You guys are all smarter than me, and all of your opinions are invaluable. I have a 50,000 treasury maturing on February 22, 2024 at Schwab. If it were you, would you use margin to put it into the Advancial 5.40% 5 year cd. I am hesitating because it is 2 months of margin interest, and anything could happen in 2 months. Pretty sure no one will have that rate on a 5 year though. I'm in Ohio and I could do the 6% GenFed, but it's only 18 months. I'm stuck. I just need a quick opinion on what you would do.
Answers
2. Margin is the only way to get the funds to your bank account quick enough unless you have emergency funds that are very liquid you can use in lieu of margin by tomorrow.
3. Margin is around 11.0% at Merrill Lynch. So in two months at 50k borrowed, will cost you in the neighborhood of under $1000. Of course you will be making 5.4% on the 50 K, so that will cut your cost down to near half.
4. Sell the treasury as soon as you can, as suggested, if that will cost you less than going on margin the full 50K for the full 2 months. Use the margin now and pay back the margin balance when the note is sold and money is credited to your account.
5. Use the smallest amount of margin that you can. Use as much of liquid savings (emergency funds) that you feel comfortable with. If you cannot access the emergency funds by tomorrow, use margin, and move as much of the emergency funds as quick as you can to your margin account to minimize the borrowed amount when they can be made available. In the event you have an emergency, and you really needed those funds, you can go back on margin to pay for the emergency.
6. Once your savings account is open by tomorrow, you can go to a COOP branch and write a check for the 50K to deposit into your new savings account. Then go home and open the CD online once you have logged in. In my case, the last 3 times, the 50K is immediately available to fund the CD and can be done just through the online CD application process once you are logged in.
Good luck, Steve
The key is getting it done by close of business tomorrow, as I would expect when they announce their new rates on the 1st, the 5.4% will not be available. But I have been wrong on this before.
I have more concerns about the future of this country, dangers in this world with current administration in 'control', government spending out of control, the out of control chaos at the border, fascist elements in our government undermining our freedoms and elections, etc. If ship hits the fan, there is nothing safe, and there are no guarantees. Remember, the Government is NOT here to help, they will do what they must just to stay in power even at you and your families expense.
My recommendation, is to not have all your eggs in one basket. I have created three 5 year ladders (5 steps each) this past 1.5 years. They are purposely spread across 8 or 10 financial institutions, with no more than 2 steps at each institution. Except Advancial, as I now have 3 steps with them, all being the 5 year steps. Stay under the guarantee limits, and you should be fine. I pull all of my interest out, and save them in high interest instruments. Ratings of institutions may matter, until they don't. Look in the past where big banks have failed and were all A rated. I don't believe any of it. There are no guarantees in this world, just do your best to be diversified.
I have recently extended my add on CDs with Mountain America to new maturity dates: 4.75% for two years, 4.5% for 3 years, and 4.2% for 5 years in December. These are meant to protect the 1 or 2 year steps in my ladders when they mature, should interest rates continue to free fall. All 3 MA CDs are better than the rates you can get for those same terms currently being offered as brokered CDs. If a CD matures, and rates are worse, I can put those funds into the 2 year MA CD at 4.75%, and when the MA 2 year CD matures I can move it to the 3 year MA CD at 4.5%, for a year, and when the MA 3 year cd matures I can move it to the 5 year MA CD at 4.2% for another 2 years. (they have a 100k limit total for all add on CDs).
I am storing my cash savings (and CD interest) in 1 year no penalty CDs at raisin (another institution that people here at DA try to scare you about). Currently getting 5.4% for 12 months, which is as good a deal as you can get right now on NP CDs (that I am aware of). If interest rates were to start to rise, I can always pull the money out after 30 days, and move that to new institutions quickly and without penalty. I put them in using smaller CD increments, in case I need emergency cash. That way I don't have to take out a big sum when there may not be good alternatives to invest that extra cash I did not need for the emergency.
Best of luck in the new year, and sorry if I sounded a bit like a downer at the start of your response.
Steve58
You’re such a party pooper! Still hoping for 5% because I have some CDs maturing in the next 2 weeks. Maybe they need the cash and we’ll be the lucky beneficiaries!
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