Laddering CDs

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

Anyone else do Certificates of Deposit?

They may be conservative, but they are guaranteed, they are always at least what they were yesterday, and you know what they will be at maturity.

When I first started, I thought I'd ladder them, cuz that's what the ex-spirts suggest you do. By always purchasing the same term, say 5 years, and then putting 20% into each term, you average out the interest rate ups and downs.

Plus, I believe the ex-spirts made an assumption that longer terms would always pay more. Not the case. If you ladder, and stick to it, the past few years would have been bad for you. I think because of doubt as to what the future holds, the highest rates have been for shorter terms much of the time.

In practice I've found I can't ladder. Paying attention to liquidity, what we may need to dip into, I have been opting for the highest rate regardless of the length of term.

This week the highest rate was 4.02% for 30 months. I have some for 7 years at 4%, some at 5 years for 5-5.25%, some at 1 year for 4.35% and 4.7%.
- - - - - -
Changing gears . . .

All that said, they are a pain in the butt, especially in IRA's, since our fearful leaders have not provided for an efficient way of managing retirement accounts. If I were in charge, a person could have an IRA umbrella and then be able to freely manage assets under that umbrella . . . any qualified assets at any institution . . . without having to repeatedly set up and close separate retirement accounts at each institution or brokerage.

Like a Trust.

Call it a Qualified Retirement Trust (Traditional, Roth, SEP, etc.). It would be the job of the Trustee to manage the Trust according to the rules of retirement accounts. That would free the financial institutions from the cumbersome chore that involves. The could just offer their product (CD or whatever) without all the paperwork and reporting.

The way it works now, when a CD matures and you want to move it to another institution, it takes a month and a mountain of paperwork to do that. With a Retirement Trust, you would just do it, give the order to the first institution to send the money to the second one.

BTW, the financial institutions are called Trustees when it is qualified retirement accounts, so just change it to one Trustee managing their entire account.

Wow, that is a good idea.

[vacation_family99 Senior Member Find all posts View Profile Close vacation_family99]

I have a CD that is maturing in April. Where are you finding 4 and 5% CDs? Right now all I can find is 2.5% - 3%.

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

Sorta my point, that if I stick with a 5-year ladder I can't take advantage of the promotional rates for other terms that institutions offer. It's very seldom that some bank somewhere isn't offering a decent rate for a year, or two, or 30 months.

They are tough to find right now.

I placed four with Navy Federal Credit Union this week at 4.02% for 30 months. It took me over a month to set it up and transfer the funds, because they are IRAs. I lost 3/4% because of that. I lost 1% because of a delay in transfer on another one recently.

When something is approaching maturity, I google and check banking sites.

I also only do three star or higher institutions. And I prefer 4 and 5 star ones.

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Good luck.

I have a CD that is maturing in April. Where are you finding 4 and 5% CDs? Right now all I can find is 2.5% - 3%.

[bigfrank Administrator Find all posts View Profile Close bigfrank]

If you recall a few years back I posted that I laddered a few cd's from 1 year out to 5 years, I am still getting about 4.5% on two of them, 4% on one and the others are at 3.5 or less.

[tennisWalt Super Moderator Find all posts View Profile Close tennisWalt]

Put It Into A Schwab Account

Anyone else do Certificates of Deposit?





Like a Trust.

Call it a Qualified Retirement Trust (Traditional, Roth, SEP, etc.). It would be the job of the Trustee to manage the Trust according to the rules of retirement accounts. That would free the financial institutions from the cumbersome chore that involves. The could just offer their product (CD or whatever) without all the paperwork and reporting.

The way it works now, when a CD matures and you want to move it to another institution, it takes a month and a mountain of paperwork to do that. With a Retirement Trust, you would just do it, give the order to the first institution to send the money to the second one.

BTW, the financial institutions are called Trustees when it is qualified retirement accounts, so just change it to one Trustee managing their entire account.

Wow, that is a good idea.

I have a SAR/SEP account with Schwab. I put my SAR/SEP deposits into into a Money Market Fund. From there I can transfer funds anyway I want to invest. CD's Stocks, Bonds, Mutual Funds etc. When The CD is due or if there is an interest payout it goes into the Money Market Account. I can do it the same day as it is posted into the Money Market Account. I can invest in any CD from any bank.

Walt

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

Can you put money in a bank CD, not a brokered CD, without starting an IRA at the bank offering the CD?

Or, are you saying you can move funds around to any product Scwab offers?

And why would you put your money with a company that sells frozen food door-to-door?

I have a SAR/SEP account with Schwab. I put my SAR/SEP deposits into into a Money Market Fund. From there I can transfer funds anyway I want to invest. CD's Stocks, Bonds, Mutual Funds etc. When The CD is due or if there is an interest payout it goes into the Money Market Account. I can do it the same day as it is posted into the Money Market Account. I can invest in any CD from any bank.

Walt

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

Yeah, the point of laddering is that those 5% ones will carry through the lower years. I have 5%-plus for the next four years.

But, how do you feel about the prospect of the 3% ones carrying through the high years?

Why not just go with the highest all the time, regardless of term, and never have those 3% ones? If I was still laddering, the 4.02% ones of this past week would be 3% instead.

When I check rates, I can't make my brain see why it is better to take a lower rate just to fit a plan.

If you recall a few years back I posted that I laddered a few cd's from 1 year out to 5 years, I am still getting about 4.5% on two of them, 4% on one and the others are at 3.5 or less.

[bigfrank Administrator Find all posts View Profile Close bigfrank]

IMO unless you can get 3.5 to 4 % on a short term CD, I would not tie my money up. I rather have it sitting in a money market waiting for the rates to go up.

[tennisWalt Super Moderator Find all posts View Profile Close tennisWalt]

I Like Having Everything In One Place.

Can you put money in a bank CD, not a brokered CD, without starting an IRA at the bank offering the CD?

Or, are you saying you can move funds around to any product Scwab offers?

And why would you put your money with a company that sells frozen food door-to-door?

Here is an example of the CD's and Banks available for 3 years to 5 years maturity.

These CD's could be used in IRA acounts and non-IRA accounts.

I have all of my SAR/SEP money in my Schwab SAR/SEP account. At 70 1/2 Schwab will tell me how much I need to take out and I will transfer the funds into the Schwab non-IRA account.

I have total control of all of the money on a daily bases. I can sell a mutual fund today and buy another mutual fund today, unlike having mutual funds at different mutual fund companies. I can get the money from the CD today and invest in another CD today.

I do everthing on-line but I can also talk to my own personal Financial Consultant.

There are No-Load, No-Transaction-Fee Funds available at Schwab from many Mutual Fund Companies, like Janus, American Funds, Neuberger Berman, Dreyfus, and OppenheimerFunds.

You do not have to put you money in just Schwab products.

If you have enough money in your account there are no extra charges.

I find it very easy, cheap, and simple.

Walt


CDs - 16 Results, Retrieved: 18:02:58 EST 03/28/2009 sorted by: APY,MATURITY

CDs from FDIC-insured banks Explain Search Results

Action CD Type Description Coupon Coupon
Frequency Maturity Price APY(%)** YTW Callable Accrued
Interest Est.
Total Cost

Fixed Rate * GMAC BANK N A 36185AM54
New Issue 3.200 Semi-Annual April 03,2013 100.00000 3.20000 ---- No $0.00 $10,000.00

Fixed Rate * CIT BANK N A 17284P4G7
New Issue 3.150 Semi-Annual April 01,2013 100.00000 3.15000 ---- No $0.86 $10,000.86

Fixed Rate * SALLIE MAE BANK 795450JG1
New Issue 3.150 Monthly April 02,2013 100.00000 3.15000 ---- No $0.00 $10,000.00

Fixed Rate * CITIZN UNION BANK X57190716
New Issue 3.000 Monthly August 09,2013 100.00000 3.00000 ---- No $0.00 $10,000.00

Fixed Rate * GE CAPITAL FINL 36160VGZ8
New Issue 2.950 Semi-Annual April 02,2012 100.00000 2.95000 ---- No $0.00 $10,000.00

Fixed Rate * GMAC BANK N A 36185AL97
New Issue 2.950 Semi-Annual April 03,2012 100.00000 2.95000 ---- No $0.00 $10,000.00

Fixed Rate * SALLIE MAE BANK 795450JF3
New Issue 2.900 Monthly April 02,2012 100.00000 2.90000 ---- No $0.00 $10,000.00

Fixed Rate * BUSINESS BANK 123255GG0
New Issue 2.900 Monthly April 03,2013 100.00000 2.90000 ---- No $0.00 $10,000.00

Fixed Rate * CITIZN UNION BANK X57190708
New Issue 2.900 Monthly April 09,2013 100.00000 2.90000 ---- No $0.00 $10,000.00

Fixed Rate * FIRST ST BANK 336472DN2
New Issue 2.850 Monthly April 09,2013 100.00000 2.85000 ---- No $0.00 $10,000.00

Fixed Rate * NEXBANK SSB 653344AX9
New Issue 2.750 Semi-Annual April 02,2012 100.00000 2.75000 ---- No $0.00 $10,000.00

Fixed Rate * LUBBOCK NATL BK X97836468
New Issue 2.350 Monthly April 17,2012 100.00000 2.35000 ---- No $0.00 $10,000.00

Fixed Rate * CENTRUE BANK N A 15643GBX2
New Issue 2.300 Semi-Annual March 30,2012 100.00000 2.30000 ---- No $1.26 $10,001.26

Fixed Rate * THOMASVILLE NATL 884693AQ5
New Issue 2.300 Monthly April 06,2012 100.00000 2.30000 ---- No $0.00 $10,000.00

Fixed Rate * FIRST ST BK TN N 336472DM4
New Issue 2.300 Monthly April 09,2012 100.00000 2.30000 ---- No $0.00 $10,000.00

Fixed Rate * PEOPLES BANK 71123QJL0
New Issue 2.250 Monthly March 30,2012 100.00000 2.25000 ---- No $1.23 $10,001.23

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

Those are brokered CDs, which trade like bonds m/l. I prefer direct CDs, for reasons relating to my recent problem getting rid of FICOs.

I had brokered CDs in our retirement accounts at American Century, and couldn't wait for them to mature so I could get rid of them.

I, of course, I had a jillions funds available when our accounts were at American Century. But I could not have anything from anywhere in our AC accounts, just what they offered.

So, if I had a Schwab IRA account, I could put some have American Century funds in it? Or any fund? Bank CDs, CDs I take out directly with any bank I want? Gold, precious metals?

Any other words, with a Schwab retirement account, can I have any qualified IRA investment in it?

And will they deliver frozen food to my door in those cream-colored trucks?

Here is an example of the CD's and Banks available for 3 years to 5 years maturity.

These CD's could be used in IRA acounts and non-IRA accounts.

I have all of my SAR/SEP money in my Schwab SAR/SEP account. At 70 1/2 Schwab will tell me how much I need to take out and I will transfer the funds into the Schwab non-IRA account.

I have total control of all of the money on a daily bases. I can sell a mutual fund today and buy another mutual fund today, unlike having mutual funds at different mutual fund companies. I can get the money from the CD today and invest in another CD today.

I do everthing on-line but I can also talk to my own personal Financial Consultant.

There are No-Load, No-Transaction-Fee Funds available at Schwab from many Mutual Fund Companies, like Janus, American Funds, Neuberger Berman, Dreyfus, and OppenheimerFunds.

You do not have to put you money in just Schwab products.

If you have enough money in your account there are no extra charges.

I find it very easy, cheap, and simple.

Walt


CDs - 16 Results, Retrieved: 18:02:58 EST 03/28/2009 sorted by: APY,MATURITY

CDs from FDIC-insured banks Explain Search Results

Action CD Type Description Coupon Coupon
Frequency Maturity Price APY(%)** YTW Callable Accrued
Interest Est.
Total Cost

Fixed Rate * GMAC BANK N A 36185AM54
New Issue 3.200 Semi-Annual April 03,2013 100.00000 3.20000 ---- No $0.00 $10,000.00

Fixed Rate * CIT BANK N A 17284P4G7
New Issue 3.150 Semi-Annual April 01,2013 100.00000 3.15000 ---- No $0.86 $10,000.86

Fixed Rate * SALLIE MAE BANK 795450JG1
New Issue 3.150 Monthly April 02,2013 100.00000 3.15000 ---- No $0.00 $10,000.00

Fixed Rate * CITIZN UNION BANK X57190716
New Issue 3.000 Monthly August 09,2013 100.00000 3.00000 ---- No $0.00 $10,000.00

Fixed Rate * GE CAPITAL FINL 36160VGZ8
New Issue 2.950 Semi-Annual April 02,2012 100.00000 2.95000 ---- No $0.00 $10,000.00

Fixed Rate * GMAC BANK N A 36185AL97
New Issue 2.950 Semi-Annual April 03,2012 100.00000 2.95000 ---- No $0.00 $10,000.00

Fixed Rate * SALLIE MAE BANK 795450JF3
New Issue 2.900 Monthly April 02,2012 100.00000 2.90000 ---- No $0.00 $10,000.00

Fixed Rate * BUSINESS BANK 123255GG0
New Issue 2.900 Monthly April 03,2013 100.00000 2.90000 ---- No $0.00 $10,000.00

Fixed Rate * CITIZN UNION BANK X57190708
New Issue 2.900 Monthly April 09,2013 100.00000 2.90000 ---- No $0.00 $10,000.00

Fixed Rate * FIRST ST BANK 336472DN2
New Issue 2.850 Monthly April 09,2013 100.00000 2.85000 ---- No $0.00 $10,000.00

Fixed Rate * NEXBANK SSB 653344AX9
New Issue 2.750 Semi-Annual April 02,2012 100.00000 2.75000 ---- No $0.00 $10,000.00

Fixed Rate * LUBBOCK NATL BK X97836468
New Issue 2.350 Monthly April 17,2012 100.00000 2.35000 ---- No $0.00 $10,000.00

Fixed Rate * CENTRUE BANK N A 15643GBX2
New Issue 2.300 Semi-Annual March 30,2012 100.00000 2.30000 ---- No $1.26 $10,001.26

Fixed Rate * THOMASVILLE NATL 884693AQ5
New Issue 2.300 Monthly April 06,2012 100.00000 2.30000 ---- No $0.00 $10,000.00

Fixed Rate * FIRST ST BK TN N 336472DM4
New Issue 2.300 Monthly April 09,2012 100.00000 2.30000 ---- No $0.00 $10,000.00

Fixed Rate * PEOPLES BANK 71123QJL0
New Issue 2.250 Monthly March 30,2012 100.00000 2.25000 ---- No $1.23 $10,001.23

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

So, would you do a 30-month, 4.02% CD now? If not, what are you getting in your MM accounts now, while you are waiting for rates to go up?

IMO unless you can get 3.5 to 4 % on a short term CD, I would not tie my money up. I rather have it sitting in a money market waiting for the rates to go up.

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

Walt, now that I actually looked that list over, why would you want anything on it?

[tennisWalt Super Moderator Find all posts View Profile Close tennisWalt]

It Is Not The Only List

Walt, now that I actually looked that list over, why would you want anything on it?

When I invest in a CD I would call my personal Financial Consultant for the best rates. Since the accounts are insured by the FDIC for $250,000 does it really matter who the bank is?

Walt

[bigfrank Administrator Find all posts View Profile Close bigfrank]

So, would you do a 30-month, 4.02% CD now? If not, what are you getting in your MM accounts now, while you are waiting for rates to go up?

When I invest in a CD I would call my personal Financial Consultant for the best rates. Since the accounts are insured by the FDIC for $250,000 does it really matter who the bank is?

Walt

Not sure what the rates are, I am like Walt my Financial planer gets me the best out there at banks I never heard of before but they pay well.

[JLB Please excuse me, I'm a Dick. Not a moron just a Dick Find all posts View Profile Close JLB]

As long as each of us is happy with what we have/do . . . I just thought I'd toss out an observation that may or may not be valid.

The national average for 5-year IRA CDs right now is 2.30%. The highest 5-year CD return is 3.59%, and it is at a marginal bank.

We have 17 CDs right now, in amounts varying from $5000 to $115000 and terms from 1 year to 7 years.

Accounting for amounts and terms, our average return is 4.49454%.