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Do you think it's a good idea considering the bear market we're in now? I'm age 60 and have $15,000 in non-IRA accounts that have lost about 18% this year and only have averaged a 1.5%-2.5% gain. I do have other money in an IRA account that lost this year but historically has done well that I may let ride out.
Do you think it's a good idea considering the bear market we're in now?
Absolutely not. There's no reason to tie up your money for 5 years at 3% in a rising interest rate economy. If you want a CD, you can get a 1yr CD with a slightly higher interest rate (3.1%) through an online bank and/or brokerage account and then reevaluate next year. You can even get a 6-month Treasury Note on the secondary market paying almost 3% (2.91%) and only have to tie up your money for half a year before reevaluating what to do with your money. Or if you haven't bought I Bonds yet this year, take $10k and do that. That will pay you an APR of 9.62% for at least the next 6 months (and if you purchase it next week, you'll earn that interest retroactively to July 1st.) The rate will then adjust semiannually based on the then-current interest rates, so you'll be protected against rising inflation. And if inflation magically disappears, you can cash in your bond any time after one-year (with a 3-month interest penalty if you do so before 5 years).
I'm only seeing interest rates of 1%-2% for a one year CD. My money is all managed by an investment firm. I know nothing about I bonds or Treasury Notes.
I'm only seeing interest rates of 1%-2% for a one year CD. My money is all managed by an investment firm. I know nothing about I bonds or Treasury Notes.
I don't know who your investment bank is, but through my Schwab account I see numerous bank CDs paying 3% or more for a one-year CD including Synovus Bank in GA, Beal Bank in NV, ConnectOne Bancorp in NJ, Bank Hapoalin in NY, Barclays Bank in DE (2.95%), and others. (ConnectOne & Synovus are actually ~15months as they mature in 10/23.)
As for I Bonds, here is a FAQ from TreasuryDirect that should answer all your questions:
Thank you. That website with all the small print makes it look confusing. Would my investment firm direct deposit the funds into an I bond?
No, you have to open your own individual account through TreasuryDirect.com. The only other way to buy an I Bond is in paper form with any tax refund you might have up to a max of $5k. This would be in addition to the $10k max for purchasing electronic I Bonds in your Treasury Direct account.
I'd rather do something now than wait until next spring when I do my taxes.
So how would the money get into an I bond account that I'd open if the investment firm doesn't send it there directly?
"Opening an account is easy to do and available to anyone age 18 or older with Internet access. Completing the online application form takes 10 minutes or less. Applicants will need the following information: their e-mail address; Social Security Number (tax identification number); driver's license or state identification number, and expiration date; and bank routing transit number and savings or checking account number. The bank account information is needed for electronic transfer of funds for security purchases, redemptions, and maturity/interest payments. Applicants choose a password, a password reminder, and security questions to ensure confidential account access. Within a few minutes of completing the process, applicants receive an e-mail with their TreasuryDirect account number. To find out more, take a Guided Tour."
Do you think it's a good idea considering the bear market we're in now? I'm age 60 and have $15,000 in non-IRA accounts that have lost about 18% this year and only have averaged a 1.5%-2.5% gain. I do have other money in an IRA account that lost this year but historically has done well that I may let ride out.
So, you have 15k in a non-retirement account that lost 18% this year, but only gained 1.5% - 2.5% in previous years? That doesn't sound right. The S&P 500 index is down about 15-16% this year, so that makes sense on the downside. But if you are invested in stocks, your account should have gone up about 27% last year, not just 2%. In 2020, the market was up over 18%.
If that is the case, I'd sure want to know what they bought in your portfolio, as you were way underperforming vs. the market. If your account only gained about 2% in 2020 and 2021, I'd close my account with them right away and find someone else. Or educate yourself and do it yourself.
I'd also want to know what kind of annual fee they are charging. You might be better off in I-Bonds and low fee index funds.
CD's.....both Well Fargo and UBS Bank of US are offering 3% on one year CD's. I bought both through my broker on Wednesday.
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