As the first CD is coming due in June,
was wondering about a comment that I read.
Instead of going with the 1yr @ 1.0%,
go with the 5yr @ 1.74%
and forfeit the 60day penalty interest
if we need to withdraw for investing in other high yield funds...
Does this make sense ?
Actually, given today's rates, only 2 of Ally's CDs are ever optimal. The rest
should all be ignored. If you think you might withdraw your money within 130
days, you should go with the no-penalty (11 month) CD. Otherwise, you should go
with the 5-year CD. After 130 days, the additional interest will more than
cancel out any early withdrawal penalty.
I drafted a spreadsheet that demonstrates all this. Unfortunately, Google Docs
doesn't yet support conditional formatting where the condition is a formula. So
if you play with the rates, it won't update the highlighting. But I think it
gets the idea across.
Tnx for the reply and posting.
The CD's are just a way to keep my hands off,
and not add to my various stock & mutual fund holdings,
along with providing a parking place for cash...
It's about $100k -
I had not actually sat and played with the numbers
to see if the 5yr made sense - even with a withdrawl
to potentially place the funds into a higher return account
if and when that might happen.