Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
I clicked on the second one on John’s posted list. While Investopedia says 2.5% for 6 months, the Credit Union’s website shows that rate for a 9 month CD.
Here’s the CU’s description: *The Annual Percentage Yield (APY) is 2.50% for the 9-month New Money certificate offer and is available only to certificates opened with new money from another financial institution between January 2, 2020 and January 31, 2020. Certificates opened with funds currently held at SRP FCU are not eligible for this offer. Minimum deposit of $500. Penalties assessed for early withdrawal on certificates which may reduce earnings. SRP FCU reserves the right to modify, restrict, change, or terminate this offer at any time without notice. Membership required. Offer ends January 31, 2020. Federally insured by NCUA.”
I compared my cash-equivalent fund of choice (an ultra-short), TRBUX, to the listed rates. I realize this may be somewhat akin to comparing apples to oranges. Most importantly, the ultra-short carries no government backing or insurance. Nor is the rate locked. Nonetheless, it’s posted a 1-year return of 3.75% - better than any of the CD rates - and with no sacrifice of liquidity. Going back 5 years its annual return is a more subdued 1.96%. 2019 was probably an (upside) exception for this fund. While normally pegged at $5.00 T Rowe allowed the fund’s NAV to climb all the way up to $5.05 by year’s end. That’s very unusual for a fund that in the past has rarely breached the $5.00 peg by more than a penny or two. It has fallen back now to 5.04 - still high compared to past behavior.
Re CDs (which I haven’t owned in about 20 years):
- I assume it’s easy to open an account online at any of these listed institutions?
- After so doing, it’s easy to transfer money in from a mutual fund or other bank / CU?
- I assume you have a grace period in days or weeks to move the money back out after maturity is reached? (as opposed to having automatic renewal).
- Compared to a good ultra-short is it worth the time and trouble to move $$ from CD to CD all the time? If a taxable account, the real returns are even less than what’s advertised.
- It’s downright weird that on John’s linked list the 5 and 10-year CDs appear to pay less than the 3 year.
*Note on ultra shorts: Some are not as conservative / well run as T Rowe’s. A number suffered substantial losses in 2008. My perception is they were reaching for yield rather than intent on protecting investors’ assets.
Ya, I appreciate the original post from JohnN. I've posted such, in the past. But as Old_Skeet has observed, we are in the midst of a GENERATIONAL era of low interest rates, and therefore low yield on CDs. Just yesterday, we bought a car at 1.99%. From our CU. I believe a local bank would have given us zero percent. I still prefer the CU. BTW, it would be 2.49%, but with the auto-pay option, we are granted .5% lower rate.
Ya, I appreciate the original post from JohnN. I've posted such, in the past. But as Old_Skeet has observed, we are in the midst of a GENERATIONAL era of low interest rates, and therefore low yield on CDs. Just yesterday, we bought a car at 1.99%. From our CU. I believe a local bank would have given us zero percent. I still prefer the CU. BTW, it would be 2.49%, but with the auto-pay option, we are granted .5% lower rate.
Hi Crash. I’ve been out and just noticed that I credited Invesco with being John’s source, where it should have been Investopedia. I’ll correct that. Blame the damned spelling app. Maybe it’s trained to remember words I’ve typed in the past? I do have a bit with Invesco.
1.99% is pretty good on a car loan. My CU had that rate (possibly even lower) when I bought a new car in 2012, so I took advantage of it. But with the new car in 2018 I checked and rates had spiked to over 4% in our area. So I chose to pay cash. The insurance was so high on the new Honda that I bumped the deductible up to $2500 to keep the rate lower. I’m glad I paid cash for the car because I’m not certain the CU would have been satisfied with that modest level of coverage. Why the high insurance rate? (1) Hybrids cost more to repair, (2) Hybrids make so little noise at lower speeds that they are involved in substantially more car / pedestrian accidents.
@hank, a year ago when i set up my withdrawal bucket or safe bucket or whatever you want to call money to be used for income in retirement, I thought I would be building a CD ladder. This retirement bucket is tax deferred with Schwab. A year ago you could get get a 1 year CD at 2.8 or abouts. Because the FED was raising rates to hold off expected inflation, I figured rates would increase from there. That changed so now that account is back in a portfolio of low risk bond funds, a money market and yes, still a couple of 1 year CDs.
It's very easy buying CDs at a brokerage like Schwab. Really no reason to be chasing the new hot bank offer. Lots of choices, but right now you won't do better than 1.7%, at least at Schwab. You don't roll over CDs unless you request that. When the CD is complete it rolls back to your sweep account. And as you mentioned, the ultra shorts mixed with a couple more-risky options as a total portfolio seems the way to go. At least for me.
I would not touch the recommended choices in this article. In a taxable account I would suggest opening up an account or a couple accounts with banks like Capital One, Ally, Symphony or Barclays. I have an account with Cap-one but I've thought of adding a second for more options. These places are always in the top tier of CD and MM rates without enticing gimmicks. The listed choices in the article are likely bait and hook offers. Once your initial rate is complete the next offer will not be as enticing.
Thanks @MikeM - Useful information for myself and others. So Schwab can get you into CDs? I had no idea. As I said, my experience goes back about 20 years and even then was very limited (at a bank where I did business). Yes, the Fed called the process of raising rates “normalization” - perfectly fitting name. But the equity markets started tumbling and the blonde one started complaining. So I guess the current Fed policy must be ... ??
(Sorry. Checked 3 different online Thesaurses and none could provide an antonym for “normalize” or “normalization.”) -
Just for @Derf: Derf, the issue is real. On a trip to the Tampa / Clearwater area 15 years ago the rental agency gave me a Toyota Prius hybrid to drive - my first experience with such a vehicle. The very first evening, while pulling out of a shopping center parking lot into heavy traffic, a young lady on the sidewalk stepped right in front of my moving vehicle. I barely stopped in time. I distinctly recall the gal made some kind of indignant gesture and than directed a stream of rather “unflattering” words in my direction. That memory is etched in my mind forever. You really need to be cautious with these stealthy cars.
My new Honda was built a year too early. The following year (2019) a law went into effect requiring electric and hybrid vehicles to emit a certain level of noise at low speeds.
"banks like Capital One, Ally, Symphony or Barclays. I have an account with Cap-one but I've thought of adding a second for more options. These places are always in the top tier of CD and MM rates without enticing gimmicks. The listed choices in the article are likely bait and hook offers. Once your initial rate is complete the next offer will not be as enticing."
Everybody does it, sooner or later. If a financial institution has decent ongoing rates that you'd be happy with, you can stay with it. Else take the offer if it's good enough to be worth the effort, and then move on.
As posted on this board and elsewhere, Capital One was offering a $200 bonus for depositing $10K for 90 days into a savings account that was paying 1.7% - 1.8%. It's still paying 1.7%.
@hank: Thanks for your update. I also had a run in with a hybrid ,but nothing like your episode ! I thought I'd make a million on my "ped-whistle" LOL What scares me , people with headphones on & or phone watchers who think they don't have to look while crossing !! We had two pedestrian deaths in the last three years & they were with conventional vehicles. Hard for me to believe it happened in a town of this size. Derf
@hank Electric cars required to emit noise. Jesus H. Christ. Because so many pedestrians divorce themselves from reality with headphones or earphones or whatever, and make a point of claiming their Right of Way, despite all conditions. Because Mom and Dad never taught them to simply "look both ways" and stay CONNECTED TO REALITY happening all around them. Total shit-heads. I had an experience in my non-electric Jeep rather like the one you described. I was very near my home on a very familiar street, in the middle of making a routine turn onto the street which connected to my own. Night-time. Street not lit. Winter. Rain, cold. Pedestrian with black skin wearing his black coat with black hoodie covering his black hair, listening to the earphones stuffed into his head, insulating him from the rest of the universe. I managed to see him at the last moment and stop in mid-turn. My own verbal reaction to his own immense stupidity, from inside my car, with windows closed, finally got his attention, and he STOPPED walking, when continuing to cross the street would have, at that point, been the intelligent choice.
“Current Federal Reserve policy of denormalization” sums it up nicely.
To further the ongoing abnormal denormalization, Judy Shelton’s nomination to one of the two vacant Fed seats was sent to the Senate for confirmation today. Viewed as a possible replacement for current Fed Chair, Jerome Powell, Shelton believes, among other things, that the U.S. should return to the gold standard.
@hank Electric cars required to emit noise. Jesus H. Christ. Because so many pedestrians divorce themselves from reality with headphones or earphones or whatever, and make a point of claiming their Right of Way, despite all conditions. Because Mom and Dad never taught them to simply "look both ways" and stay CONNECTED TO REALITY happening all around them. Total shit-heads. I had an experience in my non-electric Jeep rather like the one you described. I was very near my home on a very familiar street, in the middle of making a routine turn onto the street which connected to my own. Night-time. Street not lit. Winter. Rain, cold. Pedestrian with black skin wearing his black coat with black hoodie covering his black hair, listening to the earphones stuffed into his head, insulating him from the rest of the universe. I managed to see him at the last moment and stop in mid-turn. My own verbal reaction to his own immense stupidity, from inside my car, with windows closed, finally got his attention, and he STOPPED walking, when continuing to cross the street would have, at that point, been the intelligent choice.
criminy
you have never turned your back in a parking lot?
this sounds like what's-his-name on toilets and lightbulbs and dishwashers
I don't ever go out in the dark, on foot, in the winter rain, wearing black on black on black on black, and deliberately divorced from what's going on around me, in my own little world of sound/noise.
6 Pedestrians in 3 Days: A Deadly Spate of Crashes in N.Y.C.
“As of Thursday, 114 pedestrians have been killed in car collisions in New York City so far this year (2019) compared with 110 in 2018, according to the police.”
I came close to joining that illustrious assembly last summer when I stepped into the path of a car cruising at 40 mph through a NYC intersection (trying to beat a light?) on a dark wet rainy night. Easier to do than one might assume. Thankfully the guy’s anti-lock brakes worked as they should.
deliberately divorced from what's going on around me
What about those divorced from what's going on around them through no fault of their own? Should we remove those chirping traffic lights because they're so annoying? http://www.apsguide.org/chapter1_guidance.cfm
From the cited article (pun not intended): "As greater numbers of electric vehicles make it onto the road, worries about the potential danger of silent vehicles to pedestrians, cyclists, and blind people grow."
While we're at it, let's get rid of walk signs. They're redundant. People can look at the traffic lights. Why stop there? We can get rid of all redundant safety information. Who needs multiple sensors on a plane when one is usually sufficient to indicate what's happening? Smoke alarms? Surely people have noses.
Research by Tamara Bond and Randolph Easton at Boston College indicated that the sound of vehicles is used by all pedestrians. ... when they could see the cars but were unable to hear them, they made about 10% more risky decisions than they did when they were able to hear the vehicles as well as see them.
For those fortunate enough to have a complete set of senses, deliberately denying stimuli to one of them because it might be superfluous seems senseless.
+1 msf. There are lots of pedestrian safe-guards in place now to reduce accident and death to pedestrians. It would be very scary in my opinion for silent vehicles to be on the road with pedestrians. Not a hard safety concept I don't think.
P.S., even those flying vehicles George Jetson, Jane his wife, daughter Judy, and their boy Elroy flew around in had a noise
Comments
Here’s the CU’s description: *The Annual Percentage Yield (APY) is 2.50% for the 9-month New Money certificate offer and is available only to certificates opened with new money from another financial institution between January 2, 2020 and January 31, 2020. Certificates opened with funds currently held at SRP FCU are not eligible for this offer. Minimum deposit of $500. Penalties assessed for early withdrawal on certificates which may reduce earnings. SRP FCU reserves the right to modify, restrict, change, or terminate this offer at any time without notice. Membership required. Offer ends January 31, 2020. Federally insured by NCUA.”
I compared my cash-equivalent fund of choice (an ultra-short), TRBUX, to the listed rates. I realize this may be somewhat akin to comparing apples to oranges. Most importantly, the ultra-short carries no government backing or insurance. Nor is the rate locked. Nonetheless, it’s posted a 1-year return of 3.75% - better than any of the CD rates - and with no sacrifice of liquidity. Going back 5 years its annual return is a more subdued 1.96%. 2019 was probably an (upside) exception for this fund. While normally pegged at $5.00 T Rowe allowed the fund’s NAV to climb all the way up to $5.05 by year’s end. That’s very unusual for a fund that in the past has rarely breached the $5.00 peg by more than a penny or two. It has fallen back now to 5.04 - still high compared to past behavior.
Re CDs (which I haven’t owned in about 20 years):
- I assume it’s easy to open an account online at any of these listed institutions?
- After so doing, it’s easy to transfer money in from a mutual fund or other bank / CU?
- I assume you have a grace period in days or weeks to move the money back out after maturity is reached? (as opposed to having automatic renewal).
- Compared to a good ultra-short is it worth the time and trouble to move $$ from CD to CD all the time? If a taxable account, the real returns are even less than what’s advertised.
- It’s downright weird that on John’s linked list the 5 and 10-year CDs appear to pay less than the 3 year.
*Note on ultra shorts: Some are not as conservative / well run as T Rowe’s. A number suffered substantial losses in 2008. My perception is they were reaching for yield rather than intent on protecting investors’ assets.
1.99% is pretty good on a car loan. My CU had that rate (possibly even lower) when I bought a new car in 2012, so I took advantage of it. But with the new car in 2018 I checked and rates had spiked to over 4% in our area. So I chose to pay cash. The insurance was so high on the new Honda that I bumped the deductible up to $2500 to keep the rate lower. I’m glad I paid cash for the car because I’m not certain the CU would have been satisfied with that modest level of coverage. Why the high insurance rate? (1) Hybrids cost more to repair, (2) Hybrids make so little noise at lower speeds that they are involved in substantially more car / pedestrian accidents.
Derf
It's very easy buying CDs at a brokerage like Schwab. Really no reason to be chasing the new hot bank offer. Lots of choices, but right now you won't do better than 1.7%, at least at Schwab. You don't roll over CDs unless you request that. When the CD is complete it rolls back to your sweep account. And as you mentioned, the ultra shorts mixed with a couple more-risky options as a total portfolio seems the way to go. At least for me.
I would not touch the recommended choices in this article. In a taxable account I would suggest opening up an account or a couple accounts with banks like Capital One, Ally, Symphony or Barclays. I have an account with Cap-one but I've thought of adding a second for more options. These places are always in the top tier of CD and MM rates without enticing gimmicks. The listed choices in the article are likely bait and hook offers. Once your initial rate is complete the next offer will not be as enticing.
(Sorry. Checked 3 different online Thesaurses and none could provide an antonym for “normalize” or “normalization.”)
-
Just for @Derf: Derf, the issue is real. On a trip to the Tampa / Clearwater area 15 years ago the rental agency gave me a Toyota Prius hybrid to drive - my first experience with such a vehicle. The very first evening, while pulling out of a shopping center parking lot into heavy traffic, a young lady on the sidewalk stepped right in front of my moving vehicle. I barely stopped in time. I distinctly recall the gal made some kind of indignant gesture and than directed a stream of rather “unflattering” words in my direction. That memory is etched in my mind forever. You really need to be cautious with these stealthy cars.
My new Honda was built a year too early. The following year (2019) a law went into effect requiring electric and hybrid vehicles to emit a certain level of noise at low speeds.
Link to related story: https://mashable.com/article/electric-vehicles-noise-sound-requirements/
Everybody does it, sooner or later. If a financial institution has decent ongoing rates that you'd be happy with, you can stay with it. Else take the offer if it's good enough to be worth the effort, and then move on.
As posted on this board and elsewhere, Capital One was offering a $200 bonus for depositing $10K for 90 days into a savings account that was paying 1.7% - 1.8%. It's still paying 1.7%.
Expired promotion: https://www.moneysmylife.com/capital-one-360-review/#Expired_Capital_One_360_Performance_Savings_1000_Bonus
Cap One MM rate (1.70% APY): https://www.capitalone.com/bank/savings-accounts/online-performance-savings-account/#id_savingsrate
Marcus is currently offering $100 for $10K in new money. Not as big a bonus, but you only have to keep it there for 60 days. Its rate right now is also 1.7%.
https://www.marcus.com/us/en/savings/osa-savingsbonus-1
@hank: denormalize (not exactly an antonym for normalize, but it should do)
https://www.techopedia.com/definition/29168/denormalization
What scares me , people with headphones on & or phone watchers who think they don't have to look while crossing !!
We had two pedestrian deaths in the last three years & they were with conventional vehicles. Hard for me to believe it happened in a town of this size.
Derf
“Current Federal Reserve policy of denormalization” sums it up nicely.
To further the ongoing abnormal denormalization, Judy Shelton’s nomination to one of the two vacant Fed seats was sent to the Senate for confirmation today. Viewed as a possible replacement for current Fed Chair, Jerome Powell, Shelton believes, among other things, that the U.S. should return to the gold standard.
Some Bio on Shelton: https://moneymaven.io/mishtalk/economics/trump-nominates-gold-advocate-judy-shelton-for-the-fed-WNv2px7Zh0W6tMrD0XhloA
you have never turned your back in a parking lot?
this sounds like what's-his-name on toilets and lightbulbs and dishwashers
“As of Thursday, 114 pedestrians have been killed in car collisions in New York City so far this year (2019) compared with 110 in 2018, according to the police.”
https://www.nytimes.com/2019/12/22/nyregion/pedestrian-deaths-nyc.html
I came close to joining that illustrious assembly last summer when I stepped into the path of a car cruising at 40 mph through a NYC intersection (trying to beat a light?) on a dark wet rainy night. Easier to do than one might assume. Thankfully the guy’s anti-lock brakes worked as they should.
http://www.apsguide.org/chapter1_guidance.cfm
From the cited article (pun not intended): "As greater numbers of electric vehicles make it onto the road, worries about the potential danger of silent vehicles to pedestrians, cyclists, and blind people grow."
While we're at it, let's get rid of walk signs. They're redundant. People can look at the traffic lights. Why stop there? We can get rid of all redundant safety information. Who needs multiple sensors on a plane when one is usually sufficient to indicate what's happening? Smoke alarms? Surely people have noses. https://www.sauerburger.org/dona/quiet.html
For those fortunate enough to have a complete set of senses, deliberately denying stimuli to one of them because it might be superfluous seems senseless.
P.S., even those flying vehicles George Jetson, Jane his wife, daughter Judy, and their boy Elroy flew around in had a noise