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In a sense, the mark-to-market prices are not much different from the redemption with early withdrawal penalty. Each represents the price one could get today for offloading a CD. It's just that in one case one is offloading to an arbitrary buyer, in the other case one is exercising a put to the issuer.
@Baseball_Fan : I checked average 5 year cd's issued .from January 2019. 1.4 -1.5 % Your total sum seems somewhat suspicious for holding it that long, 3.5 years . If you google , average cd rate 2019, you should find a chart. I'll also admit it seems to me I bought a cd @ 3 % around 1/st qter 2018.
One other thought. Maybe that's the value going forth, if you sell, after your interest payment to you?
@Derf, ya it does seem wonky but...opened 5 year $90k Goldman Sachs, CD thru Schwab 1/19 @ 3.50% APY, matures 1/23, value stated a few days ago as $90,491...opened others thru Schwab during 11/19 @ 3.55%... 5 yr CDs were offering decent APYs back in late '19 etc.
As mentioned earlier, secondary market for brokered CDs is quite illiquid & the bids posted may involve decent haircuts (more than implied by rate changes). So, that can be much worse than 3-6 mo interest penalty for bank CDs. Brokered CDs aren't for trading.
A few years back I bought a 2 yr Cd @ 3%. After the second year came to an end I "wished " I had a 5 yr CD as their rates went into a steady decline. I believe a CD ladder is the way to go. That kind of puts a lot of cash into one CD on hold. Have a pleasant Sunday, Derf
Keep in mind that once an annuity, always an annuity (until 59.5). So, that 5-yr term-annuity can only be rolled into another term-annuity to avoid 10% penalty before 59.5. So, comparison with 5-yr CD (bank or brokered) is not fair. Insurance co is counting on keeping that annuity money forever by offering 5-yr teaser rate.
Don't you have the option to take your monies elsewhere after the 5 year term? And couldn't the APY go up if interest rates go up 5 years from now?
YBB - so after you are 59.5 no penalty, to moving your monies after term expires correct?
Generally no fees, correct? (I'm asking, I don't know)
I do know when my wife inherited an annuity it was a colossal and I mean colossal task getting the monies from the insurance company...so many hurdles, BS was off the charts....from rather well known company.
I think that you change (nonqualified) annuity carriers through 1035 Exchange. It is not a complicated form but just another layer of paperwork beyond normal account/money transfer paperwork. I found a sample 1035 Exchange form from NY Life. Inheriting annuity (or anything else) can be more complicated due to required proof of death and the legitimacy of beneficiaries; besides, there are different options for spouse and non-spouse beneficiaries. https://www.nylannuities.com/assets/documents/applications-and-forms/service-forms/1035 Exchange Form.pdf
That 4% is a teaser rate that only lasts for the first 4 months of the term. Thereafter, the rate drops to the higher of either 2% or their normal 12 month CD rate (currently 1.65%).
One has to read the fine print carefully as marketing tactics are often used to get your attention. If the number sounds too good to be true, go check out the rates offered in new issued CDs from large brokerages such as Schwab and Fidelity.
I believe that the credit union is required to publish a blended APY, combining 4% for 4 months and 1.65% (the current rate for the remainder) for the final 12 months.
The credit union is advertising this as 4% APY without disclosing the blended rate. This may be violating Reg DD. Haven't researched but suspect it should not be necessary to read the fine print (though one should) if the institution is stating APY as required by law.
I believe that the credit union is required to publish a blended APY, combining 4% for 4 months and 1.65% (the current rate for the remainder) for the final 12 months.
The credit union is advertising this as 4% APY without disclosing the blended rate. This may be violating Reg DD. Haven't researched but suspect it should not be necessary to read the fine print (though one should) if the institution is stating APY as required by law.
Comments
Your total sum seems somewhat suspicious for holding it that long, 3.5 years .
If you google , average cd rate 2019, you should find a chart.
I'll also admit it seems to me I bought a cd @ 3 % around 1/st qter 2018.
One other thought. Maybe that's the value going forth, if you sell, after your interest payment to you?
Have a good one, Derf
Still learning about the brokered CDs.
https://www.investopedia.com/best-5-year-cd-rates-4801473
https://www.efcufinancial.org/media/201852/august-2022-rate-sheet.pdf
I did not look to see about membership eligibility.
@Derf, ya it does seem wonky but...opened 5 year $90k Goldman Sachs, CD thru Schwab 1/19 @ 3.50% APY, matures 1/23, value stated a few days ago as $90,491...opened others thru Schwab during 11/19 @ 3.55%... 5 yr CDs were offering decent APYs back in late '19 etc.
Best,
Baseball Fan
https://www.navyfederal.org/checking-savings/savings/savings-resources/certificate-rates.html#special-offers
I believe a CD ladder is the way to go. That kind of puts a lot of cash into one CD on hold.
Have a pleasant Sunday, Derf
Might be off topic but more adjacent to convo....
Please talk to me and share opinions, experience with...Immediate Fixed Rate Annuities.
Looking on bluprintincome.com...
5 year, term, balance percent withdrawls allowed, Brighthouse, A rated, 4.30%.
advantages, disadvantages, tax consequences, etc?
Obviously not FDIC insured but....why would someone NOT do this rather than a 5 year CD?
Thoughts?
Best,
Baseball Fan
So, that 5-yr term-annuity can only be rolled into another term-annuity to avoid 10% penalty before 59.5.
So, comparison with 5-yr CD (bank or brokered) is not fair.
Insurance co is counting on keeping that annuity money forever by offering 5-yr teaser rate.
What happens if holder dies ?
YBB - so after you are 59.5 no penalty, to moving your monies after term expires correct?
Generally no fees, correct? (I'm asking, I don't know)
I do know when my wife inherited an annuity it was a colossal and I mean colossal task getting the monies from the insurance company...so many hurdles, BS was off the charts....from rather well known company.
Thanks for the replies
https://www.nylannuities.com/assets/documents/applications-and-forms/service-forms/1035 Exchange Form.pdf
4% 16 months. $10k minimum.
That 4% is a teaser rate that only lasts for the first 4 months of the term. Thereafter, the rate drops to the higher of either 2% or their normal 12 month CD rate (currently 1.65%).
See Reg DD Appendix A. This is a stepped rate CD. Section B talks about blending rates, and Section C talks about using the current rate (1.65%) if the rate is variable.
https://www.consumerfinance.gov/rules-policy/regulations/1030/a/#1B-1
The credit union is advertising this as 4% APY without disclosing the blended rate. This may be violating Reg DD. Haven't researched but suspect it should not be necessary to read the fine print (though one should) if the institution is stating APY as required by law.
Thus, the phrase: "Those bastards in Marketing."
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Must be a Trump operation.
I plead the 5th.