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So I started to ladder T-Bills for the reasons everyone is stating in this thread. The rate is so volatile (in a good way) that locking into anything even 12 months is too long for me and rates continue to climb. I use fidelity and my suggestion is this.
When they offer the new 4 week and 8 week and 13 week t-bill (they auction on diff days and diff weeks) go in and buy one of each of them with whatever money you can spare. Let's use 5k for each.
I would buy a 4 week t-bill with NO Rollover for 5k
I would buy an 8 week t-bill with NO Rollover for 5k
I would buy a 13 week t-bill WITH Rollover for 5k
Then after 4 weeks when that first on comes up, buy another 13 week t-bill with the 5k WITH Rollover.
Then after 8 weeks when the second comes up, buy another 13 week t-bill with the 5k WITH Rollover.
Now you will have 3 13 week t-bills rolling every 4 weeks or so and rolling into a new one with the proceeds. This way every 4 weeks you are capturing an increasing rate and not locked into anything longer than 13 weeks. You benefit from the rate hikes, can cash out at any time, and you have state tax shelter from the earned interest.
I can almost guarantee that the above will yield you more net income (taking in tax break) at the end of 11months then the 5% locked CD
just my 2cents
You can buy treasuries from just about any brokerage. I use Fidelity, as I like their platform and they don't charge fees/commissions for treasuries. Fidelity Fixed Income Page[fidelity.com]
Follow the above link and scroll down to the row "U.S. Treasury." Choose the duration you want and click on it. You can then click "buy" to start a trade of a specific treasury bill/bond. Fidelity's Intro to Treasuries[fidelity.com]
This is true, but it doesn't make an 11-month CD at 5% a bad idea. Those HYS can change their rates at any time, but here you're guaranteed to get 5%.
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Grace Period: You may redeem your Certificate of Deposit within ten (10) calendar days after the maturity date without penalty.
What happens if you don't redeem within 10 days?
I assume that that means you have locked yourself into another term and a withdrawal fee would apply. They are very light on information regarding the redemption process. This sounds like a good deal but I would be sure to find out exactly how you would communicate a valid redemption request to them before locking in.
Grace Period: You may redeem your Certificate of Deposit within ten (10) calendar days after the maturity date without penalty.
What happens if you don't redeem within 10 days?
After the 10 days it just gets rolled into the new rate at the same duration as the current CD. This is my experience with CDs. I do CDs often and this seems to be the trend.
Chasing rates is exhausting...hard to keep up w where all the money is
I will tell you the trick is to buy T bills at one month interval and set auto roll. As long as Fed hikes rate, you would get better rates and at the near end I would move money to long dated CD by laddering them to expire at different maturity or buy 1y/2y t bills. SoFi rate is decent on checking and saving as a bank for day to day transactions.
It's the partisan news outlets that push this idea that this time the country is really going to default. None of the credit rating agencies or finance people think it's at all possible. Countries that default or risk defaulting on their debt do so because they borrow in a currency that they don't control. For Argentina this was USD, for Greece it's Euros.
If you want to make good investment decisions, you need to turn off partisan news.
I don't have to listen to any news, I just listen to what those creepers ACTUALLY SAY.
Regular income tax rates. Expect a 1099-INT at the end of the year. Depending on how you deal with the interest on the CD, you would get a 1099-INT in early 2024 (2023 interest income) and one in early 2025 (2024 interest income, if any).
The recent auction of a 4-month t-bill for 4.6% makes the 11-month CD rate of 5% appear unappealing, as there is a high probability that interest rates will increase beyond 5%.
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When they offer the new 4 week and 8 week and 13 week t-bill (they auction on diff days and diff weeks) go in and buy one of each of them with whatever money you can spare. Let's use 5k for each.
I would buy a 4 week t-bill with NO Rollover for 5k
I would buy an 8 week t-bill with NO Rollover for 5k
I would buy a 13 week t-bill WITH Rollover for 5k
Then after 4 weeks when that first on comes up, buy another 13 week t-bill with the 5k WITH Rollover.
Then after 8 weeks when the second comes up, buy another 13 week t-bill with the 5k WITH Rollover.
Now you will have 3 13 week t-bills rolling every 4 weeks or so and rolling into a new one with the proceeds. This way every 4 weeks you are capturing an increasing rate and not locked into anything longer than 13 weeks. You benefit from the rate hikes, can cash out at any time, and you have state tax shelter from the earned interest.
I can almost guarantee that the above will yield you more net income (taking in tax break) at the end of 11months then the 5% locked CD
just my 2cents
Fidelity Fixed Income Page [fidelity.com]
Follow the above link and scroll down to the row "U.S. Treasury." Choose the duration you want and click on it. You can then click "buy" to start a trade of a specific treasury bill/bond.
Fidelity's Intro to Treasuries [fidelity.com]
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What happens if you don't redeem within 10 days?
What happens if you don't redeem within 10 days?
What happens if you don't redeem within 10 days?
After the 10 days it just gets rolled into the new rate at the same duration as the current CD. This is my experience with CDs. I do CDs often and this seems to be the trend.
https://www.navyfederal
Not seeing one
I hold a massive portfolio of bank accounts.
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If you want to make good investment decisions, you need to turn off partisan news.
Which ones ?
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