CD's-Anyone Locking in Before Feds Meet Next Week?

[barkley]

Depends on whether you are looking for short (up to 5 years) or long term (5 years or more) returns. Both are good investment products depending on your need.

i believe there's also a tax advantage on the t-bills if you live in a state that taxes income.

Of course, I have liquid money in case of emergency - just had a new roof/gutters put in a few weeks ago. Can't lock it all up.

our liquid emergency funds are not kept in cds. we have 2 savings accounts we keep $500 each in b/c the credit union pays 7.19% on 'the first 5', the rest of the liquid e/r is in a money market (currently at 4.07%). i feel you on the big expenses-we just had to replace the hvac/heat pump

The next two, I asked if they could waive the penalty; I didn't even give a reason. Both banks agreed without a problem.

when i went to break a couple when another credit union was offering a much better rate my primary credit union asked if i was willing to let them try to match the offer for the remainder of the existing term. they could not but it was nice to learn this is a possibility.

 

[AnnaS]

@barkley - of course dryer went and now need a crown.......so definitely need liquid money even if it's not making $$. Those unexpected expenses pop up out of nowhere and all at once

 

[bluezy]

Even if it auto-renews you have your grace period during which you can change it again.

Right, but we keep an eye on the rates and already know we don't want it to auto renew for 18 months. We'll most likely reinvest it immediately and possibly for a different length of time, but just in case something comes up and we forget about doing that, we'd rather just have this CD worth of money *not* tied up so we can choose which savings vehicle will work best for us at that time.

 

[barkley]

@barkley - of course dryer went and now need a crown.......so definitely need liquid money even if it's not making $$. Those unexpected expenses pop up out of nowhere and all at once

i am convinced that when money is spent on an appliance or home repair it creates jealosy among other high cost items and they desire attention. case in point-the hvac/heat pump decided to go out just a few months after we replaced our whole house geneerator followed by the springs in our garage door (it's been a crazy expensive year but that's what the emergency fund is there for and why we immediatly focus to replenish it when a portion of it is used).

 

[georgina]

My cash that I anticipate needing in the next year or two is in a Vanguard money market. Was paying 5.3%, has dropped to 5.2, expect it will continue to drop gradually but that’s OK.

 

[AnnaS]

i am convinced that when money is spent on an appliance or home repair it creates jealosy among other high cost items and they desire attention. case in point-the hvac/heat pump decided to go out just a few months after we replaced our whole house geneerator followed by the springs in our garage door (it's been a crazy expensive year but that's what the emergency fund is there for and why we immediatly focus to replenish it when a portion of it is used).

I think your analogy is correct - or perhaps

 

[_19disnA]

My cash that I anticipate needing in the next year or two is in a Vanguard money market. Was paying 5.3%, has dropped to 5.2, expect it will continue to drop gradually but that’s OK.

And how much money you have invested makes a difference when deciding if moving it elsewhere is worth the effort. Reducing the interest rate by 0.1% on $100,000 is only $100/year.

 

[tvguy]

That's a good rate. Ours just matured and it was a 6 month 5.00%. Our credit union is offering 4.75% for 6 months. We'll probably grab that one.

My daughter opened an FDIC insured account through a brokerage. Pays 5.5%. She sold her house and the proceeds of the sale met the $100,000 minimum opening balance. It can and will go below that level, but she met the opening balance minimum.

 

[Willows909]

My daughter opened an FDIC insured account through a brokerage. Pays 5.5%. She sold her house and the proceeds of the sale met the $100,000 minimum opening balance. It can and will go below that level, but she met the opening balance minimum.

We have quite a few CDs going right now and one rather $$$ (by our modest standards) tied up in a 3 year annuity (making more than was guaranteed so that's good) that matures in May 2025 from sale of our house when we downsized. We are retired and have no desire to risk $$, so this is really a great thread (thanks OP) to follow!!

 

[tvguy]

We have quite a few CDs going right now and one rather $$$ (by our modest standards) tied up in a 3 year annuity (making more than was guaranteed so that's good) that matures in May 2025 from sale of our house when we downsized. We are retired and have no desire to risk $$, so this is really a great thread (thanks OP) to follow!!

Retired here too. My Financial Advisor set us up with various investments, but annuities are a big part of that.
And now that we both are on Social Security, our checks are pretty generous. Equal to what our take home pay was before retirement. Of course, when we were working, we were putting 15% into a 401k, and paying for group insurance that was much more expensive than Medicare.
But I remember my mom years ago asking me why so many people have trouble living on just Social Security. I managed her finances that last year of her life and her expenses were about half or her social security check. Her pension and investment income were just gravy.

 

[Willows909]

Retired here too. My Financial Advisor set us up with various investments, but annuities are a big part of that.
And now that we both are on Social Security, our checks are pretty generous. Equal to what our take home pay was before retirement. Of course, when we were working, we were putting 15% into a 401k, and paying for group insurance that was much more expensive than Medicare.
But I remember my mom years ago asking me why so many people have trouble living on just Social Security. I managed her finances that last year of her life and her expenses were about half or her social security check. Her pension and investment income were just gravy.

I believe that it must be very difficult for most retired people to live comfortably. I know in our case we have dealt with multiple life events that happened with not much warning (trauma, mental health related with an adult child) and without the sale of our home (we did choose to downsize, so we are good there) we would be very uncomfortable. It is what it is, so very grateful we are okay. But yeah, no financial advisor, just us advising us....lol. But the annuity is great. Our soc sec is pretty good too.

 

[tvguy]

I believe that it must be very difficult for most retired people to live comfortably. I know in our case we have dealt with multiple life events that happened with not much warning (trauma, mental health related with an adult child) and without the sale of our home (we did choose to downsize, so we are good there) we would be very uncomfortable. It is what it is, so very grateful we are okay. But yeah, no financial advisor, just us advising us....lol. But the annuity is great. Our soc sec is pretty good too.

The unexpected certainly can have a huge impact. I think what alarms me is people who don't plan for the expected. It isn't like you don't have 40 or 50 working years to set aside a little money for retirement.

 

[Plutofan]

People should consider buying Treasuries or CDS through an online broker like Fidelity. Fidelity gives you ability to sell CDs in the secondary market if you want to get out without a penalty assuming there are quotes. Of course you will have a gain or loss on the sale depending on the change in interest rates. Also you have the ability to invest in other type of interest bearing instruments. Also makes it easier to reinvest when it matures and also to control FDIC limits.

 

[havaneselover]

People should consider buying Treasuries or CDS through an online broker like Fidelity. Fidelity gives you ability to sell CDs in the secondary market if you want to get out without a penalty assuming there are quotes. Of course you will have a gain or loss on the sale depending on the change in interest rates. Also you have the ability to invest in other type of interest bearing instruments. Also makes it easier to reinvest when it matures and also to control FDIC limits.

Agreed. Brokerage accounts are very easy to open. I use Vanguard and Schwab and I much prefer using them to manage excess cash vs dealing with a bank.

 

[barkley]

well i see that the local cd's to us have dropped (PRE fed announcement) by 1/4%. be interesting to see if they drop further AFTER the announcement.

 

[havaneselover]

well i see that the local cd's to us have dropped (PRE fed announcement) by 1/4%. be interesting to see if they drop further AFTER the announcement.

Seems like they've built in the expected drop. If the Fed goes with 50 basis points, I'd think they'll be down another 25 basis points.

 

[barkley]

not in the market for one but it will be interesting to see what happens with mortgage rates-just noticed that they are at 5.375% for a 15 year fixed.