3% 5 Year CD @ Mercantil Bank

with rates rising i show 2.10 on a 1 year and now under 3 on a 5 year . i would not lock up money for 5 years for a fraction of 1% difference with no chance if we see a recession of a cd running with the ball like a bond would and generate appreciation . .
 

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mathjak107 said:
with rates rising i show 2.10 on a 1 year and now under 3 on a 5 year . i would not lock up money for 5 years for a fraction of 1% difference with no chance if we see a recession of a cd running with the ball like a bond would and generate appreciation . .
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I am definitely putting some in.
 
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First Guaranty Bank based in Louisiana and branches in Texas [including the Dallas area] also has a 3% 5 year CD.
Plus it offers a $50 MC gift card for opening a checking account. I arranged for my CD interest to go directly into
my checking account every quarter.

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mathjak107 said:
with rates rising i show 2.10 on a 1 year and now under 3 on a 5 year . i would not lock up money for 5 years for a fraction of 1% difference with no chance if we see a recession of a cd running with the ball like a bond would and generate appreciation . .
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Those who prefer to invest in simple bank CDs [which I do] know to spread out and "ladder" their CD money
so they have a CD coming due fairly often to take advantage of a rising interest rate trend. On my 5 year CD,
I arranged for the interest to be paid quarterly to me, so I can [hopefully] reinvest it at a higher interest rate
or use it as living expenses if needed.

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Don't forget you can cash out of a CD if the numbers add up in your favor. You must review each bank's policy on early withdrawal as they can vary a great deal. I have one bank with a 12 month penalty while another has five month penalty. So if you had a 5 year CD @ 1.7% for example and the rate for another is 3% it would be in your favor to cash out of the lower rate and buy the higher rate. You have to run the numbers. nerdwallet.com is helpful here.This is another reason to ladder CDs.
 
i bought some 3-6 month laddered cd's to finish off the years spending cash . almost 2% across the board on them . but they are just a holding place for the money we live on this year. they certainly are no proxy for our investments .
 
To each their own when it comes to wanting a return on the money they have available to spend.


Looking at a 2 yr. CD with a 2.75% pay & return of $2750.00 on $50,000.00 or buying 1000 shares of a utility priced at $26.75 I decided on the utility stock. Without calculating the quarterly dividend of .41 cents a share the return on just the base amount is $3,280.00 for the two years.


This utility hasn't missed a dividend payout in over 60 years.


Valuation
On May 14, *** was trading at a PE (price-to-earnings multiple) of 13.5x compared to its five-year historical average PE of near 14x. *** seems to be trading at a discounted valuation to its historical multiple and the industry average.




The year end expectation is for this stock to sell at a little over $32.00 a share. No intention to sell and pay taxes on the capital gain. No matter what this isn't part of our need it's long term for our sons inheritance. I'm not a fan of CD's but understand that others like the no risk feature. Risk tolerance dictates decision making so. As I began with. To each their own.
 
Yes, risk tolerance plays into it. I have a mix of utility stocks too for what it's worth. Although I'm very conservative, I believe in owning more than just cd's.
 
Knight said:
To each their own when it comes to wanting a return on the money they have available to spend.


Looking at a 2 yr. CD with a 2.75% pay & return of $2750.00 on $50,000.00 or buying 1000 shares of a utility priced at $26.75 I decided on the utility stock. Without calculating the quarterly dividend of .41 cents a share the return on just the base amount is $3,280.00 for the two years.


This utility hasn't missed a dividend payout in over 60 years.


Valuation
On May 14, *** was trading at a PE (price-to-earnings multiple) of 13.5x compared to its five-year historical average PE of near 14x. *** seems to be trading at a discounted valuation to its historical multiple and the industry average.




The year end expectation is for this stock to sell at a little over $32.00 a share. No intention to sell and pay taxes on the capital gain. No matter what this isn't part of our need it's long term for our sons inheritance. I'm not a fan of CD's but understand that others like the no risk feature. Risk tolerance dictates decision making so. As I began with. To each their own.
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lots of stock s never missed a dividend , but they dividended themselves out of business like gm . unless the dividend is rising i would never take just paying a dividend as any sign of financial health . each dividend paid out is another nail in the coffin if a stock is not in good shape but they usually do not stop paying
 
mathjak107 said:
lots of stock s never missed a dividend , but they dividended themselves out of business like gm . unless the dividend is rising i would never take just paying a dividend as any sign of financial health . each dividend paid out is another nail in the coffin if a stock is not in good shape but they usually do not stop paying
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I'm certain people aren't going to stop using electricity.
 
I own a dividend mutual fund and I'm happy with it's performance. I reinvest 100% of my dividends. Vanguard and T Row Price among others offer them.
 
Knight said:
I'm certain people aren't going to stop using electricity.
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utility stocks tend to do awful when rates rise . our own utility con ed is down 12% ytd including the dividend . dominion energy down 21% ytd . so they tend to get hit very hard because rates effect them so much . utilities count very heavily on borrowed money and rates eat right in to their bottom line .

plus the higher rates go the less the dividend plays a roll unless it is increasing too so that attacks their bottom line in two ways at the same time . it is best to stay broadly diversified today in equities . look at the beating at&t has been taking for years now. an s&p 500 fund blew it away and with no individual company risk added in to the equation either
 
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mathjack I fully understand the impact of the factors impacting utility stocks when the market changes. I viewed this as a buying opportunity. As you have pointed out, over the long haul the ebb & flow of the stock market favors those that go long.


You may have missed this in my post.


"No intention to sell and pay taxes on the capital gain. No matter what this isn't part of our need it's long term for our sons inheritance."


I suspect in 20 years or more the small amount we spent now, the reinvested return along with the rest of what we don't use will bring joy to our sons.
 
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Ironic how topics about CDs always end up off topic discussing the stock market.
Maybe it's because investing in a bank CD is so simple [with no risk of principle
and no buying, selling or management fees] while stocks are more complicated.

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KingsX said:
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Ironic how topics about CDs always end up off topic discussing the stock market.
Maybe it's because investing in a bank CD is so simple [with no risk of principle
and no buying, selling or management fees] while stocks are more complicated..
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I agree that CD's are pretty straightforward and not as complex as stocks and that's why I prefer CD's. I've never understood how stocks work...it's too complicated for my pea-brain...haha :) Now, to go check out Bankrate! Thanks for the heads-up.
 
Colleen said:
I agree that CD's are pretty straightforward and not as complex as stocks and that's why I prefer CD's. I've never understood how stocks work...it's too complicated for my pea-brain...haha :) Now, to go check out Bankrate! Thanks for the heads-up.
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I've always preferred the simplicity of bank CDs... and my "pea-brain" ;) was able to retire early at age 55.

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KingsX said:
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Ironic how topics about CDs always end up off topic discussing the stock market.
Maybe it's because investing in a bank CD is so simple [with no risk of principle
and no buying, selling or management fees] while stocks are more complicated.

.
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the answer is because a penny saved may be a penny earned but it will always be a penny. actually less after inflation and taxes , without good compounding . so for most of us working stiff's the only way to ever get enough saved is by taking the little bits we do manage to save and letting one of the most powerful forces , good compounding do the heavy lifting . so perhaps for some ,their retirement draw rate is low enough that they can meet their obligations and live off cd's . but for most of us the risks of drawing anything above 2-2.50% is very high . so yes cd's can play a roll for short term money but it is important for all to understand that if they are unable to save the amount of money needed to generate the amount of money needed they can not go mostly cd's when others talk about how they do it .

you need to either save a whole lot more or live on a lot less than you could simply using a balanced portfolio .
 

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