Hi everyone, I've got ~ 1 Million in Ally 5 yr CDs maturing earning close to 3%, Ally can now only offer me 2.05% with the 0.05% loyalty bonus for renewal. Now if Ally could still offer the same 0.25% loyalty bonus they used to offer I might keep it there but I want to open the discussion of alternatives to the community here.
This site (thanks Ken!) actually played an important role in my decision to go with Ally initially as it helped me more quickly discover at the time that Ally had a best in class 60 day EWP-Early Withdrawal Penalty (as well as satisfied account owners). Ally's EWP has since gone up to 150 days & there's new permission language such as "Except for the Ally No Penalty CD, a withdrawal of the entire principal before maturity will be permitted only with Ally’s consent and an interest penalty that is described in More About Certificates of Deposit" but Ally did reply in writing to me that their standard practice is to allow early withdrawal minus the EWP in effect at time of opening or renewal unless extraordinary circumstances occur like bank runs etc.
I'm now considering the 2.25% APY CDs offered at CD | Certificates of Deposit | Synchrony Bank as Synchrony Bank allows partial withdrawals "For a CD with a term of more than 12 months, the penalty will be an amount equal to 180 days simple interest on the amount withdrawn at the current rate" (https://www.synchronybank.com/cs/groups/cmswebsite/documents/websiteasset/wres009913.pdf unlike Ally Bank that doesn't allow partial withdrawals prompting me to open many smaller CDs if I need to access a smaller amount. The "at the current rate" Synchrony Bank told me means the rate at opening, simple interest would today be 2.23%, rather than the rate at the time of withdrawal, whether it's gone up or down then). http://www.global-rates.com/economic-indicators/inflation/consumer-prices/cpi/united-states.aspx indicate lower inflation rates than 5 years ago that may help mitigate the lower returns (http://www.investopedia.com/terms/r/realrateofreturn.asp). I regard the EWP as the cost of securing an FDIC insured guaranteed interest rate over the term if maturity is not elected. I extend the FDIC coverage with Payable On Death CDs (Ally allows 10 PODs & Synchrony Bank allows 4 PODs).
Alternatives to consider? While I'd certainly appreciate a higher return, I don't want to risk principal & want ready access to it should I find real estate or business opportunities. While I understand this may be a controversial minority position, I'm among those who frankly think stock markets are increasingly akin to an industry sponsored Ponzi Scheme with questionable fictitious valuations-intrinsic value where new shareholders have less legal rights (Knowing Your Rights As A Shareholder) so insiders can grab their gains.
There exists concerns about the potential future collapse of the fiat dollar (Fiat Money Definition | Investopedia) raised in countless books but until there's a viable alternative to the dollar it's all relative & the dollar remains relatively strong. If the dollar were to weaken significantly I'd become even more interested in hard assets with intrinsic value like real estate with income potential (rather than unproductive price unstable precious metals without income potential). Anything at https://personal.vanguard.com/us/funds/bonds/bonddesk or elsewhere you think I should consider?
Many thanks in advance for a polite & productive discussion,