Do you think 5.5% guaranteed interest per year on a CD from a bank is a good deal?

Dr.Suave

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Im getting more than 11% on my bank if Im not mistaken.
 

BackInTheGame78

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No because I can get that same rate on an online savings account and not have to tie my money up for any length of time.
 

jaygreenb

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Why or why not?
Getting 5.5% on cash is good right now considering it is essentially no risk and is immediately liquid or close to it. Would just look for shortest period that needs to be locked up for, if any at all. Several avenues that include savings accounts, t bills, money market and cd's. Depending what your needs are you can adjust to when you need it available. Personally would need a low risk, high upside asset with a much greater chance of return to consider putting in another asset class. I place a large premium on the low risk and liquidity for this current period of time.
 

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If you think interest rates have peaked and you intend to keep that money in cash for the stated length of time then yes it’s a good idea to lock it because a savings account will drop the second interest rates start to drop where your cd will be sitting there collecting interest.

buy this through a brokerage account so that your cd is marketable. If rates drop you can capitalize on the open market if you want to turn them in. If you own the cd directly at your bank they’re actually going to make you forfeit your interest if you go to break.
 

FlirtLife

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Im getting more than 11% on my bank if Im not mistaken.
That sounds like corporate junk bonds, which have a higher risk of -100% return. There is no chance the risk of your bond is the same as the risk of a US Treasury paying 5%.

In the US, bank accounts are FDIC insured, so a 5% safe interest rate is reasonable. Comparing to corporate junk bonds is not.
 

Robert28

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If it’s a short term cd absolutely. I have been rolling over a 9 month cd at my bank twice now becsuse the interest keeps increasing everytime it matures and it’s only 9 measly months. I just put $10,000 in it though, I wouldn’t go dumping an amount of money you’ll think you’ll need in one. I can tie up $10,000 and not worry about it though.
 

CAPSLOCK BANDIT

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Investment is based off of one thing, like everything else, supply and demand.

Confidence is very important in the financial world; for example, if you read the fine print of most bank accounts, you'd see that purely from a legal stand point, they are only responsible for 60-70% of your total balance, meaning they could legally "Lose" 30-40% of your money and face zero consequence for it legally, however where the hit will be taken is in confidence.

So why would these banks offer a high rate? Well, you have to understand where your money is going once it's in the bank... It simply gets invested, so if they are offering you 5.5% on your money, how much money do you think they are getting on their investment using your money? Obviously higher than 5.5%.

Confidence in certain stocks right now are absolutely rock solid, some people due to inflation are broker than they have ever been, while others are richer than they have ever been.

Will your money get lost in the bank? Highly doubtful, but are you losing money by putting it into the bank? Yes.

If you can afford to let the money sit, why play safe?
 

NealIRC

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Goldman-Sachs (Marcus) currently offers 5.5% at some 1 year, It's a little higher than Capital 1 bank but Capital 1 may match rates soon.

As for other banks, well Goldman-Sachs and Capital 1 are in the top 10 banks.
 

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Goldman-Sachs (Marcus) currently offers 5.5% at some 1 year, It's a little higher than Capital 1 bank but Capital 1 may match rates soon.

As for other banks, well Goldman-Sachs and Capital 1 are in the top 10 banks.
Goldman is a bank because they went insolvent in the housing crisis and needed to form a bank in order to receive cash from the treasury. Reconsider your logic. If you want interest and government backing simply buy treasuries.
 

NealIRC

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Goldman is a bank because they went insolvent in the housing crisis and needed to form a bank in order to receive cash from the treasury. Reconsider your logic. If you want interest and government backing simply buy treasuries.
So Capital 1 it is.
 

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You can only buy $10k annually without having to circumvent. Having a cap in earnings is a huge turn-off
What!?!? I think you are confused and mean I-bonds. The us treasury market is the most liquid product in the world. You can easily buy 10million usd worth of a treasury in a single click and have a report in seconds.

In regards to the other post, the reason you buy longer dated bonds in a dropping rate environment is that you get price appreciation. the poster above noted that rates dropped What he missed was that he had 15% price appreciation on owning that bond. He can still get a 4%+ income stream for 5-10 years plus lots of upside doing so. It’s like getting the return of a stock with the safety of a bond. There is no reason to own a cd, whether it be capital security, taxation, income, ever.
 

NealIRC

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There is no reason to own a cd, whether it be capital security, taxation, income, ever.
So then why do millions of Americans put money in CDs? A few years ago the average CD in the U.S. is about $95,000. Somehow, people have more loyalty to banks/corporations than the federal government?
 

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So then why do millions of Americans put money in CDs? A few years ago the average CD in the U.S. is about $95,000. Somehow, people have more loyalty to banks/corporations than the federal government?
Because they’re off the shelf, so to speak. Would you rather, all being equal, have someone do the work for you and just sign a paper or would you want to go open an account at a broker or the treasury direct and do all that yourself?
 

NealIRC

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Because they’re off the shelf, so to speak. Would you rather, all being equal, have someone do the work for you and just sign a paper or would you want to go open an account at a broker or the treasury direct and do all that yourself?
Well, I do have a broker bank, Fidelity.

But imo the idea of closing your account, or transferring 90%, is a hassle.
 

NealIRC

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Goldman is a bank because they went insolvent in the housing crisis and needed to form a bank in order to receive cash from the treasury.
Goldman-Sachs was actually saved by a billionaire named Warren Buffet, where through his company Berkshire-Hathaway, invested $5 billion into it.


I'm wondering what Goldman-Sachs would be if it weren't for that heh.
 
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