Novice here. Only have Target Retirement accounts thus far. Thinking of investing $50000 for 11 months in Capitol CDs for 5% rate. Is it safe to do so on the Bank rate site? Will they automatically roll over? Or what kind of Treasury Direct investment would be better? I have none there so far.
I’m doing both I-Bonds and 1-yr CDs. My local credit union has 5% 1-year CDs.
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Thinking of investing $50000 for 11 months in Capitol CDs for 5% rate. Is it safe to do so on the Bank rate site? Will they automatically roll over? Or what kind of Treasury Direct investment would be better?
The 5% yield of the 11 month Capital One 360 CD is slightly higher than the recent 1 year Treasury Bill yield of 4.79%. Will your $50,000 be in retirement accounts or taxable accounts? There is no state taxation on Treasury bills.
If you decide on Capital One CDs, consider investing directly through Capital One. Per Capital one “The account will automatically renew at maturity for a time period equal to the original term. The interest rate for each renewal term will be the rate currently offered on the maturity date” Make sure to check rates for other cash equivalents before a Capital One CD account has matured.
For further information on Treasury Bill yields you can go to the Treasury direct site or the Ycharts’ site. The yields for various .0durations are at the bottom right-hand side of the page.
Your explanation was clear and helpful. I’m a little confused about the difference between an I bond and a treasury bill.
I bonds can only be bought thru Treasury Direct and are incredibly illiquid as only the first six months is guaranteed. You are unable to sell I-Bonds for 1 year
In contrast, a 4.8% Treasury Bill is equal to a 5% CD in states with a 5% income tax. Likewise the value of a 2 year CD is the T-Note interest rate divided by (1-tax rate). If the state tax is 8% that means that the 2 year T-Note is at parity when the CD is at 5% and the T-Note has a yield to maturity of 4.6%
The best part about treasury bills, notes, and bonds is they can be purchased thru a brokerage firm and can be used both in a brokerage or IRA account and thus a CD might be a better choice
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Harry Sit “thefinancialbuff” has written detailed soup to nut articles about Treasuries (2022 article) and I-Bonds (2021 article)
I so appreciate your valuable information and help. Thank you.
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February 8 |
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soldieradvocate:
I’m a little confused about the difference between an I bond and a treasury bill.
Harry Sit “thefinancialbuff” has written detailed soup to nut articles about Treasuries (2022 article) and I-Bonds (2021 article)
How To Buy Treasury Bills & Notes Without Fee at Online Brokers
Treasuries pay a higher yield and are easier to buy than CDs right now. Here’s how to buy them without fee at Fidelity, Vanguard, and Charles Schwab.
Est. reading time: 15 minutes
The Finance Buff – 13 Oct 21
How to Buy I Bonds (Series I Savings Bonds): Soup to Nuts
Series I savings bonds (I Bonds) are the best bonds you can buy at the moment. Follow this guide for a complete walkthrough from start to finish.
Est. reading time: 17 minutes
One more thing to consider for the CDs…are you wanting the CDs to be FDIC insured? Depending on your other holdings at Capitol one and those account types, be aware of the FDIC limits:
Thank you.