Savings/investments/bonds Master Thread.

[CountValentine]

On Schwab  the CD rates display the coupon rate and the APR rate. Can someone explain how the APR rate is higher than the coupon rate and which rate to use when comparing to Treasury rates ? (Fidelity does not give this data. also seems that different brokerages have have different offerings at times, so worth shopping around.)

APR vs. APY
The coupon rate (sometimes called APR) is the rate at which interest payments are calculated and paid, without taking compounding into account. The Annual Percentage Yield (APY) is the adjusted rate, taking into account compounding and assuming that interest payments are reinvested at the same coupon rate. APY is a tool to enable comparisons across CDs. Note that interest earned on CDs offered through Schwab CD OneSource is paid at the coupon rate and is not automatically reinvested.

[sam2015]

@CountValentine can I recommend you sell some of your treasuries at a profit and then purchase cds at a higher rate?

[CountValentine]

@CountValentine can I recommend you sell some of your treasuries at a profit and then purchase cds at a higher rate?

I should sell a 26 week t-bill I have at 5.1% and buy a 6/mo CD at 5.25%? After state taxes the yeild on the CD will be less than 5%.

[mlight]

T bills vs Brokered CDs
https://youtu.be/zhEiyW2N7KE

[sam2015]

I should sell a 26 week t-bill I have at 5.1% and buy a 6/mo CD at 5.25%? After state taxes the yeild on the CD will be less than 5%.

I can't tell you which treasuries to sell. I am only talking about those where it makes sense. I believe you bought some 26 week over the last few months for a lot lower yield than 5.1%. Check the numbers and see if it works. It worked for me.

[CountValentine]

I can't tell you which treasuries to sell. I am only talking about those where it makes sense. I believe you bought some 26 week over the last few months for a lot lower yield than 5.1%. Check the numbers and see if it works. It worked for me.

I have been looking at it. Even t-bill>t-bill. Can you explain how buying a CD works? I tried one last week and it is still pending.

Just bought my first CD. Can someone explain where I find the "open order period" and "trade date"?
ETA: Does the price I receive change?

[CountValentine]

T bills vs Brokered CDs
https://youtu.be/zhEiyW2N7KE

She is great and explaining things.

[sam2015]

I have been looking at it. Even t-bill>t-bill. Can you explain how buying a CD works? I tried one last week and it is still pending.

You purchase the CD and there are usually a few days until the settlement date - the date where the CD is considered 'opened' and you will start earning interest. You will not earn anything until the settlement date. I have complained to Schwab about that, but that is the way it works.

[CountValentine]

You purchase the CD and there are usually a few days until the settlement date - the date where the CD is considered 'opened' and you will start earning interest. You will not earn anything until the settlement date. I have complained to Schwab about that, but that is the way it works.

Will I get the interest rate at purchase or at settlement date? My open order says "market".

[sam2015]

You purchase the CD and there are usually a few days until the settlement date - the date where the CD is considered 'opened' and you will start earning interest. You will not earn anything until the settlement date. I have complained to Schwab about that, but that is the way it works.

For example: Take a look at this 5% 5 year CD being offered today. The CD will mature in exactly 5 years from the settlement date on 3/31/28.

[CountValentine]

For example: Take a look at this 5% 5 year CD being offered today. The CD will mature in exactly 5 years from the settlement date of 3/31/28.

I understand that part. What day is that order going to execute where you can't cancel? Will the rate be 5% or will you get the current rate when it executes?

[sam2015]

Will I get the interest rate at purchase or at settlement date? My open order says "market".

Interesting. I'm not sure why Fidelity makes it seem so complicated. I have been using Schwab so I cannot confirm anything for you regarding Fidelity.

[sam2015]

I understand that part. What day is that order going to execute where you can't cancel? Will the rate be 5% or will you get the current rate when it executes?

It's being offered as a 5% CD, so that's what it is. If they want to lower it, they will have to offer a new CD.

[CountValentine]

Interesting. I'm not sure why Fidelity makes it seem so complicated. I have been using Schwab so I cannot confirm anything for you regarding Fidelity.

I have both Schwab and Fidelity. When is that 5% CD going to go from pending to execute?

[sam2015]

I have both Schwab and Fidelity. When is that 5% CD going to go from pending to execute?

My orders from Schwab for these CDs are executed right away. For new issue corporate bonds I can cancel, but CDs are filled right away.

[CountValentine]

My orders from Schwab for these CDs are executed right away.

Will try a Schwab one, thanks!

[nucheiner]

I understand that part. What day is that order going to execute where you can't cancel? Will the rate be 5% or will you get the current rate when it executes?

They are selling you a product at a fixed rate. It's not a variable rate so it won't change. The Cds however only begin on the settlement date. So your "under contract" until that date and then you get the interest from then until the maturity date. It seems both on Fidelity and Schwab there is a cancel option until some point see here for fidelity: https://fixedincome.fidelity.com/bin-public/060_www_fidelity_com/documents/fixed-income/New-Issue-CD-Order-Next-Steps-Help-1.pdf . I can't believe that a bank would cancel in the interim even if perhaps they legally can. But practically speaking it may be worth checking back before the settlement date for you to try and cancel if there's a better rate out there.

[gozalim]

What is the projection for upcoming I bond season?

(pondering whether to grab the extra $5K via tax return)

[CountValentine]

They are selling you a product at a fixed rate. It's not a variable rate so it won't change. The Cds however only begin on the settlement date. So your "under contract" until that date and then you get the interest from then until the maturity date. It seems both on Fidelity and Schwab there is a cancel option until some point see here for fidelity: https://fixedincome.fidelity.com/bin-public/060_www_fidelity_com/documents/fixed-income/New-Issue-CD-Order-Next-Steps-Help-1.pdf . I can't believe that a bank would cancel in the interim even if perhaps they legally can. But practically speaking it may be worth checking back before the settlement date for you to try and cancel if there's a better rate out there.

Thanks. I can't believe they let you cancel like that.
We will lock you in at 5% and if the rates go up the next few days you can cancel and get the new rate.

[CountValentine]

Just bought my first CD. Can someone explain where I find the "open order period" and "trade date"?
ETA: Does the price I receive change?

This just executed today.