RichardW | | 821 posts since 2019Another relevant and bookmark-worthy article by Harry Sit. He explains several of the advantages and disadvantages of direct CDs and brokered CDs. He also describes some of the advantages which a Treasury may provide over a comparable brokered CD. A few of his previous useful articles have links provided in this one.
w00d00w | | 360 posts since 2012he makes the point that brokered CD is bond-like which I find to be a useful way of thinking about them. he mentions the disadvantage of taking a "haircut" if the need should arise to sell before maturity. this is true in a rising rate environment. however, if market rates have fallen since purchase, there is potential to sell the brokered CD at a gain. with a similar direct CD, would need to take the loss of the EWP regardless of market rates.
Ally6770 | | 4,310 posts since 2010How would it be sold? Are there brokers fees etc as there used to be with selling bonds early? Something to check into. Maybe someone has some experience on selling one early and can post it or PM you. I know a person who sold an 8% interest bond early on a suggestion when rates went down and made out good but he was shocked on the cost of the fees to have it done. But this was in the 80's.
txFish1 | | 479 posts since 2023Fidelity charges $1 per bond (cd) up to $250 max on buys and sells on the secondary market. So if I sold 100 bonds which is $100,000 it would cost me $100. If I sold 450 bonds which is $450,000 the cost is $250. Same thing goes for secondary market corporate and municipal bonds. There is no fee per se on buying or selling treasuries either new or secondary issues but I am sure there is a cost built into the actual price of the bond.
w00d00w | | 360 posts since 2012the last time i sold brokered CDs was early 2019. the interest rate on those was 3%. overall, including the broker transaction fee, the total capital loss at that time was very small, much less than what a 3 month EWP would have been on a 3% direct CD. as a side note, i think it's best to purchase brokered CDs in multiples of 10 if anticipating the possibility of selling before maturity. those "round" lots seem to get a little better selling price than "odd" lots.
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