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I Have $550K Maturing End Of May With Ally Bank 5 Year Cds. What Would You Do?

John Sears
John Sears   |     |   55 posts since 2015

1. Put it into 3 different banks at okay 5 year rates to cover fully FDIC protection and wait it out at least a year (next January?).  Even if the 5 year rate is poor, in 14-15 mos. it will be stronger than the prevailing 1 year CD.

2. Put it into 3 strong Savings and/or MM accounts and wait it out until things get btter (next January?)



Answers
Ken Tumin
Ken Tumin   |     |   5,771 posts since 2009
You may not need 3 different banks to keep under the FDIC limits. If the CDs are outside of an IRA, you can use beneficiaries to increase your coverage. I have more details in this post, Maximizing Your FDIC Coverage with Beneficiaries, and in this post, Important Note about Adding Beneficiaries to Your Ally Bank Accounts.
John Sears
John Sears   |     |   55 posts since 2015
I had forgotten all about that, that could save me headaches, thank you.
Barabbas
Barabbas   |     |   9 posts since 2016
Nobody can time interest rates. Also, I would consider diversifying, especially if this is the majority of your wealth. Put something towards equities. If you don't have an IRA, open one with Vanguard (mutually owned, no dividends to pay to shareholders) and invest in a target date fund.
Xuim
Xuim   |     |   1 posts since 2016
Might hold off until June FOMC, though if the signs are pointing to devaluation I'd get gold
Barabbas
Barabbas   |     |   9 posts since 2016
Gold is such a losers bet, I have no idea why anyone would ever consider it. What's the point of buying and holding a shiny metal that yields nothing, is expensive to buy and liquidate, and actually costs money to store and insure? Don't give me crap that it outperforms whatever asset class during whatever cherry picked time period. A well-diversified passively indexed mutual fund actually yields, counters inflation, and outperforms gold over almost any time period. Think of it this way, during a credit crisis everyone sells everything, right? INCLUDING GOLD! Gold is heavily correlated to equities, with underperformance.