[manaboutown]

This is a cite from 2014 so not current. Probably a lesser ability to compensate savers exists today.

"The FDIC currently has far less money in its fund than it has insured deposits: as of Sept. 1, about $41 billion in reserve against $6 trillion in insured deposits. (There are over $9 trillion on deposit at U.S. banks, by the way, so more than $3 trillion in deposits is completely uninsured.) "

Is your money safe at the bank? An economist says ‘no’ and withdraws his | PBS NewsHour

This is more current and from the horse's mouth so to speak.

"The DIF balance has risen every quarter since the end of 2009, and stood at a record $119.4 billion on March 31, 2021, up from $110.3 billion at the end of 2019. The reserve ratio stood at 1.25 percent at March 31, 2021, down from 1.41 percent at the end of 2019."

From: FDIC: Insurance Program

[dewilson58]

Originally Posted by manaboutown

This is a cite from 2014 so not current. Probably a greater inability to compensate savers exists today.

"The FDIC currently has far less money in its fund than it has insured deposits: as of Sept. 1, about $41 billion in reserve against $6 trillion in insured deposits. (There are over $9 trillion on deposit at U.S. banks, by the way, so more than $3 trillion in deposits is completely uninsured.) "

Is your money safe at the bank? An economist says ‘no’ and withdraws his | PBS NewsHour

If >$41B needed......................it's called printing money.

[Aces4]

Originally Posted by retiredguy123

FDIC insurance has never made sense to me. The limit is $250K per account, but you can set up about 4 or more different accounts with different names and account types and easily get millions in coverage. And if you want more coverage, you can just open accounts in different banks. Apparently, foreign banks can sell FDIC insured products if they do business in the U.S. Obviously, the Government doesn't care about protecting taxpayer money with reasonable insurance limits. Personally, I don't think FDIC insurance is very important as long as you spread your investments around and diversify.

The $250,000. is somewhat of a pain but it spreads the risk if one bank fails. If everyone dumped all their money in the overly generous interest rates and low loan rates bank and it fails, the overt risk is obvious. As Wilson points out, the Fed can print money to cover FDIC. I’m old enough to remember the generation which lived through the Great Depression and saw some of the worthless stock certificates they were left holding. Their savings were decimated.

[Boomer]

I just took a quick look at brokered CDs and saw that they seem to be creeping down a little this week. There are not as many at the 5% mark.

Is anybody else wondering if the window on the 5% might be closing? The list of those available is definitely a lot shorter than it was a couple of weeks ago.

Boomer

[fgaba1949]

Originally Posted by Paper1

In today's Sun I see an advertisement by Edward Jones offering 12 month CD's with a rate of 4.65%. Is anyone on the forum familiar with this offering and how they can offer so much more than a bank. Thank you in advance.

Instead get a short term 6 months or 1 year T Note,,Treasury Notes make more sense and are the safest investment u can make

[daniel200]

Originally Posted by Boomer

I just took a quick look at brokered CDs and saw that they seem to be creeping down a little this week. There are not as many at the 5% mark.

Is anybody else wondering if the window on the 5% might be closing? The list of those available is definitely a lot shorter than it was a couple of weeks ago.

Boomer

GM Rightnotes just increased their payout from 4.75 to 5%. This is not a CD. It is more like an interest bearing account. Interest accrues daily with no minimum time period. Easy to to deposit/remove money online to your bank account using online ACH transfer. It is not FDIC insured so if that is important, this is not for you. It is administered by Mellon Bank for General Motors

If you want any portion of your money back, you go online and set up the redemption amount and your money is deposited into your account on the next business day.

[retiredguy123]

Originally Posted by Boomer

I just took a quick look at brokered CDs and saw that they seem to be creeping down a little this week. There are not as many at the 5% mark.

Is anybody else wondering if the window on the 5% might be closing? The list of those available is definitely a lot shorter than it was a couple of weeks ago.

Boomer

The interest rate on my Vanguard money market account is still increasing. It is now 4.77 percent. That is way better than the 0.01 percent I was getting for several years. And, because about 65 percent of my portfolio is bonds and cash mutual funds, my investment income has greatly increased. I don't see the need to buy CDs.

[manaboutown]

Recently I have been moving cash into SWWXX, an AMT free muni money market fund currently paying 3.79% tax free.

6 month T-Bill today is 4.88% at Schwab.

[Boomer]

Originally Posted by retiredguy123

The interest rate on my Vanguard money market account is still increasing. It is now 4.77 percent. That is way better than the 0.01 percent I was getting for several years. And, because about 65 percent of my portfolio is bonds and cash mutual funds, my investment income has greatly increased. I don't see the need to buy CDs.

Funny you should say that. I was thinking the same thing — sort off…..

New money just in, sitting in a money market at a 4-plus something rate. Thinking of leaving it alone. Not sure yet though……

I do have a question about those brokered CDs. They are new to me. Bought a couple of short terms a few weeks ago. I get FDIC and call - protected……..

But am I understanding correctly that if the brokered CD does not compound, and instead pays all the interest income at the end of the term, that does not throw all the taxable interest income into 2024 if going out long term? If not, why not? It seems like being taxed on money you did not get — yet. Huh? That makes no sense to me. Maybe I misunderstood.

Am I right or wrong on that? If the taxing is along the way while the interest is not paid yet, how can that be?

Boomer (who is not sure if she heard that right)

[retiredguy123]

Originally Posted by Boomer

Funny you should say that. I was thinking the same thing — sort off…..

New money just in, sitting in a money market at a 4-plus something rate. Thinking of leaving it alone. Not sure yet though……

I do have a question about those brokered CDs. They are new to me. Bought a couple of short terms a few weeks ago. I get FDIC and call - protected……..

But am I understanding correctly that if the brokered CD does not compound, and instead pays all the interest income at the end of the term, that does not throw all the taxable interest income into 2024 if going out long term? If not, why not? It seems like being taxed on money you did not get — yet. Huh? That makes no sense to me. Maybe I misunderstood.

Am I right or wrong on that? If the taxing is along the way while the interest is not paid yet, how can that be?

Boomer (who is not sure if she heard that right)

A typical CD earns taxable interest annually, even if the CD does not pay the interest to the CD owner. So, you get a 1099-int every year and must pay tax on it. It doesn't matter when the interest is actually paid to the owner. This would also apply to a brokered CD.

I think that some banks will allow you to withdraw interest earned at any time without paying a penalty.

[Boomer]

Originally Posted by retiredguy123

A typical CD earns taxable interest annually, even if the CD does not pay the interest to the CD owner. So, you get a 1099-int every year and must pay tax on it. It doesn't matter when the interest is actually paid to the owner. This would also apply to a brokered CD.

I think that some banks will allow you to withdraw interest earned at any time without paying a penalty.

Thanks. It has been so long since I have had CDs, and I never took interest along the way, but it did appear on statements, as I recall.

I thought these brokered CDs seemed like they paid lump sum interest or some such thing. Still seems weird to me, but thank you for verifying that it just is.

Boomer

[Gigi3000]

Originally Posted by retiredguy123

The interest rate on my Vanguard money market account is still increasing. It is now 4.77 percent. That is way better than the 0.01 percent I was getting for several years. And, because about 65 percent of my portfolio is bonds and cash mutual funds, my investment income has greatly increased. I don't see the need to buy CDs.

I'm not sure how to figure that .11 expense on the vanguard MM when comparing it to the CDs. But it seems the safest right now and my funds are available. Any idea what the expenses are on Vanguard CDs?

[retiredguy123]

Originally Posted by Gigi3000

I'm not sure how to figure that .11 expense on the vanguard MM when comparing it to the CDs. But it seems the safest right now and my funds are available. Any idea what the expenses are on Vanguard CDs?

I use the Cash Reserve Federal Money Market Admiral fund. The current yield is 4.78 percent. The expense ratio is 0.1 percent, but that is built into the share price, so the actual yield is 4.78 percent.

For CDs, Vanguard doesn't charge anything for new issues, but there is a $1 fee per $1,000 to purchase a secondary CD (not a new issue). You can now get a 5 percent or higher yield with a Vanguard brokered CD. Vanguard's fees for most products are so low, they are hardly worth computing.

Note, if you want to increase your overall yield a little bit, consider putting about 15 to 20 percent of your savings into the Vanguard High Yield Corporate Bond fund. Somewhat risky, but it is currently yielding 7.02 percent.

[mrf0151]

Synchrony Bank online has a 14 month CD at %5.00 with no minimum. Shop around.

[Gigi3000]

[QUOTE=dewilson58;2196114]If >$41B needed......................it's called printing money.[/QUOTE

Then the inflation rate will be astronomical. Which, doesnt bother me personally much, i love the higher interest rates that come along with it but worry about Generation Z.