I am interested in what others are doing in the area of fixed income investing. I have some funds in my taxable account that I don't want in equities, since I will need the money in less than 10 years. The funds are mostly in CDs maturing over the next 18 months. These CDs were set up about a year ago when short-term rates were at rock bottom, and money market funds were yielding less than 1%. It seems that short-term rates will rise a bit more, and that long-term rates may rise as well. For these reasons, I am reluctant to look at anything other than money market funds, CDs and short-term bond funds.
My personal opinion is that CDs are your best bet right now but I wouldn't go out more than two-years. Some would say not more than one year, but I think two years is fine. Short-term bond funds in a rising rate environment are not as comfortable for me (look at the chart for VFSTX. It is an interesting time to watch money market rates, but even so, your best yields will come from CDs at this point. Shop around on the nest and at bankrate.com and you'll be surprised at some of the CD rates at banks. ToroBravo2003
For these reasons, I am reluctant to look at anything other than money market funds, CDs and short-term bond funds. You should also look at 6 month T-bills. Yield is 2.7+% and state tax free. Buy them at auction (held every Monday-not a holiday) through TreasuryDirect or through a broker like Fidelity that doesn't charge commissions if you buy through the 'net.ayduda
Where do people go other then MF when they want to find the average and best rates for CD deposits? I am really looking for suggestions that reflect people who are not clued up like the average MF reader. Hence it might be difficult to get a good answer here but I thought I would try.John
What sort of rates seem about right at this point and if we are guessing, in one year?John
From a previus post by Terry:"You Might want to take a look at Bankrate.com and follow the link to CDs.www.bankrate.com/gookeyword/default.asp#I don't know if there's a general site for rates at credit unions, which are sometimes better. The Pentagon Credit Union has recently been the best anyone has found, and can be joined by anyone who contributes to a charity for Vets.As to current rates, at my credit union, which tends to be on the high side, 1-year CD is now 3.15% APY, 5-year is 4.6%, with a fairly linear range in between (and .25% bonus for CDs over $100,000). I have no idea what things will be like in a year: Vanguard's guru (see link in previous post) expects rates on long T-bills to be .25% to .75% higher than now (4.5%-5%). But that assumes the prediction of 3.5% growth holds and there isn't a panic on the bond markets. At this point, I'm working on the hypothesis that keeping money in shorter CDs (unless needed for liquidity) isn't going to be a winning strategy, because rates will have to go up a lot to make up for lower interest while you wait.
The Emigrant(N.Y.) is offering an online rate of 3% in a money market account...Best deal that I'm aware of.
I find CD rates at:www.bankrate.com
I don't know if there's a general site for rates at credit unionsSort of hidden at Bankrate.http://www.bankrate.com/brm/rate/brm_cucdepsearch.asp?web=brm
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