It’s time to lock in higher CD rates. The rates have peaked in the last couple months. We have 80% our IRAs in CDs at this time. I have some laddered CDs that just matured and will reinvest them. I will not be investing any new money in CDs.
As I wrote in a previous post, I have been investing in CDs since last year. The best rates I locked in so far are a 3 year 5.55% CD and a 5 year 6.0% callable CD. Since I bought these CDs in July, 2006, CD rates have declined. Today, I purchased a 3 month CD at 5.2%, a 6 month CD at 5.25% and a 2 year CD at 5.2%. These were the rates at Charles Schwab. I just checked the TD Ameritrade website and rates were 5.0% to 5.1% for the same periods.
Bank Deals has posted the best rates he has found for week ending September 9, 2006. His recommendations give a good benchmark to which to compare your local offerings. Or you can buy direct from one of his recommendations.
To keep management of our CDs simple, we buy all CDs through our discount brokerage accounts, Charles Schwab and TD Ameritrade. We can buy over the phone and do not have to worry tracking multiple CDs with different financial institutions.
This is not financial, investment or saving advice. Please consult a professional advisor.
Copyright © 2006 Achievement Catalyst, LLC
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2 weeks ago
3 comments:
If you are CA resident and if you buy out of state bank CD through discount brokers like Schwab, what are the tax implications? I gues for Federal, its no issue, but what are implications for state income tax?
If you are a CA resident and if you buy a out of state CD from Schwab, what are the implications for taxes? I guess for Federal, its no issue, but what about the state tax?
Anonymous,
Thanks for your question.
You will owe CA taxes on any CD you purchase. You can earn interest that is CA and Federal tax exempt by purhcasing CA municipal bonds. US Treasury Bonds will also be CA tax exempt.
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