Yield curves are the strangest I've ever seen. Just went to my bank. CD rates 0.05% for 3-, 6-, and 7-month CDs. Then 4.00% for a 9-month CD, 0.50% for 1 year, and gradually up to 3.71% for 3 years, then back down to 2.02 for 4, 5, or 7 years. What the hell is going on?
Question for investment gurus.
- Thread starter patdog
- Start date
I'm about the farthest thing from being an "investment guru" on this board but have you checked brokered CD's ?
Just that bank I think. Discover rates are 2.85 for a 9 month, then 4.15 for a 12 month and gradually increasing to 4.40 for long term CDs.
That 9month CD would be better than one of the accounts we have open that I happened to get a letter on yesterday. Oof- sitting on the money would almost have been better because we wouldnt be charged for the management of it.
That 9month is really odd compared to everything else.
That 9month is really odd compared to everything else.
No. Probably would have been a better choice than a standard CD, but I've already bought it.
So I've but never considered CDs. Is the purpose just to earn a little more interest than savings but keep it pretty liquid? I'm trying to understand if I should consider them but honestly have always about them as something that my parents/grandparents bought all the time but no proper consideration has been given.
In this case, just parking some money short-term cause I'm skittish about the market right now (although I'm mostly invested with my retirement funds and have some personal funds in the market as well). This is pretty much the cash reserve and money I may be using to fund an investment opportunity later this year. When I saw 4% for 9 months, I figured that's not a bad deal for no risk & not tying it up for too long. In years past, I've invested my cash reserve in longer term CDs (back when the rates were a little better), but I really don't need a cash reserve now.
I got a Treasury at 6.4 for 12 within the last couple of weeks so I was wondering if I was parking cash in the wrong place. Both seem like good answers.
Well, there's been little reason to buy them for the past 15 years or so, with rates so low. For now, with rates at 4%+, it's a smarter place to park emergency funds than some other options. If things play out like they "should", a long term CD bought soon will be paying out 5% for years to come, while inflation goes back to 2% and rates go back down with it. Not a bad play for liquid assets.
Most CDs I’ve seen there’s a hefty penalty if you take it out prematurely. If you’ve got a chunk of money and aren’t going to do anything with it right away those short term CDs look pretty good.
I have looked at both my credit unions and they both seem to have odd promotional rates on one specific CD right now.
Usually 6 to 12 months interest. If you take a short term CD and roll it over when rates are back low, you'll be losing a decent bit more that way.
There are some high yield savings accounts as high as 4%. That might be a better option than a CD if you want to keep it even more liquid.
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What bank, if you don’t mind me asking? Trustmark has some pretty good rates on 5 month and 1 year CD rates now.
it’ll be a bit of a weird time for banks and deposits. The yield curve is inverted and that plays a part in the odd rates for sure. However, most banks need deposits really bad right now. PPP and stimulus money from Covid had most banks pretty flush with deposits but loan demand was also really good the last few years, so that sucked up a good bit of banks capital/deposits. Given rates have pretty dramatically increased over the past year, a lot of banks could be in a bad spot with loans vs deposit rates, especially if they have a large percentage of fixed rate loans.
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