What Should I Do With My CD Proceeds?

jack12 | Feb 24, 2022 | 307 posts since 2021

6 figures so please don't bring up an ibond

My options---without opening a new account for now seem to be

12 months 1.05% keesler

15 months 1.05% Nasa

18 months 1.15% penfed

2 years 1.25% penfed

49 month 1.70% nasa (Not going that long in this environment)

Or whatever Fidelity has available

Or a local CU that pays .75% on savings

None of these really appeal to me so when my last CD matured, I put half in the 12 month and kept the rest in savings

What would you do?

(I am not inclined to go with a fintech or t-mobile as I don't think they will be rate leaders for long)

Although the difference between 1% and .75% is $83 a month on $100k

I do have more CDs maturing in mid March and thru the year which might suggest tmobile even though I view them as not a rate leader for long

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Answers

FirstNation | Feb 24, 2022 | 85 posts since 2021

Send me a check.

Ally6770 | Feb 26, 2022 | 4,294 posts since 2010

I also had 2 large 10 year CD's maturing this last fall. There are no good choices. I checked local credit unions after not finding anything. I opened a reward checking account with them and if you did that you could open a savings paying 1% up to $50,000 and 1.5 % on all funds if over $50,000. It is a small credit union and only for my county and adjoining counties. So check the area where you live. Still not the interest we are used to but there is not a lot of choices right now. Just be happy that we have been able to do as well as we have for the last 30 years or more with Ken's site and no longer have to go to the library to read the Wall Street and the USA Today for the best places for high rates in the nation or make long distance calls to the place in Wisconsin looking for the best rates.
AGAIN KEN THANK YOU. You cannot know how many people you have helped.

Sylvia | Feb 24, 2022 | 389 posts since 2012

.75% is very good for a safe and liquid account. I'd park the $$s there until new rates are released for March. We're only days away. Starting March, I'd begin plugging holes in ladder.

Rickny | Feb 24, 2022 | 1,296 posts since 2017

I would go with T Mobile. Many have predicted their rate would go down and it hasn't. If it does go down you can move the funds to another savings account or your .75% account.

If you willing to take a little risk you can look at Toyota IncomeDriver Notes
that pay 1.15% and are guaranteed by Toyota's Finacial arm. Not FDIC insured but Toyota is a stable company. The notes were paying 1.35% a couple of months ago. GM Financial Right Notes. All investments earn 1.25% ot FDIC insured.

CuriousDave | Feb 26, 2022 | 233 posts since 2018

As GreenDream suggests, you should not totally disregard I-Bonds for a portion of part of your proceeds.
In the current rising interest rate environment, a conservative way to go is to "ladder: short term CDs. As an example, using the four first terms ou have listed, you invest 25% of your proceeds immediately with Keesler for 12 months, 25% with NASA for 15 months, 25% with PenFed for 18 months and 2 years with Penfed. If the current trend of rising rates is still in effect in 12 months' time, you then invest the proceeds from your Keesler account for 2 years with whoever gives you the best rate then, When your 15 months with NASA matures, invest that with whoever for 2 years, and so on. That strategy provides flexibility for you going forward in case the upward trend changes. For instance, you can lock some or all of your four investments into one or more longer term CDs.paying top rates at that time.
It's possible though that rates may rise quite sharply within the next 12 months, so you could initial terms of less than 12 months, or for now simply put everything into the best savings or (insured0 money market account available, until the Fed announces its new rates in March - and perhaps provides an update of the future direction and timing of rates.

GreenDream | Feb 25, 2022 | 358 posts since 2019

Sorry, I'm going to bring up Ibonds anyway. If you haven't bought your yearly allotment yet, it's a good place to park some of your money, and with the current 6 month rate ay 7.12% annualize and the next 6 month rate likely to be in the same ballpark, it's really a good time to max out your yearly allotment.
At 10k for yourself, 10k for your spouse, 10k per child, plus you can have trust and business accounts as well, that can all add up and depending on your circumstances you could well get near or even into the 6 figure range with ibonds, But even if it's just the 10k for yourself, you've made it clear you don't have any better place to put that money, so why ignore/denigrate one good place that you can put it? Do you also ignore/denigrate IRAs, HSAs and 401Ks because they have less than 6 figure limits as well?

And while I understand you distrust of fintech, I'd say t-mobile is as good a place as any to store some cash. They've been a consistent rate leader for a while now at 1% (despite constant failed predictions of naysayers in regards to rate cuts) and with the impending rate raising from the fed, it's unlikely they're suddenly going to start dropping rates now. If anything, I'd say the bigger risk is that other FI will raise their rates higher while t-mobile stays with 1%. But if/when that happens you can always move your money to the new higher rate FIs.

alan1 | Feb 24, 2022 | 877 posts since 2015

Do you have a brokerage account where you can purchase CDs and Treasury securities? Do you have a Treasury Direct account?

If so, you should be able to better for at least some of the terms you mention, "without opening a new account".

Ltssharon | Mar 10, 2022 | 471 posts since 2020

Is the .75 savings Fdic insured? Be sure to stay under the fdic insurance maximums whatever you do.

jack12 | Apr 14, 2022 | 307 posts since 2021

I recently bought a callable 2 year brokered at 2.35%--- now they are up to 2.40%

I decided to look for a better deal in the secondary market despite the fact that I wanted to avoid them for the extra tax work
I picked up some with 25 Months remaining at 2.65% after the $1 each fee for buying them- but I would have liked more
And it seems the bond market closed early today
I can't figure out when they settle and fidelity is going to be a half hour

SMH

Rickny | Feb 26, 2022 | 1,296 posts since 2017

Jack12 If you not already done so, y
ou can also look for savings and or checking accounts that pay bonuses. I look for accounts without direct deposit requirements.

Choice | Feb 24, 2022 | 937 posts since 2020

The difference per month is not $83 but more like $21

AhorrarDinero | Feb 26, 2022 | 41 posts since 2019

HMBradley Savings Tier Boost Promotion pays 3%. You have to have a direct deposit of 1500, get there credit card (free the 1st year) and spend 100$ a month on there credit card.

Ally6770 | Feb 26, 2022 | 4,294 posts since 2010

That site seems confusing to me. I do have a reward checking paying 4.25% on $25,000 at a small local only credit union and it requires $1,000 deposit and 24 debits and they also offer one that pays 3% on $25,000 with no deposit and 12 debits. They also have the 1% and 1.5% savings account. I think reward checking accounts are the best we can do now but they do not accommodate high interest on large amounts.

Ratesaver | Mar 7, 2022 | 187 posts since 2013

Little late but for what it is above I would go with penfed for 2yrs, However be prepared to keep it there because of the penalty. Also , not to be renewed is the way to go however you do it.

cdqueen | Mar 10, 2022 | 78 posts since 2016

The best cd spread available today is the 1.50% 18 month special at USAlliance FCU, truly a bloom in the desert.

Ltssharon | Mar 10, 2022 | 471 posts since 2020

Regarding ‘not. To be renewed’: Most banks are defaulting otherwise upon maturity. I am having a heck of a time getting credit unions to set up my cds so that upon maturity the proceeds automatically go to an associated savings at that credit union. I want this done now not in the month before or 10 days after maturity. The new employees swear it cannot be done, and make me discuss it ad nauseum before they give me a manager who will do it. Sigh

Ltssharon | Mar 10, 2022 | 471 posts since 2020

I suggest a 2 step approach:
Immediately put it in 6 month t bill on treasurydirect.gov. By the way, if your money is in a trust, use an ‘entity ‘ account). Then in December when it matures, longer term cds will , by the, be at higher interest rates.

jack12 | Mar 18, 2022 | 307 posts since 2021

My CD matured today at keesler and my intent was to put a small part of it in a new 1.05% first step but the rep mentioned I could add funds to an existing first step- So its an add on and I added about half of my maturing CD to it
My existing first step matures 12-27 meaning it has about 9 and a half months to go

I know Marcus has a 10 month at a slightly higher rate but It seems I always get locked out of my account for the mere reason of not doing something regularly so I have to call a rep and several times I had long waits so I dismissed them
The rest is going to my local CU .75% savings for now

And I am going to be on the lookout for a good deal on a short-term CD

I saw In Touch has a 1.5% 11 month but I am not eligible -something like that sounds good

Sylvia | Mar 18, 2022 | 389 posts since 2012

USAlliance has an 18 month CD at 1.5%, https://www.usalliance.org/investment-products/cd.

jack12 | Mar 20, 2022 | 307 posts since 2021

Sounds like a good option even though I am trying to avoid new FIs and those that do hard pulls

Sylvia | Mar 20, 2022 | 389 posts since 2012

Yes, the hard pull is an annoyance. If it's any consolation, they regularly have competitive deals so the hard pull would not be wasted on a single deal.

Ally6770 | Mar 20, 2022 | 4,294 posts since 2010

Ask the place where your CD matured if they will match. Credit unions are more likely to do match rather than a larger bank, but small banks also may match.

jack12 | Mar 20, 2022 | 307 posts since 2021

Everywhere I asked to match rates has said no expect one local credit union
I wrote the ladies' name down but when I called back to open one she no longer worked there
The rep I spoke with said he had to email the president and he would get back with me but he never did
Also their CD rates are SO low I am afraid they will say no but I will call tomorrow to try again
Another reason I would like to use them is they pay a special dividend every year based I guess on how much money you have with them
I have an RCA with them so its a nice little bonus

jack12 | Mar 20, 2022 | 307 posts since 2021

I was looking around at US Treasuries- I have never bought one
They compare favorably to the above CD
I'm showing 1.41% for a 1 year and 1.98% for a 2 year and I would not have to join yet another CU and no hard pull

The 3 year is 2.14% and 5 year 2.16% - so to me the 1 or 2 year seems like my best bet
Wait they also have new issue CDs for 2%

Treasuries have the best deals for 1 year and under

18 month terms are not listed but I looked at what I guess are aftermarket showing yields of about 1.73%

I did buy aftermarket CDs in the past but I probably want to avoid anything aftermarket because they were a little extra work on my taxes if I recall

I don't know the settlement on treasuries but I am guessing the next day

https://fixedincome.fidelity.com/ftgw/fi/FILanding?bar=p

Sylvia | Mar 20, 2022 | 389 posts since 2012

I think supply of funds for FI's currently exceed demand so they're less inclined to match. From solicitations that I receive, they're looking for ways to put their funds to profitable use via mortgages, car loans, etc.

Here's a discussion on treasuries vs. CD's that you might find useful, https://www.depositaccounts.com/blog/treasury-bonds-versus-cds-rising-rate-environment.html

alan1 | Mar 20, 2022 | 877 posts since 2015

jack12 wrote: "I don't know the settlement on treasuries but I am guessing the next day"

When it comes to financial matters, I prefer to avoid guesses. My preference is to either find out or to not bother finding out, but I don't guess.

If jack12 is referring to the settlement dates of newly issued Treasury securities, the "Tentative Auction Schedule of U.S. Treasury Securities" (which includes settlement dates) can be found at
https://home.treasury.gov/system/files/221/Tentative-Auction-Schedule.pdf

jack12 | Mar 20, 2022 | 307 posts since 2021

If their goal was to make it as confusing as possible, they succeeded

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