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

Divorced w 3

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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.
He absolutely saved them from reputation risk good point, the government did bail them out. Legend has it Warren was running onto airplanes and avoiding legal correspondence in their effort to repay him because he was making so much money
 

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To answer the original question, yes it's a good opportunity. I wouldn't park a significant portion of my investible funds into CDs, but if you can find that rate on something with a term of greater than 12 months right now, I'd lock it in.

With the prospect of the Fed lowering the Fed Funds rate at some point in 2024, CD rates with a 5-handle won't be around for much longer. So if you don't have any stronger convictions on alternatives, it's a very acceptable decision to make.
 

NealIRC

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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.
Ok, I'm finding out that U.S. treasury bonds still pay federal tax. They're exempt from state tax. So CDs from bank it is.
 

BackInTheGame78

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You can get that on a High Interest savings account now, why the heck would you tie up your money in a CD for an extended period of time?
 

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Ok, I'm finding out that U.S. treasury bonds still pay federal tax. They're exempt from state tax. So CDs from bank it is.
That doesn’t make any sense. The treasury curve out to 2 years is usually between 5-5.4. If you don’t have to pay state tax, and you don’t have to worry about fdic with bills, why would you ever buy a cd? Bills are also marginable at 90%+. Don’t give your money to the bank. Be your own bank. Use your head.
 

Murk

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I made 428% on a short trade after Powell spoke at FOMC on Wednesday. I held it for 36 hours. Why on earth would I put any amount of money to work in a bank for 5%? I rather stake crypto when going that route. I have better odds making money in poker.
 

davidsonj73

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I made 428% on a short trade after Powell spoke at FOMC on Wednesday. I held it for 36 hours. Why on earth would I put any amount of money to work in a bank for 5%? I rather stake crypto when going that route. I have better odds making money in poker.
What did Powell say, and what decision did you make as a result?
 

Murk

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What did Powell say, and what decision did you make as a result?
What he says is irrelevant honestly, better to count how many times he coughs and if he's wearing a purple tie. The fact is the market pumped without bullish news so I took 3 short entries in btc, eth and fet, which happened to be the top (mostly luck) and rode it down. I caught 90% of the top and bottom.

I mainly invest and trade crypto but I do have shares in Nvidia, microstrategy and coin (coinbase) which are AI and crypto related stocks. I'm only really invested in AI related crypto (made a post about this months ago).

I trade only BTC, ETH and a couple other alts (sol, matic, fet (I'm also a long-term investor/holder)).

I'm not claiming to be an experienced trader, oracle or someone that can time the markets. I have a full time business I run. I just swing trade and keep an eye on charts/news daily. Been in since 2016.

What I will say is that I would never keep my money in a savings account. I don't pay into a pension, I back myself.
 

davidsonj73

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What he says is irrelevant honestly, better to count how many times he coughs and if he's wearing a purple tie. The fact is the market pumped without bullish news so I took 3 short entries in btc, eth and fet, which happened to be the top (mostly luck) and rode it down. I caught 90% of the top and bottom.

I mainly invest and trade crypto but I do have shares in Nvidia, microstrategy and coin (coinbase) which are AI and crypto related stocks. I'm only really invested in AI related crypto (made a post about this months ago).

I trade only BTC, ETH and a couple other alts (sol, matic, fet (I'm also a long-term investor/holder)).

I'm not claiming to be an experienced trader, oracle or someone that can time the markets. I have a full time business I run. I just swing trade and keep an eye on charts/news daily. Been in since 2016.

What I will say is that I would never keep my money in a savings account. I don't pay into a pension, I back myself.
That's awesome! Thanks for replying. For some reason I don't seem to understand crypto as well as I understand stocks (I'm no expert on stocks either), so for now, I'll stay away from crypto. I prefer that stocks are pretty much limited to Mon-Fri 9:30 am-4 pm.
 

Murk

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That's awesome! Thanks for replying. For some reason I don't seem to understand crypto as well as I understand stocks (I'm no expert on stocks either), so for now, I'll stay away from crypto. I prefer that stocks are pretty much limited to Mon-Fri 9:30 am-4 pm.
Crypto is way more volatile and wild wild west. It's a get rich quick scheme on crack. The traders I know personally only deal with S&P, Nasdaq, gold, silver, oil. Bitcoin and Ethereum are relatively safe investments though, BTC has an ETF and ETH will be following shortly.
 

davidsonj73

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Crypto is way more volatile and wild wild west. It's a get rich quick scheme on crack. The traders I know personally only deal with S&P, Nasdaq, gold, silver, oil. Bitcoin and Ethereum are relatively safe investments though, BTC has an ETF and ETH will be following shortly.
Cool! I'll look into BTC's ETF!
 

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To answer an earlier question why would you buy a CD (we call them bank or savings bonds) over gov bonds, factoring out tax (don’t know US tax) would be due to the spread. Banks can’t print money, governments can so theoretically you should be paid for the additional risk. Recently you don’t get paid much for that risk, as the GFC showed that governments tend to underwrite it all anyway.

likely to be better to buy treasuries, and you can buy these in a pooled investment, but your duration rolls so you always have interest rate risk, and can’t immunise like you would if you were holding directly.

US shares cost a fortune, our GILTs price at £100 nominal not sure nominal price of treasuries.
 

FlirtLife

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Banks can’t print money, governments can so theoretically you should be paid for the additional risk. Recently you don’t get paid much for that risk, as the GFC showed that governments tend to underwrite it all anyway.
The U.S. government backs FDIC insurance, which repays the first $250,000 per account if the bank goes under. I'm not aware of a bank without FDIC insurance, or of customer losses despite FDIC insurance. I don't see a difference in risk between them.

If someone is concerned about taxes on their high income, municipal bonds are worth a look. Federal and state governments do not tax municipal bonds, making their interest tax-exempt.

Very short term treasuries offer almost 5.4% right now, but anything over a year pays under 5%. The "inverted" yield curve means the longer the duration, the lower interest it pays (30 year being the exception). Here is the data from Bloomberg News:
United States Rates & Bonds
 

Fruitbat

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The U.S. government backs FDIC insurance, which repays the first $250,000 per account if the bank goes under. I'm not aware of a bank without FDIC insurance, or of customer losses despite FDIC insurance. I don't see a difference in risk between them.

If someone is concerned about taxes on their high income, municipal bonds are worth a look. Federal and state governments do not tax municipal bonds, making their interest tax-exempt.

Very short term treasuries offer almost 5.4% right now, but anything over a year pays under 5%. The "inverted" yield curve means the longer the duration, the lower interest it pays (30 year being the exception). Here is the data from Bloomberg News:
United States Rates & Bonds
Interesting to hear about the US system. We are guaranteed up to £85K per person per institution.

Some softer data came out recently in US so hopefully longer term inflation is coming down and the curve is reflective of this.

Main concern now is how the US deals with thr debt. “Bidenomics” (cringe) is pro-cyclical stimulus which has never been tried before. Dollar will weaken V Sterling longer term.

May well be worth considering foreign investments as a US investor.

You can count yourself lucky in some ways as you have really long mortgage deals. Our are 2-5 years so I’m just about to swallow 30% increase on my mortgage.
 
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