Certificate of Deposit Rates

Brookswood

Brookswood

Senior Member
The latest inflation news had core inflation at 3.4% This is much better than a year ago when it was over 5%. But, we still are well above the Fed's goal of 2%. Yet, they Fed is thinking of lowering rates later this year. Will it happen? I don't know. But, I've leaned not to be greedy.

In my opinion I think it's time to lock in some 5% money while it's still available. I picked up a 2 year brokered CD offered buy Morgan Stanley bank that is paying 5.1%. That's the longest term CD offering 5% or more that is NOT subject to a being called by the bank if rates drop. I could get 5.4% on a 6 month CD, but if rates drop, I would have to reinvest it in 6 months a lower rates. All the CDs I purchase are FDIC insured so I know if I hold the CD to maturity I will get my money back. Note: $250,000 limit to FDIC insurance. I don't buy callable CDs because I don't like risk in my CDs. Others may feel differently. .
 

News just in

Federal Reserve officials penciled in just one interest-rate cut for this year, indicating most are in no hurry to lower rates, even after a widely watched report Wednesday showed inflation improved last month.
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I'm glad I locked in those 5.1% CDs. If the future rate cut happens, I suspect new 2 year CDs will offer 4.75%, maybe lower. Who knows for certain? Not me.
 
My BofA 7 month CD just matured so let it roll over and yesterday set up the new rate at a modest 4.65%. Not the highest rate, but as someone little money oriented, differences are trivial.

Am one that would prefer the Fed stop feeding the real estate corporations and Wall Street moneymongers that use those low rates to purchase properties via loans that then drive up inflation as those leaches then jack up prices and rents on the rest of us.
 

It's we cost those tight fisted bankers some real money!!

From an article in the recent WSJ:

Although inflation cooled to 3.3% in May, the Federal Reserve is penciling in just one rate cut this year. If you still have money earning nothing, this is the moment to take stock of your cash and retool your strategy, financial advisers say.
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The first step is moving emergency cash and cash needed for known expenditures, like tax payments, into higher-yielding online accounts, or money-market funds at a brokerage.
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After the above consider a move to FDIC certificates of deposit.
As I said above I just bought a Two year CD that yields 5.1%.

I may go for a 4 year CD to lock in these rates for a longer time. However, the bankers are not willing to take as much risk so the rates for a 4 year CD are about 4.6% the last time I looked. You pay a price in interest to lock in these rates for a longer time.

Unless you are a gambler make sure the brokered CD is NOT CALLABLE. It might say CALL PROTECTED. <-- that's good also. If rates drop and the CD is callable, the banks will pull it out from under your feet leaving you with nothing but the smiles on the banker's faces. <--- won't buy you much.
 
I'm heavily invested in the stock market but during the beginning of last summer my financial advisor invested a small portion in CDs paying 5%. I would have made much more just staying in the market but at least I had some form of guaranteed income. Who would have thought the Dow and the S&P would just keep climbing, but the economic fundamentals are all in place for it.
 
Brookswood said:
The latest inflation news had core inflation at 3.4% This is much better than a year ago when it was over 5%. But, we still are well above the Fed's goal of 2%. Yet, they Fed is thinking of lowering rates later this year. Will it happen? I don't know. But, I've leaned not to be greedy.

In my opinion I think it's time to lock in some 5% money while it's still available. I picked up a 2 year brokered CD offered buy Morgan Stanley bank that is paying 5.1%. That's the longest term CD offering 5% or more that is NOT subject to a being called by the bank if rates drop. I could get 5.4% on a 6 month CD, but if rates drop, I would have to reinvest it in 6 months a lower rates. All the CDs I purchase are FDIC insured so I know if I hold the CD to maturity I will get my money back. Note: $250,000 limit to FDIC insurance. I don't buy callable CDs because I don't like risk in my CDs. Others may feel differently. .
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Although I won't be investing in CDs myself, a couple of weeks ago I gave a friend the same advice as in your post Brookswood. Muslims are not supposed to deal in riba (interest) but we can invest and get dividends and capital gains.
 
The years of near-zero interest rates were a "war-on-savers". May as well get CD interest at rates a bit better than inflation while I can.
And if the FED chooses to drop rates near year end, the bond funds beaten by the rising rates will recover a bit sooner.
 
I just picked up a 5.25% one year call protected CD offered through Fidelity.
 

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