Submitted by snowcal t3_1263ryz in personalfinance
My wife and I need somewhere to park $900k until late October/early November. Are 6 month CDs the best place to put this money? I would hate to lose out on interest if there's something else out there. Thank you!
CD, HYSA or Bonds/Tbills. Whatever will give you the most for you money. You can find the rates for everything online. I find CD's to be easier, just break the money up into 250K chunks so it's covered under FDIC. You can also find banks that will do that for you.
Yes, 250k for single account or 500k for joint account.
Wealthfront is FDIC up to 3 million, no need to split it up.
Ally no penalty cd would be my choice if I were making decision today. Open a joint account and it covers 500k at least.
Vs Alliant?
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Duh. No penalty has no penalty for early withdrawal
Without knowing your income and state of residence, it's hard to answer this question with precision. My suggestion is to use a Tax-Equivalent Yield calculator to compare net yields from different instruments suited to your circumstances. A Treasury Bill may be more valuable if you're in a high income tax state compared to a CD, even if the APY on the CD is higher. Also in-state municipal bonds are potentially tax-free if that's an option.
I got lucky about three weeks ago with a 5.3% bond, but they're not paying as much now so CDs are the more profitably thing to buy right now since bonds are down.
Nothing wrong with a series of CDs and a HYSA. Split it all up to keep individual accounts under $250k.
Read the fine print about what fees you might pay if you need the money before the CD expiration date. They will often take most of the earned interest and sometimes a fee on top of that. I learned this the hard way.
I agreed with comments that T bill are the safest and exempt from state and local income taxes. Note there will be US debt ceiling discussion some where in July and later. I really doubt US government will stop paying its debts (T bills and others), but we will just monitor the event at that time. If you decide put into CD or brokered CD, make sure to keep within $250K per bank. Even if a bank fails, FDIC is insured.
If I have a joint bank account with my wife, is the FDIC insured for $500K?
You can farm a lot of bank account bonuses with that much.
I would recommend just putting it in a high yield savings account. You can add more at any time or with draw at anytime with no penalties. The rates are about the same as most 6 month CDs. Also once the CD date ends your often times asked to with draw or sign up for a new CD. If you with draw but are planning not using it all at once you start losing out on interest again. I’ve found this to be the best way to make hassle free, FDIC insured passive income that’s quickly accessible. I park my emergency fund here and extra money until I can a solid investing opportunity.
"The rates are about the same as most 6 month CDs" where if you don't mind sharing?
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Discover bank 6 month cd - 3.4%. Online savings - 3.6%
Of course, a 12 month cd is 4.5%, but the savings account makes more sense at 3.6 than a 6 month cd at 3.4. Also, rates for online savings can change ( you aren’t locked into your rate). Lately rates have been going up - if you open an online savings at 3.6, there is a good chance the rate will increase while your money is in it over the next few months (the way rates are currently)
Fidelity offers a 6 month CD at 5.10% rate.
That's $22,950 in interest on $900,000 over 6 months.
Uh. Isn’t that 5.1% annualized?
no it isnt. Would be half that.
Skittles_the_Unicorn t1_je7hfgi wrote
Keep in mind that T Bills are exempt from State and local income taxes.