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Need Help Making Decision Where To "Put" $200K.

Fifi
Fifi   |     |   5 posts since 2015

In my mid-seventies.  Own mortgage-free home valued at about $250K.

Have about $80K in individual stocks I plan to leave for daughter.  Have only about $40K in IRA.  Federal government retiree.  Pay off credit card each month.  Live comfortably on annuity.

I have over $200K that I took out of the stock market a few months ago and want to get a few CDs or put in high-yield savings account. 

I have used the same bank (USAA) for 40 years.  They are super but have very low CD interest rates compared to Synchrony (which I just discovered today).  Synchrony has a horrible reputation based on internet reviews but I don't plan to use them as my "regular" bank.

I don't think CDs with 5-7 year maturity are a good idea since the interest rate will surely go up in the next year or two and I don't want money tied up for that length of time. 

Synchrony will pay 1.05% in high yield saving account and have best CD rates.  I'm thinking that maybe $100K in their saving account and purchasing $100K in CDs.  I have no plans to use this money in my lifetime.

Thanks



Answers
Rockefeller
Rockefeller   |     |   4 posts since 2015
XCEL federal credit union is currently offering a 1yr 1.5% CD.  Maybe hunker down there for a year and see where things are at in a year.
Ken Tumin
Ken Tumin   |     |   5,770 posts since 2009
Two calculators on our site may help in your decision making:

First, here's the Early Withdrawal Penalty Calculator that John alluded to. You can use this to compare long-term CDs with mild early withdrawal penalties with short-term CDs.

Second, the tool, Where to (Safely) Grow Your Cash, can help you decide what bank accounts to use for your savings.

Hope this helps.
MidAtlantic
MidAtlantic   |     |   77 posts since 2012
I have used Synchrony (and GE Capital Retail Bank before it became Synchrony) for many years and had absolutely no problems.

I like Lending Club, but would never describe them as safe compared with FDIC insured bank CDs.

To get 100% security I would spread the funds between Synchrony and Barclays and between a variety of CDs and saving accounts, to give flexibility. Of course, your overall interest rate will be low but you will retain flexibility and some degree of access.
TomW
TomW   |     |   4 posts since 2015
I am hoping to find another decent rate like the recent 3% for 3 yrs at NWFCU.  If you want to park you money where you can retrieve it to take advantage of one of these deals as they pop up you may consider everbank.  They have a 6 mo introductory rate on there money market account of 1.6% (up to $150K).  You could put another 50K at https://home.capitalone360.com/lp-savingsbonus500 - They have a $500 bonus on 50K if you hold it there for 3 months which if you close the account after three months is a rate of 4.75%.  So if you want some flexibility and have the time to open and close accounts these two items will give you a short term good rate.    
Fifi
Fifi   |     |   5 posts since 2015
Thanks.  I'm still struggling with what to do.  I read the reviews of the three banks (Synchrony, Ally, and Evergreen)  I'm considering.  There are so many negative reviews - perhaps because people use these bank as "everything" banks.  I'm only interested in getting really good interest rates because I plan to keep my forever bank for credit card, automatic deposits, bill paying, etc. 

I'll take a look at capitalone360 $500.00 bonus and Everbank money market account.
Thanks
InterestYields
InterestYields   |     |   27 posts since 2010
I also plan to look into https://home.capitalone360.com/lp-savingsbonus500 & https://www.depositaccounts.com/blog/2015/08/everbank-boosts-6month-intro-rate-checking-mma.html as suggested by TomW which could make sense for you for the next six months but you could also see my thread at https://www.depositaccounts.com/community/ask/22210-1-invest-cds-alternatives.html since you mentioned you "have no plans to use this money in my lifetime" & of course no offense intended in any way with the following quote regardless of your age or health but "an early withdrawal without penalty will generally be permitted in the following circumstances - In the event of death or the adjudication of incompetence of an owner; or Within the Grace Period" at such banks (see https://www.synchronybank.com/cs/groups/cmswebsite/documents/websiteasset/wres009913.pdf) potentially avoiding any EWP by your beneficiaries in such scenarios..  As I mentioned in that thread "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", such strategy would not be necessary to set up at Synchrony or Barclays where the EWP is only paid on the amount withdrawn..

Regarding concerns about not being able to break CDs early you could clarify with each bank in writing but as I mention at that thread "I'm no longer too worried that Ally won't honor an early withdrawal request as I have in writing in several secure emails that I have PDF printed copies of that under no circumstance would they not honor an early withdrawal request.  As I had mentioned Ally also assured me in writing that their standard practice remains to consent to early withdrawal minus any applicable EWP but when reading Synchrony Bank's deposit agreement for example it states "We may refuse your request to make a withdrawal.where..we have received a court order.." which Ally's lawyers may have been trying to account for in part with their discouraging vague consent language change.  While one Ally CSR had speculated bank runs may be a theoretical scenario when early CD redemption may not be immediately consented to another corrected that speculation by pointing out that the 
FDIC would come into play under such extraordinary scenarios."

Click Thru:

https://www.depositaccounts.com/tools/ewp-calculator.aspx?ids=5207,5207,264557,31602,11425&apys=,2.0...

https://www.depositaccounts.com/tools/ewp-calculator.aspx?ids=5207,5207,264557,31602,265245&apys=,2....

https://www.depositaccounts.com/tools/ewp-calculator.aspx?ids=5207,264557,31602,265245,252521

https://home.capitalone360.com/lp-savingsbonus500

https://www.depositaccounts.com/blog/2015/08/everbank-boosts-6month-intro-rate-checking-mma.html
John Sears
John Sears   |     |   55 posts since 2015
Are you saying that Synchrony Bank, if you open at 2.25% interest, break it in one year, and the interest then is 5%, that they would hit you for that amount instead, making it conceivably much more than 6 mos.?  That's new to me, are other banks doing this?
InterestYields
InterestYields   |     |   27 posts since 2010
According to the Synchrony Bank representative I spoke with when they state "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" means at the current simple interest rate in effect when opened that's gets lock in (currently 2.23% simple interest rate).  I've unbolded "at the current rate" now too de-emphasize that but did think this was a worthwhile clarification given that vague language. 
John Sears
John Sears   |     |   55 posts since 2015
Structure the $200K as smaller units, perhaps $10K each.  Go with 2.25% with six month penalty (Barclay or Synchrony).  Consult chart on this site which shows when you will be beating the best one year rate out there (I think it's 1.3% for a CD).  Instead of the one year CD, keep the $$ in the 5 year CD.  At around 15 mos. you're surpassing the 1 year CD if you break it.

I may be wrong, but this approach to me does the same thing as laddering but is more effective.  By having it as $10K units, if you need the $$, you don't have to break the entire thing.  Consider having the interest transferred to you monthly.

Calculate how much you will lose in one year if you hit 1.3% with your broken 5 year.  If the loss is $5K, factor that in when you get the five year CD by deducting the amount each year.

I have a similar problem coming up in June when my Ally Bank 5 year CDs expire with their 2 mo. penalty CDs.
Ricochet
Ricochet   |     |   231 posts since 2010
  @Fifi
I don't believe you're looking to play the   Break the 5 yr CD Game   as the above suggests :)
The CU and banks aren't obligated to give in to the request.
The multiple lower amount 25k CDs  is something we do.
paulhb2
paulhb2   |     |   4 posts since 2011
Hi, I'm in my 80's!
Look at Lending Club--a safe investment if you do a couple of things right. Email me after you have an idea how it works and I'll detail those for you.
I've had most of my savings there for many years.
Paul
paulhb2@aol.com
Fifi
Fifi   |     |   5 posts since 2015
Thanks for your suggestion Paul.

After spending a couple of hours this a.m. looking into the Lending Club comments from both investors and customers, I don't think it is something I want to pursue.  However, I learned a lot :)...
TedandAfrica Osmundson
TedandAfrica Osmundson   |     |   2 posts since 2016
I don't know your background, abilities, or motivations.  However, finding a hobby where you buy and sell can be highly profitable with E Bay & Craigslist.  The pitiful percentages banks and other institutions pay savers when compared to taxes and the rising cost of living make conservative paper investments a pretty close to zero sum end result.  I know you want to simply park your money and watch it grow, however with interest rates artificially low your rate of return is at best a break even situation in my opinion.  If you could manage it a 3 bed 2 bath home in a nearby decent ( good schools, close to shopping ) makes more sense to me.  You will have some maintenance cost from time to time and other things to deal with, however, many of the months will come and go with pure profit after taxes.  That is the beauty of real estate.  Lets say you invest 180K in a house and rent is for $1,100 a month.  Lets say your after tax and expenses the profit is $8000 to $10,000 a year.  How does that compare to paper investing?  This is simply something to consider and you may have no interest in what I am saying.  Perhaps you already have rental property income. Whatever the case, good luck to you finding the perfect financial plan to maximize your income while giving you peace of mind.