20 Year CD At 2%

CDmanFL | Jul 26, 2021 | 286 posts since 2019

Friends,

I noticed that some of the big brokerage firms are offering a 20 year brokered CD at 2% from Goldman Sachs that is callable. I’m not saying that I would do this but it did make me think for a minute. Is anyone considering this and if so please share your rationale? I could possibly be tempted by a 10 year CD at 2% but 20 years seems irrational. Heck, I may not be alive in 10 years, let alone 20. Would love to know what you guys think and if there is any value in this offer.

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Answers

micheleforan | Jul 26, 2021 | 39 posts since 2018

If this was ever going to be a "good deal" the brokerage firms would simply call in the CD. A good deal for the buyer is a bad deal for the seller.

Rickny | Jul 26, 2021 | 1,296 posts since 2017

Probably better to get a savings bond that doubles in 20 years tax deferred and in most states no income tax.

What's the EWP,?

Choice | Jul 26, 2021 | 937 posts since 2020

Put or EWP…coupled with a call function now that would be crazy. What bothers me is a lot of brokered CD funds are from issuers who are FDIC FIs where latter do not offer similar rates for old/new customers. For example, go into USBancorp (US Bank) and ask to see their rate sheet…clearly they have brokered CDs. A final thought…alluded to by Rick…what is the difference between A and B? By that I mean, if 1% is available for ten years and 3% for the latter, the average face rate is 2%. But aren’t your options greater at that lower rate/term where you can flip to something else? The latter is what some are doing now…zero rate or thereabouts while still receiving much higher rates for existing long term CDs and the average/net return is greater than new issues now….dollar averaging

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