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Author: ahihist One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 35357  
Subject: Is laddering CD's best? Or I-bonds? Date: 8/4/2000 7:31 PM
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I am wondering if I should ladder CD's at Schwab (or wherever has the best interest rate), or buy I-Bonds.
The liquidity is not important since I do not plan to use the money for at least 10 - 20 years.

However, if I can get about the same interest rate on rotating CD's as an illiquid I- bond, and given that we do not know what the future will bring, maybe the I-bonds interest rate won't be much higher than the rate of inflation. Even though I-bonds are at a good interet rate right now, maybe they will be at a less than wonderful rate in the future and then I would be stuck, so, maybe CD's are best?

If so, any opinions on which CD's are best? Any opinions on Schwab's CD's?

Thank you... Valerie
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Author: ortman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 928 of 35357
Subject: Re: Is laddering CD's best? Or I-bonds? Date: 8/5/2000 2:57 PM
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However, if I can get about the same interest rate on rotating CD's as an illiquid I- bond,

I-Bonds are completely liquid after 6 months. You don't ladder I-Bonds, as you can hold them for up to 30 years.

In a sense, the I-Bonds would make your cash more liquid then laddering the same funds in CD's.


and given that we do not know what the future will bring, maybe the I-bonds interest rate won't be much higher than the rate of inflation.

The return on I-Bond return is broken into two components - a fixed return and an inflation based modifyer. So, you'll be earning a fixed amount over the rate of inflation for up to 30 years (at least the government listed rate of inflation.)

Even though I-bonds are at a good interet rate right now, maybe they will be at a less than wonderful rate in the future and then I would be stuck, so, maybe CD's are best?

Most of your questions would be answered by the US Savings Bonds site:

http://www.publicdebt.treas.gov/sav/sbiinvst.htm

Also keep in mind - interest on CD's will be taxed every year. Interest on I-Bonds will be tax deferred until you actually cash the bonds in.

If so, any opinions on which CD's are best? Any opinions on Schwab's CD's?

CD's are essentially fungible items - as all are FDIC insured. Given that, the best CD is the one which pays the most interest.

-Ortman



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Author: Goofyhoofy Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 986 of 35357
Subject: Re: Is laddering CD's best? Or I-bonds? Date: 8/25/2000 5:22 PM
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If so, any opinions on which CD's are best? Any opinions on Schwab's CD's?

Given that a CD is a CD is a CD...

When I checked Schwab earlier this week their highest rate on a 1-year was 6.3%. E-trade (www.etrade.com) is offering a 7.25% 1 year CD. Don't quote me on these, but I believe a 15 month was 7.29% and it went as high as 7.4% for a 5-year.

All FDIC, etc. You also get a $50 bonus for signing up, which you can do on the web.

My Schwab broker said "oooo, that's a good rate."

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