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Help 2017 CD Purchase Strategy

PaCuLard 9 10 January 4, 2017 at 02:14 PM in Finance (2)

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So, its the new year and I have about $200K parked at Ally earning 1%. With all the uncertainty following the election I am NOT looking to get into stocks given my age and current risk avoidance mindset. I looked at the CD rates today and noticed that Pentagon Federal CU is currently offering 1.36% on a 12 month CD. After perusing the financial news, I see many analysts are predicting the Fed will raise interest rates 3 to 4 times in 2017. Note, these same gurus predicted 3-4 interest rate increases in 2016, but only 1 rate increase occurred.

Not really interested in committing cash to a period longer than 12 months due to anticipated rate increases.

For folks knowledgeable about these matters, how would you proceed?

Immediate options that come to mind follow:

(1) Jump all in with the $200k at 1.36% and start the 12 month clock a clicking. "Hassle-free approach" and I reassess rates in a year from now. Personal advantage: don't have lots of personal free time. Disadvantage: Loose out on potential rate increases.

(2) Come up with a ladder scheme such as put $50K in now at the 1.36% point and then pump $50K in the 2nd quarter after the fed meets. And so on, and so forth till the $200K is committed. Advantage: Lock on rate increases as the occur. Disadvantage: Takes more processing time than (1), above

(3) An alternative to (1) & (2) above that I have not thought of including an instrument other than a CD, that offers (a) a higher rate, (b) no/low risk, and (c) short term commitment.

Appreciate any help you can provide.

Happy New Year SD'ers!

Pa Cul La



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Why not just put it in the 1.25% no penalty CD at Ally and wait it out until you are ready?
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For .36%, I would just keep the money liquid in a 1% money market\savings account. Why waste your time with CDs and tie up your money? You also might be better off seeing if you can purchase actual short term munis (not funds but he actual bonds) as they might yield you better results after taxes. My 2 cents.
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You might consider Agfed credit union. They have 1.55% 30 month CD with no withdrawal penalty.

You can open an account with Agfed by joining some kind of a non-profit organization. I am not sure the name of the organization.
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So did OP figure out where to put his/her stash?
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I would go with 100k towards hard money lending. you might end up with another rental property or house to flip. As long as you do your homework, you could be looking at 8-10% easy
200k cash easy access is a waste
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