Certificate of deposit strategy

[anthony]

Let’s say a guy has $25,000 spare cash on hand and is looking to diversify. Would it be a good strategy to invest $5000 each in 1, 2, 3, 4, 5 year cds and converting them to 5 year cds as they mature?

That way, each year you get $5000 + interest to either reinvest or spend….

[weimy froob]

Let’s say a guy has $25,000 spare cash on hand and is looking to diversify. Would it be a good strategy to invest $5000 each in 1, 2, 3, 4, 5 year cds and converting them to 5 year cds as they mature?

That way, each year you get $5000 + interest to either reinvest or spend….

right now at my bank they're giving the best rate on a CD for 9 months. the less rate the longer you get one for. i never have seen that before--but i guess the thinking is that the fed will be going in a different direction relatively sooner. in that scenario i think putting at least 3/5ths in the nine month and see what things look like then is a good idea. i'd do the other 2/5ths in the next best rate.

i've got a year one that matures in september--so i'm thinking pretty hard what i want to do then. i've seen some real good 15 month rates--so i might just put it in a money market until october and then get one of those 15 month CDs. that pushes the income out for taxes to be paid in 2026.

[Old_Kid]

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[weimy froob]

FORTUNE (magazine)
The 10 best CD rates for August 2023

The highest current CD rates for our top picks*

Bread Savings: 1-year CD, 5.35% APY
Barclays: 1-year CD, 5.00% APY
Quontic Bank: 1-year CD, 5.30% APY
Ally Bank: 9-month CD, 5.00% APY
BMO Harris: 13-month CD, 5.10% APY
Synchrony Bank: 1-year CD, 5.10% APY
CFG Bank: 1-year CD, 5.05% APY
PenFed Credit Union: 15-month CD, 4.90% APY
First Internet Bank of Indiana: 1-year CD, 5.35% APY
Marcus by Goldman Sachs: 1-year CD, 5.00% APY

[weimy froob]

these are the rates for bread savings on three and five year CDs.

3-year CD 4.75%
5-year CD 4.35%

so tying up your money for less time gives you a better interest rate.
Bread Savings: 1-year CD, 5.35%

[weimy froob]

[Voltron]

Are those companies like Robinhood or Coinbase that offer 4-5% interest on uninvested cash just buying CDs like this and pocketing the 1-2% difference?

Has to be something like that

[Old_Kid]

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[weimy froob]

USBank
CERTIFICATE OF DEPOSIT
Grow your money with our special CD rates.
Take advantage of personalized rates. Open a CD Special account online today.
CHOOSE YOUR ANNUAL PERCENTAGE YIELD (APY) - $1000 minimum.
APY: 4.55% for 7 months
APY: 4.75% for 11 months
APY: 4.65% for 15 months
APY: 4.65% for 19 months

We have been buying these 7 month CD's for quite some time. Space out so the interest hits different years for tax purposes. They are more liquid that invested for more time if that is what you are looking for as we are. On $100,000 we have earned $1,369.60 in four months. Plus, it is with USBank which can be trusted more than some no name financial institution. My two cents.

they're all FDIC insured.

[weimy froob]

i've got mine through an edward jones agent. he showed me how little he made for putting the money in the CD. it's through a wells fargo bank in south dakota i think.

[Old_Kid]

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[weimy froob]

a new rate. two more months. i'll be seeing what the edward jones guy will be able to at the end of the month. i'd suspect he's going to have to be able to get close to this rate or i'll be calling the credit union.

[Dan33185]

I'm getting 4.75% at Betterment in cash reserve, I can deposit and withdrawl whenever I need.

[anthony]

I'm getting 4.75% at Betterment in cash reserve, I can deposit and withdrawl whenever I need.

Vanguard just sent me a notification that I qualify for a 4.5% savings account. I think that’s the route I’ll go instead….

[Dan33185]

I'm getting 4.75% at Betterment in cash reserve, I can deposit and withdrawl whenever I need.

Vanguard just sent me a notification that I qualify for a 4.5% savings account. I think that’s the route I’ll go instead….

Yeah, a lot of similar places out there offering a similar APY, not sure why anyone would lock themselves out of their money for 9+ months when you can get the same rate and still have access to it anytime.

[Hornets]

Pretty sure I remember CD rates of over 8% back in the early 80's....

[Mill City Froob]

Pretty sure I remember CD rates of over 8% back in the early 80's....

Probably when mortgage rates were 16% under Reagan.

As far as the OP, I'm getting a 5.7% rate on my savings account without having to lock into a CD.

[weimy froob]

Pretty sure I remember CD rates of over 8% back in the early 80's....

Probably when mortgage rates were 16% under Reagan.

As far as the OP, I'm getting a 5.7% rate on my savings account without having to lock into a CD.

i just talked to the edward jones office where i have a CD that comes due this month. can get 5.4 for six months and that's probably what i'll do. on a hundred thousand dollars you're talking about only 300 dollars difference from what you're getting and i don't mind keeping an account open with this guy just in case i want to talk some investing strategies/options later. one minor benefit to taking a six month CD over a money market/savings account is that i'll push the tax liability into 2024. that's a little bit of something.

[weimy froob]

getting 5.52 percent on a liquid account right now.

[Hornets]

Pretty sure I remember CD rates of over 8% back in the early 80's....

Probably when mortgage rates were 16% under Reagan.

As far as the OP, I'm getting a 5.7% rate on my savings account without having to lock into a CD.

i just talked to the edward jones office where i have a CD that comes due this month. can get 5.4 for six months and that's probably what i'll do. on a hundred thousand dollars you're talking about only 300 dollars difference from what you're getting and i don't mind keeping an account open with this guy just in case i want to talk some investing strategies/options later. one minor benefit to taking a six month CD over a money market/savings account is that i'll push the tax liability into 2024. that's a little bit of something.

You got a hundred thousand dollars Weimy? Holey Moley!

[weimy froob]

i didn't say that. i said what the difference in the rates would mean in dollar bills on 100,000.