Guaranteed 4% - 4.7% T Bills vs Brokered CDs?! Which Is Better? BUYER BEWARE!
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- Опубликовано: 23 ноя 2022
- Is there such a thing as guaranteed 4% - 4.7% T-Bills vs brokered CDs? What are some of nuances between brokered CDs vs T-Bills that very few folks talk about? Which might be better for you & how do you decide?
This is another highly-requested video from many of you in the community. So today, I’m going to walk you through:
✔️ What is a brokered CD
✔️ The three key questions that will help you figure out whether brokered CDs or T-Bills might be better suited for you.
✔️ Whether I prefer T-Bills or brokered CDs & why
Plus the three additional you need to consider when comparing brokered CD rates vs T-Bill rates.
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HAPPY THANKSGIVING! Thanks for visiting our personal finance channel! We hope this free content will help fast-track your financial journey! Everyone's financial journey is different. Please note that there are questions/ comments which I will not be able to answer without fully understanding your financial, personal & other circumstances.
Yes, show us how to buy brokered CD’s at Fidelity!
What an excellent video! Your explanations are organized, concise, and easily understandable. No jargon, no fast-talking, but plain language that follows the logical progression of your topic. You are an excellent presenter, and your knowledge was very informative. I'm definitely subscribing to your channel!!
She's a super clear communicator.
Nice video. One strategy I've employed over the years is to buy multiple CD'S at one time from the same bank. For example if you have $10,000 to invest in CD'S buy 10 $1,000 CD's. Then if you NEED the money for un expected expenses or emergencies you only have to cash in what you need not the entire $10,000. This works out very well espically if the current rate is below the rate of the CD you have to cash in.
Exception is when "only one CD allowed" for their promotional special. I've had that at a couple of credit unions. Would not allow more than one CD that was at a promotional higher rate plus "add on" feature, for example. But under normal circumstances; yes; break them up to manage EWP. I also do that for MYGAs.
And many are $10K minimum, with $1000 cd paying much less. If you have $100K to invest, another story….
Just found your channel. Great content. This videos is especially timely as I'm deciding between cds and t bills. Rally appreciate you breaking down the + and -. And I especially appreciate your reasons for going with t bills. Thanks
All your videos, including this one, are concise and very well-explained. Great content. I appreciate you posting!
I never even considered a brokered cd until now. Great content as usual! I love your channel.
Thank you for this information! I did not know what a brokered cd was until I just watched this video. This is great information, I will look at this as an option now when comparing bank CDs. I would love to see a video of you purchasing a brokered cd in a Schwab account. I’m thankful for your videos and educational content. 🙌
My parents had deposits at a savings and loan that collapsed in the early 80s in Ohio. I still remember how tight money was in the household until they finally got their money back. I currently have five brokerage CD'S at different banks. All the money is in an IRA, so taxes are equal. The total is less than the $250,00 FDIC coverage. But I never forgot that apparently. Great coverage of the differences. I'm going to get my first T-bill next week, thanks to your videos.
I bought brokered CD'S on Fidelity and did not find it complicated at all. I think the T-Bill auction process is complicated: announcement date, auction date, settlement date, rates established upon auction. CDs are always available and the rate you will get is crystal clear. It is clearly stated whether they are callable. Anyway, love your channel.
Thanks for the insights!
Another highly informative video! It re-enforces my preference for T-Bills over CD's. Happy Thanksgiving to you and your family!
Just subscribed. I was just thinking about getting either t bills or brokered cds. You really help explain the math. Your t bill videos are great too!
Just came across your channel and have learned a ton after watching just a few of your videos. You cover so much in such a short time!
YES, I would definitely want a video on brokered CDs. Please do one. I’d hood to maturity and even considering long term.
I think I watched all the T-Bill videos and learned as much or more as the excellent I-bond videos that hooked me to Jennifer's channel. What I think is particularly good is the listing out of her priorities and being clear, sometimes with examples, that other people's priorities can be different/just as correct for very good reasons.
I'm somewhat new to your channel and absolutely love it! Thank you so much Jennifer for sharing your great knowledge and doing with language/explanations that is easy to understand. I'm learning a lot and am looking forward to creating a T bill ladder. T bills trump the brokered cd ( which I new nothing about so ty ) for me due to where I live, Washington State, which has local and state taxes. Thanks again for all and looking forward to more of your content in the future! 🙏
Thanks for sharing Jason!
Absolutely excellent and simple to understand explanation in just 21 minutes of nearly all important basics. Perfect!
Great comparison video. Your point at 13:51 is the big one imo and the reason I favor brokered CDs. For me, the comparison (and even in your example at 7:29) are close enough to almost always favor CDs for the the certainty of knowing the exact brokered CD rate at the time of purchase. The big brokerage firms also will typically have offerings from the big national banks, so you can pretty easily find the ones that are most likely to be stable.
Thanks for sharing!
Hi, Jennifer: Excellent videos! You are very informative, clear, and didactic. My family will consider all your advice when buying either instrument. Thank you.
Great video, have been reading about Brokered CDs but I didn't really know how they worked. Your video was very helpful!
Jennifer, Fantastic as usual, living in California, paying state and local taxes are the key points for sticking with T Bills. Thanks for great video once again.
This video and as well as other Diamond Nest Egg super savers videos, for a 70 year old man, are truly an eye opener. I am considering moving most of my stock investments into safe and fixed income investments then came across your program - I'm glad I did. Simple, straight forward, great examples with tables and easy to navigate. Appreciate if you can have another session on how to buy Brokered CD (Fidelity and Charles Schwab). Thank you and Happy Thanksgiving!
yes, I'd like a Fidelity video on Brokered CD's also! Thanks
Great content. I really enjoy learning from you. Happy TG!
Nicely done Jennifer, especially your summary/closing comments were a great reminder of how fragile the banking system is and at least one reason why some banks offer higher CD rates than other. As you say, BUYER BEWARE!
Yes! This was such a helpful talk. Learned a lot!
Excellent presentation. Informative, direct and I really like the “what my preference is and why”. My first time here, thumbs up and I will subscribe and check out all your other content. Thank you for putting this together. VERY helpful.
Great explanation of t-bills vs brokered CDs. This is all I needed to see to subscribe!
Valuable information.. Thanks very much... A lot of this i thought so, but very good to hear it summarized. I have felt the same way about CD's.
Great video Jennifer! I knew about the tax advantage of Treasuries (I live in NYS) and the issue of being callable, but the info on liquidity of brokered CDs was something I was not thinking of. That would mean there is a higher bid/ask spread for brokered CDs compared to liquid Treasuries if you need to sell before maturity, similar to buying stocks that have a small "float" compared to a very liquid blue chip stocks. I want to stay liquid if the Fed goes too far for too long and causes a recession (no soft landing), which then causes good stocks to decline in value (a buying opportunity), so the ability to sell in the secondary market is important to my goals. Happy Thanksgiving!
i was shocked to see the value of my brokered cd's drop like a rock in the last 3 month. It was so bad to look at all the red that i turned off the display of the daily value change in my account. BUT, it works both ways too. If you're in the market for better rates, look at buying cd's that are on the secondary market. Take advantage of the thin liquidity to pick up bargains. I bought some 3 month treasuries and i swear those things go up in value every day. Even when interest rates go up! My broker does not allow me to put in bids under the ask. I always have to buy at market price. It would be nice to find a broker that allows you to enter a bid price
Thank you for this very helpful and informative video. I just watched it for the second time and the points about state income tax assessed on CD’s and on all assets in tax advantaged retirement accounts are useful in deciding whether to buy cd’s or t-bills. Your opinion on the safety of t-bills versus cd’s and the historical data you included were also greatly appreciated.
Thanks for the lessons! I just bought brokered CDs for my Fidelity taxable account. I live on Guam which has no state or local taxes. It was a little confusing at first, kept going to CD ladders, but next time will be easy, especially after selecting the period (length) you're interested in. I chose a 3 month, 4.75% yield from Fifth Third Bank, no automatic roll over. You really helped me learn some of the lingo.
Glad you enjoyed the video!
Here I am at the gym working out and boom, Jennifer is putting out informative videos on thanksgiving. I have to do some work later today as well, so I know this feeling.
No work later for me (for once) - just insane amounts of cooking. Enjoy your workout!
@@DiamondNestEgg I worked and ate Thursday and worked all day on Friday. You had it much easier than I. I took the weekend off.
2008 crash had 3 CDs (5.5% - 5.75%) in 3 different banks that failed. There was no drama or delay. FDIC announced failures every Friday. When failed bank opened on Monday, they were present. If account under $250K coverage, go to the counter. If over, go to the "tears and fears" room.
At the counter, each of 3 banks a different method. One simply already had prepared a check to me in the full amount of the account balance previous Friday. Another simply provided the FDIC document that the account was now at ABC bank, same CD, same terms. And the last one simply provided the FDIC document that the account was now at XYZ bank, same CD, but years until maturity reduced from 4 to 2 years.
Those of us under the $250K enjoyed the coffee and goodies while waiting our turn. The over $250K ... tissues. Yes, full grown men and women crying ... because end of the day they knew better, but didn't bother to heed the limit.
Great insight on how the FDIC process works with a failed bank. Thank you for sharing.
Thanks for sharing your experience with us!
Detailed explanation of buying brokered cds was a great time spent. Thanks for the warning of failed banks.
This is a great video. I Have to watch again so the info sticks. Thank You!
Please make the Brokered CD video. AND, thank you for all your wonderful videos and shorts!
Your videos are so useful! Despite my partner and my advanced degrees we still need these talks that simplify and breakdown rationale and strategy! I would love one on “option trading for dummies”. I have some large gains in some old tech investments, and would like to understand how to hedge these bets. Thank you and Happy Thanksgiving!
thank you for this video!! 😊
Great video and something I have been trying to understand. You made it very clear. Love your videos
I love your channel very much. Great didactics, precise, concise, easy to understand, just thr right amount of information. Keep up the good work! You are helping a lot of folks in need of financial literay like me.
A wealth of terrific information! Your presentation and advice is top notch. God bless you for this video. Happy New Year and thank you for the work you’re doing.
great presentation as always!!
Timely Video. Thank you!
Great video! I’ve watched similar videos on RUclips that try to steer you to purchase bank cd’s from private firms and not brokerages. Scary!😮
Great video! You predicted bank failures three months before they started. 👍
So informative. You make it easy for someone like me that is not that was not comfortable with buying these types of investments in my brokerage account. I have bought both since I found your channel. HAPPY THANKSGIVING!
Fantastic job breaking it down. Please do one on brokered CDs.
All your videos are top tier content. Keep up the fantastic work.
New subscriber! I'm still learning a lot about securities and I so appreciate you sharing your expertise!
I find your videos wonderfully clear and informative. Thanks for your effort.
Jennifer- your videos are terrific. Much appreciated
Very informative love your channel big fan. Keep up the good work. thanks
Best video ever! Many many thanks Jennifer. Learning to think through how things work and use it to help inform my decisions is helping me save more for my short term and long term goals! My most important take homes are: Never buy T bills in my traditional IRA and stick with new issue CDs if I buy from a brokerage rather than a bank. The list of everything else I learned is too long for here but of great value in my siutation.
I actually buy in my traditional IRA (don't have a Roth) - like I said, everyone's financial journey is different :-) Glad you enjoyed this Anne!
We are new to your community. Your explanations are excellent. We wish you continued success. Please consider making more financial videos. Any university would also want you on their staff.
You have a gift. Thanks for sharing it with us!
Very helpful and clear. Thank you 😊
great video. trying to help out my mom with this and this video gives a very good description.
thanks. Very clear and easy to understand. Great presentation. No boring.
Super video! I now know a lot about brokered CDs.
Thanks as always for the details in your videos. You are really great. I purchased my first T bill and I bonds because of your knowledge
Glad the videos have been helpful!
Outstanding video 👍 !! One of the best explanations of Brokered CD's Vs T Bills but also highlighting the value of FDIC and how to secure via one Brokerage (rather than many banks) 👍
Thank you so much. Your videos have so helpful to me.Thank you.
Hi Jennifer, I will make this short, Thank You! very educational.
Your videos are great. Thanks for doing them. Personally this video on Bank CDs is enough. I was never a fan of the added risk and the reward just wasn’t worth it. I would love to see you move into the in’s and outs of the secondary T-Bill T-Note market. I actually prefer to use that rather than new issues as I like investing my money immediately and knowing what yield I will get.
Thanks again for the great videos. You are a wonderful teacher/ instructor
You always have what I need when I need it. Great
super helpful for investing starters like me, it breaks out everything you need to know in plain English. More like this please and could you have videos of stock market and all kinds of index funds, EFT the same way? I like how you don't need a high degree to understand these investment knowledges that everyone should know for their own good.
Excellent Video as always. Could you do a video about buying resale corporate bonds on the Vanguard platform and how to calculate the interest? Would love to see that!
I bought my first 13-week t-bill today with an effective rate of 5%. Thanks for the video.
I am grateful for your knowledge and informative content.
Thank you so much.🌺
Thank You for all your help.
Another great video, Thanks a lot. Happy Thanksgiving.
Thank you, Jennifer and Happy Thanksgiving
Always thank you for your info. Happy Thanksgiving to you and your family..
Jennifer - these are terrific videos. Thank you!
Thank you! Very clear and helpful
Just starting watching ur channel as was looking at both Auction and Secondary markets on T-Bills, glad u confirm better than CDs esp in current climate. U nailed bank failure mess months ago way before the Fed!!!
Very nice explanation. Thank you
Great video! Thanks!
Thank you. Very edifying
In a rising rate environment you will probably have to sell at a discount on the CD. If rates go lower than your coupon generally you can probably sell at a premium or with little loss.
Excellent information, well done
Thank you for all your great advice
Glad you enjoyed the Thanksgiving day post!
Awesome information and presentation thanks
Thanks for your sharing!
Thank you! Happy Thanksgiving!!
Thank you for this video.
She is fabulous! I am so happy I found this channel.
Thanks for the great video. I hadn't clearly understood how the secondary market works for brokered CD's.
Excellent video. I thought I would have to call Fidelity to find out if I can invest more than 250K in brokered CDs and still be FDIC protected. You answered it perfectly and saved me a lot of trouble. Thank You. RH
Jennifer nailed it again! She’s simply the BEST
Always great advice. Thank you.
Glad you enjoyed the video - happy Saturday
Your videos are very informative🙏
Thank you for bringing useful content to this community. Your videos have been appreciated. I am now interested in knowing your thoughts on “when to go long” on treasuries as it appears rates will shortly begin to level off and eventually start to trend down. Thanks!
That's already on the video list - noted!
Excellent video!
Nice job. Thank you.
Great video as always! Happy Thanksgiving!!
Totally agreed on the liquidity issues on brokered CDs. These are essentially cash investments where you trade a little liquidity for a little better yield. The liquidity of the T-Bill giving you the ability to cash out and keep most if not all of the accrued interest (in case of emergency) is worth more than a small increase in yield. Further, in this environment, where CDs seem to be the T-bill rate reduced a bit for the banks profit margin the choice is pretty clear.
Thanks for making these videos. I'm not a novice and I find your clear, holistic approach quite informative. They give me greater clarity and confidence in my decision making.
Glad you’re enjoying the videos & thanks for sharing!
But with t-bills I thought you cannot cash it out till the end of the maturity term right? Like if I purchase some directly from the treasury you have to wait at least 4 weeks if you buy a four week term?
Happy Thanksgiving! Great point about the CDs being callable. Lately at Fidelity you can get 2-3 year CDs that are not callable if you shop their offering - generally at a minor yield reduction.
Happy Thanksgiving to you & yours too!
Plenty of non-callable three, six, nine and 12 month cds
Thank you Jennifer for this invaluable information. Do you expect the yield to continue to invert in treasuries? In the current environment, will the shorter terms continue to increase and the longer terms decrease? Thanks.
Brilliant presentation and content.
Thank you. I am overwhelmed by the big list of CDs in Fidelity. Could you please make a video of how to choose CDs in Fidelity?