CIBC now offers a US online savings account. "Agility." A rate of 1.85% yield can be had. Best I've seen for a standard account, lately. Navy Federal still posts a 3.5% CD rate. Still too low for me to bite. I'll do better, sticking to my funds. When the offered rates climb to 5% and higher, it would be worth locking-up some money in such an instrument. Not a lot, though.
https://us.cibc.com/en/agility/agility-savings.html
Comments
I remember those 5%+ yields on CD rates ... however, that was back in 2004 ... 2005. I'm not expecting to see the 5% CD yields anytime soon. In looking at CD rates, that my broker offered this week, they were 1.6% on 6 mo, 12 mo and 18 mo CD's with a 24 mo @1.75%. With this, I put the money into a government money market mutual fund (GOFXX) since I already have a prime money market fund through Federated (PCOXX). With this, I went with one of their government offerings at this time. This now leaves me with a three step CD Ladder. The next one that maturies come up in May of 2020 with a yield of 2.65%.
I'm not familiar with CIBC, and the 1.85% rate is very good but not the highest. So it may be a relatively stable rate. Hard to tell.
That said, CIBC like many, many other banks, has dropped its APY multiple times this year in response to Fed moves. 2.39% through Aug 14, 2.20% through Oct 3, 2.05% through Nov 11.
In a near mirror image, it raised rates three times in the last quarter of 2018 to arrive at the 2.39% APY.
https://www.depositaccounts.com/banks/cibc-usa.html#rates
(click on view details)
Another way to approach volatility is to embrace it. Elements FCU (formerly Eli Lilly FCU) is offering 2.10% for a year for new money in their Helium Savings Account. Fully liquid (subject to the usual 6 withdrawals per month restriction). After that, you can be sure you'll get less interest.
TIAA Bank (formerly EverBank) pays 1.85%, guaranteed for a year. That's a drop from last week when it offered 2.00% for a year. Like Element's offer, this is a promotional rate.
@Old_Skeet, can you say more about the MM mutual fund you bought? What are your expectations for return since I would think those type fund's returns would be affected as is every other savings vehicle, savings account, MM account, CDs?
I see per Schwab that the 7-day yield on GOFXX is only around 1.57% right now. I, like you and probably many here, am having CDs mature and I'm trying to figure out where to put this "safe" money. 1.57% and falling isn't real intriguing to me.
Maybe not too smart, but I don’t much worry about what that 15% is earning. It’s there chiefly for stability. I use a blend of TRBUX (ultra short) and DODIX (short-intermediate) plus a smaller chunk in the CU checking account as my cash position.
My take: If the other 85% is generating decent total return, the cash isn’t worth worrying much about. Probably evolved over time owing to the paltry returns available. I appreciate the fact, however, that many here are genuinely interested in what their cash delivers.
Added : One advantage of cash is liquidity. That means you can get your hands on it today or tomorrow if an emergency arises or a great investing opportunity comes along. Locking cash up in a time deposit would seem (to some extent) to reduce that advantage. You’ll get a better rate, but at the price of sacrificing a degree of liquidity. (Same argument might be made about moving out a bit on the “risk axis“ as @msf notes below.)
As one can see from its rate sheet, most of the institutional class shares/funds are running around the same rate. Unless one wants to buy an institutional fund where the NAV may fluctuate. (Those funds have three asterisks *** next to them.)
https://olui2.fs.ml.com/Publish/Content/application/pdf/GWMOL/ICCRateSheet.pdf
I continue to suggest Vanguard. Even if that means opening a new account, that's not really much different from opening an account at a new bank. Vanguard tends to have the highest yielding MMFs available at more reasonable mins. Its Treasury MMF (VUSXX), admittedly requiring $50K to start, currently sports an SEC yield of 1.64%. That's state tax free. Its prime MMF, VMMXX has a yield of 1.72%.
To compare with bank rates, use APYs of the MMFs. For the Vanguard funds, they're 1.65% and 1.73% respectively.
Note that Cap One's yield is 1.80%. I know since I just opened accounts to pick up the $200 bonus.
For locking in rates for 6 or 12 months, T-bills seem attractive. Fidelity shows both (new issue) expected to yield a tad north of 1.5%. As with VUSXX, they are state tax free; in high tax states they can be worth nearly 1.7%. In addition, T-bills purchased now will not be taxed (federally) until next year, since the interest will be deferred until then.
As Hank wrote, one can move out a bit along the risk axis into assets whose NAV will fluctuate. One should do a bit better on average that way.
Then what about the number of people who bought CD's & now wish they had left it in equities or purchased equities. Oh for want of a crystal ball !!
@msf; Do you regularly shop for the cash bonuses ? I guess that would make (CENTS}
instead of doing Sudoku puzzles, as I'm guilty.
A good weekend to all, Derf
I put more effort into getting investment money into the best financial institution to buy the funds I want than in moving cash around. I generally don't shop around for an extra 10 basis points or modest bonuses. But $200 on $10K (2%) for a 90 day commitment (8% annualized) was large enough in both percentage and dollars to get my attention. And it's gotten a lot easier to move cash electronically.
The only time I seriously chased rates was when I had sold my home and was looking for another. We spent a year looking. All during that time we were never sure when we'd pull the trigger and need the money.
Thank you for your question.
I'm somewhat like @hank in that the cash area of my portfolio is designed to offer liquidity and stability along with a little income. I let the income area of my portfolio provide most of the income that I seek while I let the equity area provide growth needed to grow my principal and offset the effects of inflation.
The reason I moved maturing cd money into a money market fund was for better liquidity. There is not much difference between the return found in GOFXX at 1.52% and in an 18 month cd with a yield of 1.60%. The CD locks the money up for 18 months while GOFXX provides nearly the same retrun plus it is the most liquid of the two. So, I went with the one that was the most liquid given that their current returns were about the same.
I'm still with my asset allocation of 20% cash, 40% income and 40% equity. My cash area holds both my money market mutual funds and my CD ladder as I consider CD's a time deposit that are FDIC insured while my money market mutual funds are not (insured). Currently, I'm now about equally split between my money market funds and my CD ladder at about 8% each with 4% in demand cash.
For example, when Capital One 360 (formerly ING Direct) started its $200 for $10K promotion a couple of months ago, its savings account was yielding 1.90% APY. In mid November that dropped to 1.80%. Today it dropped to 1.70%. The $200 offer is still a great deal, and 1.70% APY isn't so low that I'd move the money back out after the 90 day bonus period. But it suggests that one should keep an eye on this bank's rates to make sure they don't drop too low.
So far, CIBC's 1.85% APY is holding steady. As I'd expect rates in general to behave, with the Fed standing pat.
Derf