Should I renew

[sweeps]

Originally Posted by Duchesse

I really liked your idea for laddering, I even printed a copy so that I could study it. One thing more. I hate to be a pain in the a** but those 3 month CD's are a waste of time. I can get better rates with a Money Market account .

Can you give me another laddering example using 6month, 9 month and 12 month and 15month CD's.

Hmm, ok. If you want a ladder of 15-month CDs with one maturing each month, you could do this:

May: Deposit $14,800 in the MMA and $1,300 each in a 6-mo, 9-mo, 12-mo and 15-mo CD.
June: Withdraw $5,200 from the MMA and deposit $1,300 each in a 6-mo, 9-mo, 12-mo and 15-mo CD.
July: Withdraw $5,200 from the MMA and deposit $1,300 each in a 6-mo, 9-mo, 12-mo and 15-mo CD.
Aug: Withdraw $1,300 from the MMA and deposit $1,300 in a 15-mo CD.
Sept: Withdraw $1,300 from the MMA and deposit $1,300 in a 15-mo CD.
Oct: Withdraw $1,300 from the MMA and deposit $1,300 in a 15-mo CD.
Nov: Roll May's 6-mo CD into a 15-mo CD.
Dec: Roll June's 6-mo CD into a 15-mo CD.
Jan: Roll July's 6-mo CD into a 15-mo CD.
Feb: Roll May's 9-mo CD into a 15-mo CD.
Mar: Roll June's 9-mo CD into a 15-mo CD.
Apr: Roll July's 9-mo CD into a 15-mo CD.
May: Roll May's 12-mo CD into a 15-mo CD.
June: Roll June's 12-mo CD into a 15-mo CD.
July: Roll July's 12-mo CD into a 15-mo CD.

EDIT: Ok, just saw your last post. I'll leave this here anyway in case you change your mind.

[Duchesse]

Here's what I decided to do.

As all of you know the best MM rate I can get is 4.75%. I saw no sense in tying up my money for 3Months in a CD 4.75%.

So, in May,

I bought a 6month 5.21%, 9month 5.16% , and a one year 5.30% CD .

I will purchase a 1 year CD in June ,
July,
August ,
September,
October, from my (GMAC 4.75% MM).

In November

I will roll over the 6month I bought at Etrade 5.21% into a 1 year CD.

I will then purchase a l year CD for December and
January. GMAC MM

In February,

I will roll over the 9month I bought at GMAC 5.16% into a 1year CD. I will then purchase a 1 year CD for March
and April. GMAC MM

When May arrives,

Voila, I will have a 1year CD 5.30%( or better if rates go up) maturing every month.

[markio26]

i never renew... unless the rate is very high.. i go for the longest term.. our local bank has a cd that you don't need to ladder... they just charge you on the money that you withdraw and use.. they also, bump it up when the rates go higher than your cd rate... i would not put all of my eggs in one basket.. if this is your only money... do $1000 in an emergency fund first... then i use capital one for cd.. bofi for small business money (ebay, hgp, good rebated deals). make sure your yearly bills are covered with your wages....ingdirect is for our fun money, vacations and such.

[Duchesse]

Thanks for the advice Mark.

I chose CD's because I am diversified enough, in fact I may be spread too thin (stocks, bonds, indices, Money Markets, Mutuals, real estate). This is my CD money which I chose to ladder because with the ladder it becomes liquid every month and it is not at risk. This helps me to sleep at night and balance my portfolio.

[TeenInvestor2688]

is it correct in saying that a 4.5 6month cd is only getting 2.25 percent for the 6 months? Basically you would get half of the interest. So with a 4% 3 month CD, you would get 1% for that 3 months? If this is true, what is the purpose of a 3 month cd, just if you will need the money soon?

[Duchesse]

To Teen:

Yes you are right. That is why I decided to forget the 3 month and start at six months. I will be getting 5.21% or half of that for the 6 month CD, but this is the same way that interest is compounded at the bank, there I would get 4.75% maximum at this time. The money must remain for 1 year for you to get the interest promised whether it be a CD or a Money Market account. I know it's a little work but it's fun for me and the money is not at risk!

[sweeps]

Originally Posted by TeenInvestor2688

is it correct in saying that a 4.5 6month cd is only getting 2.25 percent for the 6 months? Basically you would get half of the interest.

Actually you would get a little less than 2.25%. The 4.5% is the APY, which means the money must be invested for a full year in order to attain that full yield.

Originally Posted by TeenInvestor2688

So with a 4% 3 month CD, you would get 1% for that 3 months? If this is true, what is the purpose of a 3 month cd, just if you will need the money soon?

If you want to think of it that way, sure, but compare to other investments the same way. For example, if a stock earns a steady 10% return but you hold it for only 3 months, you're really only earning 2.5%.

[Duchesse]

E*trade CD rates



3month 4.75 APY 4.64APR

6month 5.21APY 5.16APR

1year 5.3 APY 5.16APR