 pm
Got some 3.141% 07/25/18 maturity from Discover through Fidelity this morning.
Pretty good rate, too bad it's only for less than a day :wink:
Lol sorry I meant 7/26/2021. 07/25/2018 was the purchase date obviously. Effectively 3-year 3.141%.
That's a good rate, is that net of commission? The best I could find when I was buying last week was 3.064% for ~3 year (same maturity date, so might even be the same Discover CD as yours). That would still be just under 3.1% before commission, I think. Not sure how much the YTM would increase due to the effective maturity being a week less at the time you bought?
Yes, net rate including commission.

User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Thu Jul 26, 2018 10:13 am

Kevin M wrote:
Wed Jul 25, 2018 6:37 pm
[Would expect to see WF 2.80% at Fidelity by tomorrow.
Large quantity of 2-year at 2.80% now at Fidelity. Smaller quantity still available at Vanguard. One thing about these is that they don't settle until 8/16, so three weeks from today.

I would be looking on secondary market for quicker settlement. Another advantage of secondary market is that you're likely to find 2-year at about 2.80% from different banks (especially if paying $1/CD commission); with WF being the only one offering the highest yield, larger investors have to consider FDIC insurance limits.
Similarly, WF now has a 3-year offering at 3.00% at Vanguard, but not yet at Fidelity.
WF now has a large quantity of 3-year at 3.00% at Fidelity as well. These also settle 8/16. There are several others at 3% that settle next week.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

wjinghlw
Posts: 1
Joined: Tue Jul 24, 2018 5:33 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by wjinghlw » Thu Jul 26, 2018 7:33 pm

Hey guys I was browsing today on depositaccounts.com. I found Home Loan Investment Bank, F.S.B. is offering 18 month e-CD at 3.15% APY. I have never went shopping for CD at online banks before. I am missing anything obvious about this deal? Because it seems fantastic to me.

gips
Posts: 475
Joined: Mon May 13, 2013 5:42 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by gips » Thu Jul 26, 2018 8:22 pm

wjinghlw wrote:
Thu Jul 26, 2018 7:33 pm
Hey guys I was browsing today on depositaccounts.com. I found Home Loan Investment Bank, F.S.B. is offering 18 month e-CD at 3.15% APY. I have never went shopping for CD at online banks before. I am missing anything obvious about this deal? Because it seems fantastic to me.
not a lot of reviews or information but looks good.

I've been thinking about the andrews 9 month at 2.75. I suppose in 9 months, I'd have find 3.35% to break even. And I'm pretty frustrated with andrews cust service, I was on hold for 20 mins before I opted to have them call me back while keeping my place in the queue. It took 48 hours for a callback, I wasn't home, so they left a message with their call center phone number...sounds like another 48 hours and a crap shoot if I'll be home.

otoh, I'm getting tired of creating new banking relationships....

Mitchell777
Posts: 1032
Joined: Mon May 21, 2007 6:32 am

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Mitchell777 » Tue Jul 31, 2018 5:46 pm

Kevin - Have you purchased any callable CD's? I just started buying CD's on the secondary market and have in the past bought some new issue. Never callable. I see a JPMorgan 48128FNS7 two year callable after one year (Vanguard). It looks like worst case I would get 2.85% after one year, or it is not called and I get 2.85% after two years. Am I missing anything - Thanks

User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Tue Jul 31, 2018 6:09 pm

Mitchell777 wrote:
Tue Jul 31, 2018 5:46 pm
Kevin - Have you purchased any callable CD's?
Not that I recall, and certainly not recently. I think call protected (not callable) is the default in the search criteria, and I've never changed it when I've changed other things.
I just started buying CD's on the secondary market and have in the past bought some new issue. Never callable. I see a JPMorgan 48128FNS7 two year callable after one year (Vanguard). It looks like worst case I would get 2.85% after one year, or it is not called and I get 2.85% after two years. Am I missing anything - Thanks
I don't see any big downside to this. The downside is that if rates fall enough in a year, they'll probably call it, and you'll have to reinvest at a lower rate.

I see that this is a new issue. You only get 5 basis points more than non-callable 2-year new issue at 2.80%, and although last time I looked it was harder, some weeks ago I was getting 2.85% net on 2-year new issues on secondary market. I think I would rather look for good deals on secondary market than give the bank a call option for 5 basis points.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

Mitchell777
Posts: 1032
Joined: Mon May 21, 2007 6:32 am

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Mitchell777 » Tue Jul 31, 2018 6:19 pm

Thanks Kevin - I have a CD that matured at a local bank. I was trying to get 2.85%+ but not seeing it on the secondary market at Vanguard in 50 or more lots. Same with three year at 3.1%. I saw some recently and bought but not in the past few days

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Tue Aug 07, 2018 3:30 pm

Sallie Mae has a bunch of 08/09/2021 maturity at 3.11% after fee on Fidelity - 795450U60

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Tue Aug 07, 2018 3:43 pm

likashing wrote:
Tue Aug 07, 2018 3:30 pm
Sallie Mae has a bunch of 08/09/2021 maturity at 3.11% after fee on Fidelity - 795450U60
Out of curiosity I have just looked for the same CD on Schwab, and it is not available.

In addition, best new issue on Schwab for 2/3yr is 2.80/3.00. On Fidelity it is 2.85/3.05.

On Vanguard, 795450U60 is available but without "ask". Their new issue is also 2.80/3.00.

Go figure.

User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Tue Aug 07, 2018 9:48 pm

likashing wrote:
Tue Aug 07, 2018 3:43 pm
likashing wrote:
Tue Aug 07, 2018 3:30 pm
Sallie Mae has a bunch of 08/09/2021 maturity at 3.11% after fee on Fidelity - 795450U60
Out of curiosity I have just looked for the same CD on Schwab, and it is not available.

In addition, best new issue on Schwab for 2/3yr is 2.80/3.00. On Fidelity it is 2.85/3.05.

On Vanguard, 795450U60 is available but without "ask". Their new issue is also 2.80/3.00.

Go figure.
The Fidelity 2-year at 2.85% and 3-year at 3.05% are callable at par after one year, so you're getting only 5 basis points for the call risk. We discussed this just up-thread.

The yield premium of about 10 basis points for the 3-year secondary CD at Fidelity is pretty typical, based on what I was seeing when I was actively monitoring secondary CDs a few weeks ago.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

User avatar
whodidntante
Posts: 4306
Joined: Thu Jan 21, 2016 11:11 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by whodidntante » Tue Aug 07, 2018 10:46 pm

Do brokers tend to charge a fee if a CD/bond is called?

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Wed Aug 08, 2018 1:17 am

Kevin M wrote:
Tue Aug 07, 2018 9:48 pm
likashing wrote:
Tue Aug 07, 2018 3:43 pm
likashing wrote:
Tue Aug 07, 2018 3:30 pm
Sallie Mae has a bunch of 08/09/2021 maturity at 3.11% after fee on Fidelity - 795450U60
Out of curiosity I have just looked for the same CD on Schwab, and it is not available.

In addition, best new issue on Schwab for 2/3yr is 2.80/3.00. On Fidelity it is 2.85/3.05.

On Vanguard, 795450U60 is available but without "ask". Their new issue is also 2.80/3.00.

Go figure.
The Fidelity 2-year at 2.85% and 3-year at 3.05% are callable at par after one year, so you're getting only 5 basis points for the call risk. We discussed this just up-thread.

The yield premium of about 10 basis points for the 3-year secondary CD at Fidelity is pretty typical, based on what I was seeing when I was actively monitoring secondary CDs a few weeks ago.

Kevin
Good catch on the call-able.

On the other hand, it is not the first time I see a secondary CD no available on Schwab and Vanguard.

User avatar
jeffyscott
Posts: 7366
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Wed Aug 08, 2018 10:29 am

likashing wrote:
Tue Aug 07, 2018 3:30 pm
Sallie Mae has a bunch of 08/09/2021 maturity at 3.11% after fee on Fidelity - 795450U60
Unless I am misunderstanding something, it's 3.115% before the commission? The order page shows this:

Image

My understanding is that Fidelity quotes ignore the commission. So I think that one would be about 3.08% after commission.
press on, regardless - John C. Bogle

User avatar
jeffyscott
Posts: 7366
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Wed Aug 08, 2018 10:43 am

likashing wrote:
Wed Aug 08, 2018 1:17 am
Kevin M wrote:
Tue Aug 07, 2018 9:48 pm
The Fidelity 2-year at 2.85% and 3-year at 3.05% are callable at par after one year, so you're getting only 5 basis points for the call risk. We discussed this just up-thread.

The yield premium of about 10 basis points for the 3-year secondary CD at Fidelity is pretty typical, based on what I was seeing when I was actively monitoring secondary CDs a few weeks ago.

Kevin
Good catch on the call-able.

On the other hand, it is not the first time I see a secondary CD no available on Schwab and Vanguard.
FWIW, that new issue callable 3 year at 3.05% is on Schwab also.

But for the secondary market the closest they come to the Sallie Mae one is 3.045% for a 9/28/21 maturity, so about 0.035% less for almost 2 months longer maturity. To get better than 3.08%, you would have to go to January and still get only 3.1%.
press on, regardless - John C. Bogle

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Wed Aug 08, 2018 10:49 am

jeffyscott wrote:
Wed Aug 08, 2018 10:29 am
likashing wrote:
Tue Aug 07, 2018 3:30 pm
Sallie Mae has a bunch of 08/09/2021 maturity at 3.11% after fee on Fidelity - 795450U60
Unless I am misunderstanding something, it's 3.115% before the commission? The order page shows this:

Image

My understanding is that Fidelity quotes ignore the commission. So I think that one would be about 3.08% after commission.
Sir you are one day late.

Right now for 795450U60 is in fact 3.088510% after commission. It was higher yesterday.

Can't find the same thing on Schwab either. It has been my experience whenever I checked on Schwab's platform.
Last edited by likashing on Wed Aug 08, 2018 10:55 am, edited 1 time in total.

User avatar
jeffyscott
Posts: 7366
Joined: Tue Feb 27, 2007 9:12 am
Location: Wisconsin

Re: 2-year CDs at Vanguard and Fidelity Today

Post by jeffyscott » Wed Aug 08, 2018 10:52 am

No, it doesn't show up as available on Schwab.
press on, regardless - John C. Bogle

gips
Posts: 475
Joined: Mon May 13, 2013 5:42 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by gips » Wed Aug 08, 2018 11:03 am

I understand the ease of brokered cds and they are often within 20 basis points of the broader cd market but in the current market, I think it pays to purchase outside of fidelity, vanguard and schwab.

likashing
Posts: 149
Joined: Tue Mar 06, 2007 7:58 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by likashing » Wed Aug 08, 2018 1:17 pm

gips wrote:
Wed Aug 08, 2018 11:03 am
I understand the ease of brokered cds and they are often within 20 basis points of the broader cd market but in the current market, I think it pays to purchase outside of fidelity, vanguard and schwab.
Do you mean direct CDs? I believe it depends on how much you need to deploy and how much trouble you want to go through.

I have dealt with direct CDs before, and with still quite an amount which will mature next year. However, I find brokered CDs more suitable for my situation.

Like you have said, ease, as well as time, cost it takes to re-invest in-between direct CDs. The opportunity cost of a $250k direct CD maturing, at a hypothetical rate of ~3%, is about $150 a week while you are closing/opening/transferring accounts. A little bit easier if you are in taxable, much more effort if it is in IRAs. The opportunity cost will grow larger as interest rates trend up.

User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Wed Aug 08, 2018 7:51 pm

gips wrote:
Wed Aug 08, 2018 11:03 am
I understand the ease of brokered cds and they are often within 20 basis points of the broader cd market but in the current market, I think it pays to purchase outside of fidelity, vanguard and schwab.
Things can change quickly. When I was last actively looking for alternatives to deploy proceeds from maturing direct IRA CDs, I didn't see any direct CDs that were better than the brokered CDs at Fidelity and Vanguard. However, now I see some 2-year direct CDs in the 3% ballpark, with brokered 2-year CDs at 2.80%.

Of course you need to investigate, check out the bank or credit union to see what glitches there might be, join, open the account, etc. I've opened many credit union accounts in the past to get good CD deals, but don't want to open any more unless the CD deal is exceptional, and they will agree to lock the rate during the time it takes to do the IRA transfer.

In taxable accounts, a 2-year Treasury has a taxable-equivalent yield for me of about 3%, so I'd go with a 2-year Treasury over a 2-year CD in taxable.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

gips
Posts: 475
Joined: Mon May 13, 2013 5:42 pm

Re: 2-year CDs at Vanguard and Fidelity Today

Post by gips » Wed Aug 08, 2018 8:35 pm

Kevin M wrote:
Wed Aug 08, 2018 7:51 pm
Things can change quickly.
indeed, this week, just before we funded the justice fcu 24-month %3.354 cd along comes the freedom fcu 30-month %3.56 offer. we changed gears, and hope to have that funded tomorrow. still, as I look at some of the low rates in our cd ladder (1.4%, 2%, etc), I wonder, even with the loss of principal in the face of rising interest rates, if BND might have offered a better return. I suppose I should figure that out...

User avatar
Kevin M
Posts: 10287
Joined: Mon Jun 29, 2009 3:24 pm
Contact:

Re: 2-year CDs at Vanguard and Fidelity Today

Post by Kevin M » Thu Aug 09, 2018 12:26 pm

gips wrote:
Wed Aug 08, 2018 8:35 pm
indeed, this week, just before we funded the justice fcu 24-month %3.354 cd along comes the freedom fcu 30-month %3.56 offer. we changed gears, and hope to have that funded tomorrow. still, as I look at some of the low rates in our cd ladder (1.4%, 2%, etc), I wonder, even with the loss of principal in the face of rising interest rates, if BND might have offered a better return. I suppose I should figure that out...
Whenever you bought your CDs, the Treasuries in BND were yielding about the same or less for the same maturities (if not, you should have bought individual Treasuries instead of the CDs). Both BND and the CDs you bought have experienced losses, but the BND losses probably are larger, considering the duration of about 6 years.

The 2-year CDs you are buying now have yields much higher than the 2-year Treasuries held by BND--especially if the state income tax exemption for Treasuries is not a factor for you. If you want to take much more term risk, as you would be doing with BND, you can buy longer-maturity CDs, and earn even larger yield premiums--at least looking at brokered CDs. But the 2-year CD you bought at 3.35% has the yield of a 5-year brokered CD, which is significantly higher than the 5-year Treasury yield at about 2.8%, which is what BND would be holding. A 10-year brokered CD yields 3.75% compared to about 2.9% for the 10-year Treasury BND would be holding.

Kevin
Wiki ||.......|| Suggested format for Asking Portfolio Questions (edit original post)

Post Reply