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Old 01-05-2016, 01:58 PM
 
672 posts, read 837,449 times
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We have money in our liquid account (bank account) earning no interest. We feel we can afford to put some in a CD ladder for the next 5 years (at 1 year increments). We would be opening it up with Fidelity. We have had CDs for past 25 years and when they were really earning interest it was a wonderful tool along with our mutual funds. Now with interest so low everywhere and being semi retired we are looking at things a little differently. For the record, we are holding off on SS until FRA (we are 60 and almost 63) and my husband does consulting work that basically pays our living expenses, so we haven't had to dip yet into savings/investments. Opinions please.
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Old 01-05-2016, 02:01 PM
 
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The fidelity cd's pay way less . They can be bought and sold like bonds .
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Old 01-05-2016, 02:08 PM
 
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I checked with various banks and credit unions and they were way less than Fidelity. Where would I go to check rates at other institutions? Can you suggest some? Thank you
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Old 01-05-2016, 02:26 PM
 
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Best CD Rates - compare highest CD rates at bankrate.com
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Old 01-05-2016, 02:32 PM
 
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Thank you!
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Old 01-05-2016, 05:28 PM
 
Location: Florida
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Look for CD's from a few on line brokers and most likely on line banks.
Read the fine print. If you cash in early you probably lose 6 months of interest. Some might even be a year. But if you think of keeping your cash in the bank for 5 years or getting a 5 year CD and cashing it in at the end of 3 years for some reason you are still ahead. Point is you may want 3 to 5 years or maybe all 5 years. The key is to keep the amount of each CD small so you do not have to cash in your total dollar amount.
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Old 01-05-2016, 10:06 PM
 
Location: Southwest Washington State
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Yes to needing money before the CD matures. You will pay a hefty fee, most likely. Don't do this until you've investigated this fully. When interest rates are high, CDs are great; when interest rates tank, they aren't so good.
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Old 01-06-2016, 07:23 AM
 
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Unless something quite catastrophic happens we won't need this money for the time it's invested. And with a ladder something will come due every year. I was asking in the hopes others use this tool and wondered how they liked it given todays market. It sure seems smarter than just leaving it sit in the bank. Just another tool. Thank you for your responses.
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Old 01-06-2016, 07:25 AM
 
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i don't spend a whole lot of time worrying about cash returns . since i am quite diversified , over time the returns on the total portfolio make the little bit of return on such a tiny piece of the portfolio irrelevant . especially since as time goes on the cash is being spent down to live on and grows less by the day .
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Old 01-06-2016, 07:33 AM
 
Location: Ponte Vedra Beach FL
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Quote:
Originally Posted by saralvr View Post
We have money in our liquid account (bank account) earning no interest. We feel we can afford to put some in a CD ladder for the next 5 years (at 1 year increments). We would be opening it up with Fidelity. We have had CDs for past 25 years and when they were really earning interest it was a wonderful tool along with our mutual funds. Now with interest so low everywhere and being semi retired we are looking at things a little differently. For the record, we are holding off on SS until FRA (we are 60 and almost 63) and my husband does consulting work that basically pays our living expenses, so we haven't had to dip yet into savings/investments. Opinions please.
The first thing I'd do is take that liquid account and switch it to a "high yield" savings account. Many are paying about 1% (give or take a bit) now. Some have bonuses for new accounts. Like this one:

https://www.everbank.com/?c3apidt=84...QV9hoCs9jw_wcB

I am currently using American Express high yield savings - which is paying .9%.

And why a short term ladder?

I would avoid Fidelity for CDs. Its CDs in general have lower rates than those at other brokerage firms - like E*Trade. In addition - firms like E*Trade offer cash bonuses for setting up accounts (amount of bonus depends on the size of the account). I've been buying brokered CDs in the 8 to 12 year maturity range the last decade+. Current yields are in the range of 3-3.25%. These are mostly in non-taxable IRA accounts. In taxable accounts - I've mostly been buying long intermediate term munis (20 years out or so). Where yields are also in the 3.25% range. Robyn
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