Comments on: Buying CDs from a brokerage http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/ Because you shouldn't need an MBA to be savvy about finance and business Mon, 22 Mar 2010 04:03:05 +0000 http://wordpress.org/?v=abc hourly 1 By: Schwab makes it easy to buy treasuries at auction | Experiments in Finance http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/comment-page-1/#comment-4358 Schwab makes it easy to buy treasuries at auction | Experiments in Finance Mon, 16 Oct 2006 21:49:32 +0000 http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/#comment-4358 [...] When I discovered that Schwab offered an easy way to purchase CDs online, I bought a few 3-month CDs through Schwab yielding 5.3-5.4%. Unfortunately, I soon realized that CDs were probably not the best investment out there for us. Why? Because as California residents, the interest earned from CDs would be subject to our state income tax rate of 9.3%, and there were other instruments out there with comparable returns that were exempt from state income tax: treasuries. [...] [...] When I discovered that Schwab offered an easy way to purchase CDs online, I bought a few 3-month CDs through Schwab yielding 5.3-5.4%. Unfortunately, I soon realized that CDs were probably not the best investment out there for us. Why? Because as California residents, the interest earned from CDs would be subject to our state income tax rate of 9.3%, and there were other instruments out there with comparable returns that were exempt from state income tax: treasuries. [...]

]]> By: financial independence » Blog Archive » buying a CD from a broker http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/comment-page-1/#comment-2901 financial independence » Blog Archive » buying a CD from a broker Sun, 17 Sep 2006 01:29:20 +0000 http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/#comment-2901 [...] In the article Buying a CD from a Broker, the procedure is outlined and alternatives, such as money market funds are compared. Primary concerns are return, duration, safety of the investment, administrative effort and cost. The author concludes that the 3 month CD prchased throiugh Schwab at no additional charge was a reasonable way to go. [...] [...] In the article Buying a CD from a Broker, the procedure is outlined and alternatives, such as money market funds are compared. Primary concerns are return, duration, safety of the investment, administrative effort and cost. The author concludes that the 3 month CD prchased throiugh Schwab at no additional charge was a reasonable way to go. [...]

]]> By: financial independence » Blog Archive » kissing frogs http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/comment-page-1/#comment-2866 financial independence » Blog Archive » kissing frogs Sat, 16 Sep 2006 16:05:08 +0000 http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/#comment-2866 [...] http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/ seems interesting [...] [...] http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/ seems interesting [...]

]]> By: Here’s What I Think… - about Stocks, Investing, Energy, Computing, Our Warming Planet and the News » Using Treasury Direct to buy T-bills http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/comment-page-1/#comment-1968 Here’s What I Think… - about Stocks, Investing, Energy, Computing, Our Warming Planet and the News » Using Treasury Direct to buy T-bills Thu, 24 Aug 2006 11:49:51 +0000 http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/#comment-1968 [...] One of the pitfalls of taking action as you learn is you occasionally make mistakes. This happened to me recently, after happily having bought some high-yielding CDs at Schwab and then realizing that there were better options out there now that we live in California (with its 9.3% income tax rate) and not Washington state (which has no state income tax). [...] [...] One of the pitfalls of taking action as you learn is you occasionally make mistakes. This happened to me recently, after happily having bought some high-yielding CDs at Schwab and then realizing that there were better options out there now that we live in California (with its 9.3% income tax rate) and not Washington state (which has no state income tax). [...]

]]> By: Using Treasury Direct to buy T-bills | Experiments in Finance http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/comment-page-1/#comment-1729 Using Treasury Direct to buy T-bills | Experiments in Finance Wed, 16 Aug 2006 00:59:16 +0000 http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/#comment-1729 [...] One of the pitfalls of taking action as you learn is you occasionally make mistakes. This happened to me recently, after happily having bought some high-yielding CDs at Schwab and then realizing that there were better options out there now that we live in California (with its 9.3% income tax rate) and not Washington state (which has no state income tax). Once again, ignoring tax implications proves perilous. But, at least I was able to find a better place to park my cash: T-bills. [...] [...] One of the pitfalls of taking action as you learn is you occasionally make mistakes. This happened to me recently, after happily having bought some high-yielding CDs at Schwab and then realizing that there were better options out there now that we live in California (with its 9.3% income tax rate) and not Washington state (which has no state income tax). Once again, ignoring tax implications proves perilous. But, at least I was able to find a better place to park my cash: T-bills. [...]

]]> By: TJ http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/comment-page-1/#comment-990 TJ Mon, 10 Jul 2006 04:02:28 +0000 http://www.experiglot.com/2006/07/06/buying-cds-from-a-brokerage/#comment-990 I bought CDs via ETrade a few months ago. Six, 6-month laddered CDS (they are my I-lost-my-job-how-do-I-pay-the-bills fund) and the most current one yields 5.46%. If your assumption is that the fed will continue to raise rates (which seems reasonable), and given the marginal yield increase, then I'd agree buying something longer than 3 months doesn't make sense. One thing you didn't mention is how important financial flexibility is to you over the next 3 months. If you might need or want to do something else with that money the MMF may be a better choice. I bought CDs via ETrade a few months ago. Six, 6-month laddered CDS (they are my I-lost-my-job-how-do-I-pay-the-bills fund) and the most current one yields 5.46%.

If your assumption is that the fed will continue to raise rates (which seems reasonable), and given the marginal yield increase, then I’d agree buying something longer than 3 months doesn’t make sense.

One thing you didn’t mention is how important financial flexibility is to you over the next 3 months. If you might need or want to do something else with that money the MMF may be a better choice.

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