# Should I consider a CD Ladder?



## Colleen (Sep 24, 2020)

Just got another email from my online bank that my savings interest has dropped (again!...thank you FED) from .80% to .60%. I've been considering taking out money and opening a CD Ladder. I'm 73 and not interested in investing in the stock market. Too risky and I don't have that many years left to wait for any kind of secure return. Anyone have a CD Ladder?


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## Aunt Bea (Sep 24, 2020)

I used to have a five-year ladder of CDs but when rates dropped to essentially zero I let them gradually expire and put the money into a money market account that averages only .65%.  The CDs at the local bank seem to be in the .1% - 1% range depending on the terms ranging from 4-72 months.

IMO the low-interest rates are the price we pay for liquidity and are not really an investment.

You might do better in a short-term bond fund but the higher the return on any investment the greater the risk.

Good luck with your decision.


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## Pecos (Sep 24, 2020)

Colleen said:


> Just got another email from my online bank that my savings interest has dropped (again!...thank you FED) from .80% to .60%. I've been considering taking out money and opening a CD Ladder. I'm 73 and not interested in investing in the stock market. Too risky and I don't have that many years left to wait for any kind of secure return. Anyone have a CD Ladder?


We have just about given up on the idea of being able to make any money on CD's or Savings accounts. We still owe about $36K on our 3% mortgage and have started putting extra money against the principal. Prior to recent events, we were always able to earn more money other ways, but not any more. We have left our stock funds and bonds funds alone, but we are not spending any money on travel, eating out, or shopping, so we have to put it someplace. We do have CD's that are laddered, but that is coming to an end this Fall.
I Bonds are paying 1.06% right now, but that locks your money up. We did buy my max this year. I bought them through Treasury Direct and it was a bit of a hassle.


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## macgeek (Sep 24, 2020)

CDs are no good. they don't earn much interest. And you get penalized for taking money out early.  Money market would be better if you don't care to try the stock market. You may get a higher rate with a money market then a savings account.

https://www.daveramsey.com/askdave/retirement/9957


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## bowmore (Sep 24, 2020)

Colleen said:


> Just got another email from my online bank that my savings interest has dropped (again!...thank you FED) from .80% to .60%. I've been considering taking out money and opening a CD Ladder. I'm 73 and not interested in investing in the stock market. Too risky and I don't have that many years left to wait for any kind of secure return. Anyone have a CD Ladder?


Post this question to the folks at early-retirement..org. I am active there. I am older than you and have 50% of my assets in the market. A CD ladder is a joke, as it will not even keep up with inflation.


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## fmdog44 (Sep 25, 2020)

I would avoid locking money in at the current pathetic rates. I have yet to read anything as to when they may rise only that they will remain this low.
After you pay taxes on the 0.1%-1% or less it is a joke. So the option is a money market or a balanced mutual fund *but* with the election so close and possible social disruption and or court challenges on the election results I think the markets will react in a way that will not be pleasant for investors.  Be patient and sit on your money is my advice.


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## Red Cinders (Sep 25, 2020)

My mother just locked into a .70% CD for 5 years.  The bank told her that because of the Fed flooding money into the system, the bank does not really need depositors' money.  The only reason my mother locked this in was because she gets one bump up and only a 3-month interest penalty should she take it early.

With the Fed saying interest rates will remain low at least through 2023 regardless of inflation, savers who want even a little secure return on their money are left out in the cold.  I have a decent amount in an online bank and have decided to leave it liquid at the current .60%.  If I didn't have other investments, I'd be really ticked off.  Actually, I am ticked off because conservative savers are being punished.


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## macgeek (Sep 25, 2020)

Red Cinders said:


> My mother just locked into a .70% CD for 5 years.



*no way would I tie up money that long for so little return*. A money market would maybe pay around that much, and you can get to the money without penalties if you need too.  this is why CDs are so bad. CDs are basically a savings account and like savings accounts they pay nothing...


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## Red Cinders (Sep 25, 2020)

I have not seen any money market paying .70%.  The fact that my mother has one bump up and will only have to give up 3 months of interest should she take it early makes it do-able for her.


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## Liberty (Sep 25, 2020)

Have CD's coming up next summer.  Have been receiving 2.50%.  Probably will take some of that money and put it in the market in 4 broad based sector funds that have been paying really well for some years now.  Agree that the field is really changing.  Doubt any CD rate will be even as good as we got for the future now.


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## Pecos (Sep 25, 2020)

Liberty said:


> Have CD's coming up next summer.  Have been receiving 2.50%.  Probably will take some of that money and put it in the market in 4 broad based sector funds that have been paying really well for some years now.  Agree that the field is really changing.  Doubt any CD rate will be even as good as we got for the future now.


I am with you. My CD's were paying 3.2% and the last one matures in Nov of this year. My problem is that I am likely to need this money in a couple of years and I am reluctant to put it in the market where I already have the bulk of our assets. It seems like we are between a "rock and a hard place."


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## Colleen (Sep 25, 2020)

fmdog44 said:


> I would avoid locking money in at the current pathetic rates. I have yet to read anything as to when they may rise only that they will remain this low.
> After you pay taxes on the 0.1%-1% or less it is a joke. So the option is a money market or a balanced mutual fund *but* with the election so close and possible social disruption and or court challenges on the election results I think the markets will react in a way that will not be pleasant for investors.  Be patient and sit on your money is my advice.



We have been hearing from several sources and especially Prof. Richard Wolff that the FED cannot keep pouring money into the stock market and we're on the verge of a collapse. So many nay-sayers about this but it's coming.


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## Phoenix (Sep 25, 2020)

It's time to sit tight.


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## Colleen (Sep 25, 2020)

Thanks, everyone. I appreciate the comments and advice. Since I don't have a lot of money to play with (or lose!), the stock market is not an option for me. I'll leave my money where it is. Maybe it would be safer in my husband's gun safe...haha.


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## mathjak107 (Sep 25, 2020)

There are better choices in my opinion then a guaranteed loss in cash instruments ...the fed did everything but drop leaflets out of helicopters telling us they are raising the fed target to 2-3% inflation ...locking in 1% or less is a guaranteed loss ....

i would sooner put a little inflation oriented portfolio together consisting of 

vtip the short term inflation protected bond etf
flot the floating rate short term loan etf
dbc broad based  commodities etf
gld gold etf 

throw in 25% equities and look again in a year


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