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CD Laddering/Emergency Fund % in CDs

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    CD Laddering/Emergency Fund % in CDs

    Started opening up CDs this year when rates got more attractive...plan is to end up with 12k out of my 30k in CDs where 1k matures each month. How much is too much in CDs? I was wondering if I should lower the amount in CDs and put the rest in a taxable investment account. Probably have too much in the emergency fund currently but it helps me to sleep easier.

    #2
    How many months is $30k? Seems like you could keep it all in CDs if you are going to roll it every month. Seems like a lot of work to chase some yield, though. A 5 year ladder is less work and probably gets you 95% of the yield with 1/12 the work.

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      #3
      Does your target asset allocation include cash?

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        #4
        Originally posted by corn18 View Post
        How many months is $30k? Seems like you could keep it all in CDs if you are going to roll it every month. Seems like a lot of work to chase some yield, though. A 5 year ladder is less work and probably gets you 95% of the yield with 1/12 the work.
        ~9 Months of expenses including many discretionary expenses.

        20k is in a money market at 1.85%
        12k will be in cds earning 1.85% - 2.7%

        The cds are set to auto renew so the hard part has been remembering to open them every month for the first round.


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          #5
          Why buy any CDs that aren't paying significantly more than the money market, especially in an environment of rising rates?

          Are you only buying 1-year CDs? If the point is to boost your yield, I'd go with slightly longer terms. I wouldn't go too long because of rising rates but 18-24 months should give better results. If you've already bought your 12 CDs, you can just adjust as they mature if you want to.
          Steve

          * Despite the high cost of living, it remains very popular.
          * Why should I pay for my daughter's education when she already knows everything?
          * There are no shortcuts to anywhere worth going.

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            #6
            Originally posted by disneysteve View Post
            Why buy any CDs that aren't paying significantly more than the money market, especially in an environment of rising rates?

            Are you only buying 1-year CDs? If the point is to boost your yield, I'd go with slightly longer terms. I wouldn't go too long because of rising rates but 18-24 months should give better results. If you've already bought your 12 CDs, you can just adjust as they mature if you want to.
            I was buying them because it is higher and was easy to do. Rates at my CU where Iíve bought most are currently:

            12 mo - 2.71%
            18 mo - 2.75%
            24 mo - 2.80%

            With rates rising it wasnít worth it for me to go longer than a yr.

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              #7
              Originally posted by MooseBucks View Post

              I was buying them because it is higher and was easy to do. Rates at my CU where Iíve bought most are currently:

              12 mo - 2.71%
              18 mo - 2.75%
              24 mo - 2.80%

              With rates rising it wasnít worth it for me to go longer than a yr.
              That makes sense. I was responding to you saying ď1.85-2.7Ē. It was the 1.85 that didnít make sense to me.
              Steve

              * Despite the high cost of living, it remains very popular.
              * Why should I pay for my daughter's education when she already knows everything?
              * There are no shortcuts to anywhere worth going.

              Comment


                #8
                Originally posted by MooseBucks View Post
                Started opening up CDs this year when rates got more attractive...plan is to end up with 12k out of my 30k in CDs where 1k matures each month. How much is too much in CDs? I was wondering if I should lower the amount in CDs and put the rest in a taxable investment account. Probably have too much in the emergency fund currently but it helps me to sleep easier.
                if having money in the investment account is going to keep you up at night .. then you should have more in the CD's ... If something were to happen, and you'd be find waiting it out for your investment to get back on track, then you're fine. if the amount in the cd' would not be enough to survive a correction , you should have more in cash / cd's or a cash equivalent.

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