Brokered CDs usually offer the highest rates. Here's what to know.
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- Опубликовано: 14 окт 2024
- Short-term interest rates have surged in 2022 but banks have been very slow to adjust the rates on savings accounts and certificates of deposit (CDs). However, if you know where to look, you can find CDs yielding nearly the same rate as short-term government bonds which are approaching 5% as of this recording. Today, we're talking about brokered CDs and the key things you need to know.
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My professional focus is retirement planning for individuals over age 55. Please visit our website or reach out for a complimentary planning session.
Ted Erhart, CFP®
Financial Planner
Anoka, Minnesota
www.norrislakeretirement.com
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This has been prepared solely for informational purposes. Information herein is not intended to be complete, and such information is qualified in its entirety. This is not an offering or the solicitation of an offer to purchase an interest in any fund, and it is not an offer to buy or sell or a solicitation of an offer to buy or sell any security. Nothing herein should be construed as investment advice, an opinion regarding the appropriateness or suitability of any investment, on an investment recommendation. No representation is made that the objectives or goals of any investment or strategy will be met or that an investment or strategy will be profitable or will not incur losses. Past performance is no guarantee of future results. Reliable methods were used to obtain information for this presentation but the information herein cannot be guaranteed for accuracy or reliability; the information in this presentation may be out of date or inaccurate. The information contained in this summary is and may not be distributed without permission.
For a quick tutorial on buying brokered CDs via Fidelity, check out this follow-up video: ruclips.net/video/gziEzw2BI1c/видео.html
I'd love to see a video on municipal bonds, easy ways to get into them, their advantages and disadvantages, etc.
very well explained. thanks mate, keep em coming.
Good info. Still not sure about brokerage CDs though. Thanks!
! Thank you.
Very helpful video. Thank you.
Glad it was helpful!
Can you explain buying cd at discount rate PLUS a coupon paying attached to it with CP added to it? Is this the optimum way to buy a CD?
Up until recently brokered CD's have been paying more than bank CD's. Why are brokered CD's currently offering at least a point LESS than bank CD's since it looks like the Fed is going to cut rates in September?
For investors living in states with state tax, when not using tax deferred funds, the after tax return on Treasuries will be better than CDs with the same nominal yield.
CDs are less liquid than US Treasuries so expect a larger bid-ask spread.
I haven't found buying Treasuries at auction at my brokerage to be significantly harder than buying brokered CDs.
Thanks Sean. I'm working on a video about the tax advantage of treasurys over CDs in taxable accounts.
RUclipss about brokered CDs seem to say to Not buy CALL'able CD's. I would think it depends, CALL'able CDs seem to pay 20% more, with the risk of being called. They would only be called if rates were dropping. And if rates are dropping I would want to re-evaluate and probably go back into equities, no?
I would agree that it depends on the individual and their objectives. But you make a fair point, especially for an active investor.
So the brokerage CD I bought a few days ago that is losing value is not an issue if I hold to full maturity? I will get my full principle and the 4.55% and the 1 year mark ? Thanks
Right, if you hold to maturity you're good. The price will move as interest rates fluctuate but that only matters if you want to sell before maturity.
I notice that Fidelity's highest rate for CDs is now 4.7% for a 1 year term wherein it was 4.8% a couple of days ago. The Fed just raised the base interest rate by 1/2 point. Should this not raise the brokered CD rates to possibly 5%? Is there a lag time? What am I missing here?
It's a good question. The market ultimately sets interest rates for CDs. So if investors are willing to buy CDs at 4.7%, that's what the banks are going to offer regardless of Fed actions. Many people expect a recession in 2023 so money has been moving into safer things like treasurys and CDs. This puts downward pressure on interest rates.
@@TedErhartCFP Got it. Thanks again. Maybe I should go for 4.7% while I can get it.
@@TedErhartCFP Can you do the math on an exmple? Like $1000 into a cd for 5 years at 4.7%? I see some are monthly others semin annualy. Which do you prefer?
Do you think investing CD’s in small amounts into multiple brokers banks is better then investing in just 1 bank? Just in case a bank gets into a bad situation
Owning CDs across multiple banks is definitely one way to spread out risk. Thanks Gary!
Hello can I get a 10 year cd for 5%?
I just checked Fidelity's platform and there are none available at this time. Long term interest rates have been falling for the last month or so (the 10-year Treasury is only about 3.6% presently). Therefore I wouldn't expect you'd find any long-term instruments at 5% but you never know.
STOP STARTING SENTENCES WITH "SO"!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
But I'm from Minnesoooooooooota! 😄