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Thanks for heads up. I see the same offerings at Fidelity. Have to wait a bit to have cash to deploy. At these yields they are doing better than treasuries of the same duration.
Good Morning - any thoughts why you would (assuming you still could, they don't seem to be available any longer)...but comparing brokered 5 yr CD vs a SPIA annuity fixed term 5 year from A++ rated NY Life...4.9%APY
brokered CD is FDIC insured, can't touch the monies without taking a ding until 5 years are up
Annuity, you can do partial withdrawls, something like up to 10% of funds ea year if you desire or need to.
The Annuity seems to be a better yield...if you go with an A(+), Nationwide etc, you can get 5.15% APY
I see you can get with 7 year SPIA, A+ rated co, 5.25%...
I've been very conservative past several years, always thought markets were kind of "artificial" due to money printing CBs etc, those rates above are kind of appealing...I've never had any annuities before so kind of cold feet. Also thinking that maybe, just maybe going forward, PMEFX and maybe PVCMX will outperform those SPIAs, dunno?
If you want to take the money out before 59.5, there are taxes and 10% penalty. Also, you have to use 1035 exchange to transfer annuity from one vendor to another. Safety (credit rating) of insurance company is also important.
Annuity companies know this and that people have inertia. So, they treat annuity money as captive money and offer inducements initially. And that is why some term-annuities have better rates than Treasuries and CDs.
Thank you YBB...I'm just the other side of 59.5..so that is that.
But still, say you have a SPIA, 5 year term. After 5 years, you can pull the money out and put it into a money market somewhere else if you wish, you are not tied to that company forever so to speak, correct? Apologies if this is a non-informed question.
Interesting reading your comments...I do remember my wife inheriting an annuity after her Mom passed. Oh my gosh it was a taffy pull getting the money from the insurance company...long drawn out process. I'm wondering if it was just the specific company (I probably shouldn't mention which one, but most would recognize the name) or if it would be like that with all/most of them.
I do know the Schwab's, Fidelity's of the world, they DO NOT like to lose qualififed, 401k rollover etc monies either...."sticky money" to your point.
Interesting from a few days back in this thread regarding banks pulling or not adding some CD's for purchase at the brokerages. Without a doubt, they are trying to decide too, what will be taking place with FED actions and rates within the next 1 year or so. Some clues, perhaps from these actions, too.
Non-Callable FDIC: 3 year now at 4.85 presently available at Schwab. Offerings slightly down from 4.95, but I'm thinking that we may have reached the peak for medium-term instruments. Will continue to watch this.
At Fido, lucky to see 4.8% or 4.9% non-callable 3 year CDs. They go fast, if you can even catch them.
Forget about getting much above 4% (non-callable) for any CDs dated longer than that. Banks have made the decision that rates will come down within the next few years. Which makes sense. They are going to protect themselves and their profits.
This rate cycle has peaked for 3 yr CDs (and longer).
If Banks perceive that interest rates will drop at some point within the next few years, they will not offer up higher rate CDs with a long duration (over 30 mos). These last few expected rate hikes would not affect that outlook.
Hope I am wrong there, but that's what the recent activity has been showing.
Thanks @yogibb, I made the correction on my posting.
Tough to forecast future CD rates, especially on the longer ends. Too many balls in the air. Labor # report this morning indicates tight labor market, i.e. continuing high service cost. The market fell. I never fully understand how banks set their rates for longer end. Per
We don't hold any CD's, but note that several of you have written about the availability of some CD maturities and/or rate changes during the past several weeks. The below graphic is for Treasury 'yields', not pricing or performance. The graphic begins November 23 through today, December 7, as of December 7; but will update each business day going forward, for a 10 day range. The only duration, at this time; that is maintaining a more positive yield is the 6 month; with the remainder showing significant percentage drops in yields. If you hover your computer pointing tool over a particular color bar, the current yield will be shown. Anyway, not sure if this is of any real value; other than to easily see changes recently taking place.
Comments
Steady rising yields in CDs and treasuries
Sorry for all of the distraction. Carry on.
brokered CD is FDIC insured, can't touch the monies without taking a ding until 5 years are up
Annuity, you can do partial withdrawls, something like up to 10% of funds ea year if you desire or need to.
The Annuity seems to be a better yield...if you go with an A(+), Nationwide etc, you can get 5.15% APY
I see you can get with 7 year SPIA, A+ rated co, 5.25%...
I've been very conservative past several years, always thought markets were kind of "artificial" due to money printing CBs etc, those rates above are kind of appealing...I've never had any annuities before so kind of cold feet. Also thinking that maybe, just maybe going forward, PMEFX and maybe PVCMX will outperform those SPIAs, dunno?
Baseball Fan
If you want to take the money out before 59.5, there are taxes and 10% penalty. Also, you have to use 1035 exchange to transfer annuity from one vendor to another. Safety (credit rating) of insurance company is also important.
Annuity companies know this and that people have inertia. So, they treat annuity money as captive money and offer inducements initially. And that is why some term-annuities have better rates than Treasuries and CDs.
But still, say you have a SPIA, 5 year term. After 5 years, you can pull the money out and put it into a money market somewhere else if you wish, you are not tied to that company forever so to speak, correct? Apologies if this is a non-informed question.
Interesting reading your comments...I do remember my wife inheriting an annuity after her Mom passed. Oh my gosh it was a taffy pull getting the money from the insurance company...long drawn out process. I'm wondering if it was just the specific company (I probably shouldn't mention which one, but most would recognize the name) or if it would be like that with all/most of them.
I do know the Schwab's, Fidelity's of the world, they DO NOT like to lose qualififed, 401k rollover etc monies either...."sticky money" to your point.
Best,
Baseball Fan
https://www.investopedia.com/terms/s/sec1035ex.asp
https://www.irs.gov/pub/irs-drop/n-03-51.pdf
Non-Callable FDIC: 3 year now at 4.85 presently available at Schwab. Offerings slightly down from 4.95, but I'm thinking that we may have reached the peak for medium-term instruments. Will continue to watch this.
Forget about getting much above 4% (non-callable) for any CDs dated longer than that.
Banks have made the decision that rates will come down within the next few years. Which makes sense. They are going to protect themselves and their profits.
This rate cycle has peaked for 3 yr CDs (and longer).
FOMC meets on Dec 12-13th; high probability of 50 bps rate hike. Perhaps there will be more new CD issues afterward. With the inverted yield curve, the spreads between 2 mo, 3 mo to 10 yr treasury have increased into the negative territory.
https://stockcharts.com/h-sc/ui?s=%24UST2Y-%24UST3M&p=D&yr=1&mn=0&dy=0&id=p55872895334
One can also ‘ride the curve’ by buying new issues of the shorter end of T bills (new issues).
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html
Hope I am wrong there, but that's what the recent activity has been showing.
Tough to forecast future CD rates, especially on the longer ends. Too many balls in the air. Labor # report this morning indicates tight labor market, i.e. continuing high service cost. The market fell. I never fully understand how banks set their rates for longer end. Per
new money: $5k minimum, rate of 4.25%
old money: 4.00%. Also $5k minimum.
ELEVEN MONTHS.
https://www.hickamfcu.org/
The below graphic is for Treasury 'yields', not pricing or performance. The graphic begins November 23 through today, December 7, as of December 7; but will update each business day going forward, for a 10 day range. The only duration, at this time; that is maintaining a more positive yield is the 6 month; with the remainder showing significant percentage drops in yields. If you hover your computer pointing tool over a particular color bar, the current yield will be shown.
Anyway, not sure if this is of any real value; other than to easily see changes recently taking place.
30 year through 1 month Treasury yields, as of December 7.
Remain curious,
Catch