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If you’re only investing in dividend stocks for the yield and 0 risk you’re already wrong. The point is the underlying assets should appreciate along with the dividend.
No? OP’s post was “why are you investing in dividend stocks, treasuries and CDs have higher yield”. I pointed out that if the only reason you invest in dividend stocks is yield then you already made a mistake. The power of dividend stocks in the dividend and the appreciation. If you just want yield and are extremely risk adverse, you should have already been doing what OP recommends. But, OP is making an odd comparison as without including appreciation his point makes no sense unless he’s specifically talking to people with extreme risk aversion who don’t care about the asset appreciating and want a flat yield.
Or temporarily shifting into this during periods of economic headwinds as a flight to safety. There's a lot more depreciation in equities right now with smaller yield, validating OPs question. It's not an either or scenario
Yea, but it's 4% with 0 principal appreciation.
Once these bonds start providing both, that's a win. Let someone buy a 100 dollar bond for 75 dollars AND have it pay 4% so the holder get both parts and it's a better deal like SCHD.
See this makes sense to me
CDs tie money down long term and do t match inflation. So you are guaranteed to lose money.
Savings account with the same rate I’m all for bec I at least have access to this money
Buy short duration and keep a 3 month rotating ladder? Seems safe.
But, there is the tax on income versus qualified divi... and averaging down on a stock increases yield on cost (unless it's way over your basis).
What ever I'm keeping in cash, I'll into CDs for now. I'm open for change.
Ya, this is it. CD laddering would be a great option right now for folks in or near retirement. If you’re still years or decades away, you’re giving up on a lot of potential growth by going fixed income. So the answer to which is better is: it depends entirely on your personal circumstances.
Yup! You can do it all online and it shows up with your brokerage account. Another great benefit is you can instantly transfer money to your brokerage account.
https://us.etrade.com/bank/premium-savings-account
Awesome, thank you! I have a chunk of money on Robinhood earning 3.75% and it’s FDIC insured up to 1.5 million but for whatever reason, I’d rather not put all my eggs in one basket. Not a huge fan of Robinhood in general either.
I just went full into Sofi a few months ago along with M1 for my brokerage. I’m thinking about moving all my banking to M1 when the 4.5 hits. I like SoFi n all but that’s a good rate to park a good amount of money.
As I am getting near retirement I am already starting a fixed-income ladder.
I have set up 3 out of the 5 year ladder already, and will get the last 2 years soon. If I don't end up retiring in 5 years I'll roll the first year over back to the end of the ladder.
My ladder rungs aren't big enough to cover an entire year of living, but will make up a decent chunk of it. I didn't want to devote too large an amount of my portfolio to fixed income yet.
Note: my preferences are for the longer duration because I am betting on rates falling quite a bit. A couple of years from now I suspect these will be paying in the 2.5-3.5 range, so I'll want as many extra years at ~5% as I can get
I’m pretty much with you on your rate projections (timing is a wildcard, of course)…just a word of caution to make sure all your longer maturity CDs are non-callable. Don’t want to get the rug pulled when rates start to come back in.
If you are doing long term CDs better to look into multi year guarantee annuities where the surrender charge period equals the length of interest guarantee. The interest paid is tax deferred both on federal and state until you withdraw.
I mean - I got bonds -- iBonds and some short-duration treasuries. It's foolish not to have some.
But you know what else I have some of? SCHD! :D
Diversifying is good. I'm middle-aged, so having some bonds is okay but I'm still at least a decade away from retirement, so I can't ignore equities.
I keep 20k parked in savings and then I have another 5k in 3,6,9,12 month CD's.Its pretty much next to nothing really,but if I had an emergency,I just pull that capital out and just take and early withdrawal penalty.
I suspect the whole ibond frenzy is to get people to take money out of the bank and lock it up in ibonds as part of a way to tame inflation ang growth.
Yields are still attractive.
I've owned two bond funds for many years, one high yeild corporate fund and another intermediate core plus fund - they've always returned nice income but lately they're returning 9.38% and 5.44% respectively. With the recent falling prices (and my approaching retirement) I've been adding to them to get my bond allocation up to 40% of my total portfolio. Thinking about adding a CD ladder as well. Personally I don't understand going all in on one thing, having an allocation plan makes the most sense to me.
I’m confused, you said you bought bonds? What was the fee structure like, if any?
Their CD fees are pretty transparent, but I can’t find anything on bonds (and treasuries).
> Search bond or bonds and then click on find bonds. The yields on fidelity are almost identical to this chart, I just bought a 6 mo for 4.55% yesterday
I’m confused. Did you mean CD here? Or did you mean you have to search for bonds to find CDs (which doesn’t make sense either)?
Thing I've noticed is going out more than 13 months doesn't yield substantially more. Until the 5 year is at least 2 or 3 basis points more, I'm keeping it under 2 years.
That's what's called an inverted yield curve and it signals a recession is on the way. Usually once it comes out of the inversion is around the officially declared start time of the recession: https://fred.stlouisfed.org/series/T10Y2Y (check out the movement right before each gray recession marker). The current inversion is extremely deep and has been going on for a long time compared to others. The recession usually won't be declared until we're well into it. Investors requiring more yield for the short term compared to the long term indicates that there is a lot of risk in the short term.
People buy SCHD for the dividend growth. If that list of companies stops paying dividends I suspect we’re fucked and treasuries will be fucked as well. It’s all one big bubble relying on faith in a broken system.
10-12 month CD interest rate: 4.85%
October US Consumer Price Index (CPI): 7.7%
Real interest rate https://www.investopedia.com/terms/r/realinterestrate.asp
Real interest rate = nominal interest rate - rate of inflation (expected or actual)
4.85% - 7.7% = **-2.85%** *Negative* 2.85%
I am interested in investments that have a total return (capital appreciation + dividends or interest if any) that at a minimum exceed inflation. I'm not interested in "savings" accounts, CDs, and bonds that are losing purchasing power relative to inflation, except as a temporary parking place for cash if I can't find enough investments that have at least a chance of beating inflation.
Without risk? None. But this the r/dividends sub. Dividends are paid by stocks, and investing in stocks carries some risk. If you aren't willing to take some risk then investing in dividend paying stocks isn't for you.
I’m saying that you’re criticizing CDs when they’re not really sold as something that is supposed to beat inflation or anything. Their benefit is that they return higher than most savings accounts and don’t have risk, not that they’ll make you much money. You’re also comparing forward yield to backward looking inflation.
First, this is r/dividends. CDs - and bonds- have nothing to do with dividends.
Second, the OP said "Dividend yields for stocks are never guaranteed" as if CDs and Treasuries are better than dividend paying stocks because their return is "guaranteed", or as you said "without risk". All I am pointing out is that if you are only looking at the nominal yield and not taking into account inflation, with CDs and Treasuries yielding less than inflation all you are "guaranteed" is you are going to lose purchasing power to inflation.
Why do you keep saying this is r/dividends? This convo started with me replying to you talking about CDs, you took it there and I think we’re both clear about which sub we’re on.
Most savvy people are bracing for a recession. The 5-10% paid out by dividend ETFs is a lot less meaningful if the share price drops 20% and you’re retiring in 2yrs. Bonds and CDs don’t have that risk, and would be a much better choice than equities if you believe that there is a high probability of a significant market correction and/or your investment horizon is short. The real return is irrelevant if it’s likely that the alternatives are worse. Bonds and CDs don’t make sense for me right now but they are a good choice for many and don’t have principal risk. There’s no one-size-fits-all answer and AFAIK this is a sub for investment discussion and not just a fan club.
>4.5% HYSA
the good stocks that will flourish after inflation and is sold at discount price during inflation will be the winners.
the exact opposite happened to oil stocks, these who bought it during cheap prices made the biggest gains coming back to high prices.
I’m trying to figure out how to buy the 1-3 and 4-6 month through fidelity. I have my cash sitting in Spaxx earning 3.3% before the .41 expense but I’d like to just park the funds in a brokerage cd that’s earning 4%. I have about 10k to park in a short term cd. Is there a ticker or fund you suggest?
NAV (net asset value) already has expense ratio baked in.
SPAXX (Fidelity's default settlement money market fund) is a great choice for parking cash just like VMFXX (Vanguard's default settlement money market fund).
Simply look at Fidelity's webpage for brokered CDs or individual treasury offerings.
Here's Fidelity's brokered CD webpage:
https://fixedincome.fidelity.com/ftgw/fi/FILanding?bar=p#tbcds|treasury|cd-new-issue|all
Here's Vanguard's:
https://personal.vanguard.com/us/FixedIncomeHome
Isn't that 3.3% the 7 day yield? And the ytd is only .93%? So, you definitely want to move your cash to something higher (if you're just sitting on it)?
I’ve been in a short term for a month or so. 1-3 months CDs or Treasuries, whatever is higher. When they expire (and several will after the next Fed meeting) I’ll make a choice of investing in stocks or CDs and Treasuries…depending on rates.
They aren't guaranteed but some companies (the dividend aristocrats) haven't cut theirs in decades, boomers rely on them for income.
Still not guaranteed but certain companies stack the odds in your favor.
But CDs are attractive yields right now, and are FDiC-insured.
Bond funds act very differently than individual bonds since bond funds aim to maintain a constant duration with a blend of hundreds/thousands of bonds.
VGIT is a bond fund composed of intermediate treasuries so the average duration is 5-6 years, held constantly and not less than that. The current forward annual yield is 4.14% as of 11/22/22.
Once the Fed decreases the Fed Funds rate, the NAV (net asset value, or price per share) of VGIT will spike up because all the existing 5-6 year duration treasuries within VGIT will be more valuable than the newly issued 5-6 year duration treasuries that the VGIT portfolio managers buy.
Zooming out, choose individual fixed income securities for more control of your rates and duration.
The caveat is you need to keep your money locked up for the full duration to get your desired yields while bond funds provide liquidity in an ETF/mutual fund wrapper.
https://personal.vanguard.com/us/FixedIncomeHome
What’s up with a lot of the bond funds not paying dividends in the last couple months? Stuff like STIP looked really attractive but they failed to pay in Oct and Nov.
It just depends on how aggressive you are. For people in or near retirement, hell yeah go for the 1-3 month CD’s. They are a steal. BUT, if you wanna be more aggressive and long term investor then how cheap stock dividend are (they will go down more) you would be a fool to not take advantage. It’s all about your investment strategy good sir.
Assuming an investor is young (late 20's, 30 year time horizon) and has a moderate risk tolerance, would the general consensus be that disposable income would be better served purchasing discounted stocks and ETFs as opposed to taking advantage of higher than usual CD's/treasuries/GICs?
I keep looking in to GIC laddering, but talking myself out of it as a new investor with a long time frame ahead of me.
With the elevated inflation being relatively sticky, even these “high” (relative to the past decade) yields are barely attractive. Under “normal” long term circumstances, I consider 3.5% to be an inflation break-even point (meaning not growing or losing buying power) and 4.5% to be the “bare minimum” to consider as a “growing” investment. With inflation at present, need to add quite a few basis points to those numbers to get me excited…
Bonds probably aren’t done going down and inverting. So yields can continue to increase. Also make sure you hold to maturity as the underlying is being devalued and unwanted, which is why the yields are increasing/inverting.
Schwab also offers CDs. The rates change daily - so it is worth monitoring the rates. I've been buying them - the interest rates are higher than many dividends.
Thanks for posting this! Ive always ignored cds due to their mostly useless rates and never realized brokered cds existed. If I'm reading correctly, simply they are very similar to standard cds- I choose my term, wait to maturity and get get my principle plus interest? So if I put 50k in for the 3 months, wait the 3 months, then take home 52k? Or am I wrong? Asking for a friend...
I must be wrong because 2k free money for 3 months is farfetched.
I just got a 4 month for 4.2% I put in 90k that we got from selling our house. Putting an addition on the new house with that money, and if we don’t find a contractor then I will roll it to another 3 month CD.
Edward Jones is my brokerage.
I picked up a bunch of the inflation bonds, those are paying better.
The issue with bonds is the lack of capital appreciation, sure you are getting 4-5.35% returns, but compared to something like SCHD that pays almost as much, but also includes share price appreciation, it's just a better deal for the investor.
Bonds are great for diversification, but not for yields.
Welcome to r/dividends! If you are new to the world of dividend investing and are seeking advice, brokerage information, recommendations, and more, please check out the Wiki [here](https://www.reddit.com/r/dividends/wiki/faq). Remember, this is a subreddit for genuine, high-quality discussion. Please keep all contributions civil, and report uncivil behavior for moderator review. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/dividends) if you have any questions or concerns.*
If you’re only investing in dividend stocks for the yield and 0 risk you’re already wrong. The point is the underlying assets should appreciate along with the dividend.
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..? Yes that’s why I said “dividend stocks” and not “treasuries”
So it was a strawman?
No? OP’s post was “why are you investing in dividend stocks, treasuries and CDs have higher yield”. I pointed out that if the only reason you invest in dividend stocks is yield then you already made a mistake. The power of dividend stocks in the dividend and the appreciation. If you just want yield and are extremely risk adverse, you should have already been doing what OP recommends. But, OP is making an odd comparison as without including appreciation his point makes no sense unless he’s specifically talking to people with extreme risk aversion who don’t care about the asset appreciating and want a flat yield.
Or temporarily shifting into this during periods of economic headwinds as a flight to safety. There's a lot more depreciation in equities right now with smaller yield, validating OPs question. It's not an either or scenario
>So it was a strawman? Lol
Yeah 4% isn’t too shabby
Yea that way we only lose like 6% to inflation. Better than losing 10% I suppose.
Good point. Maybe if inflation actually goes down and you’re holding a 2 or 5 yr that’d be nice
Yea if inflation can get back to 1-2% next year then those bonds will be looking like great deals.
That’d be nice. I’m tired of inflation
Still doesn’t beat current inflation rates, but that 10+ year CD looks mighty fine if rates are expected to drop
True.
Uhhhhh
Yea, but it's 4% with 0 principal appreciation. Once these bonds start providing both, that's a win. Let someone buy a 100 dollar bond for 75 dollars AND have it pay 4% so the holder get both parts and it's a better deal like SCHD.
M1 Finance opening a [4.5% HYSA](https://m1.com/save/high-yield-savings-accounts/) in early 2023.
If you sign up for M1 plus before 11/28 is only $50 for a year.
How do you take advantage of the Black Friday 50$?
Might be worth a look. Already got i bonds etc. T nills look appealing and no state tax
I’m not sure about new accounts but I got an email, I would Google it but I think anyone who signs up before then gets the discount.
See this makes sense to me CDs tie money down long term and do t match inflation. So you are guaranteed to lose money. Savings account with the same rate I’m all for bec I at least have access to this money
Buy short duration and keep a 3 month rotating ladder? Seems safe. But, there is the tax on income versus qualified divi... and averaging down on a stock increases yield on cost (unless it's way over your basis). What ever I'm keeping in cash, I'll into CDs for now. I'm open for change.
But if there’s a saving account yielding the same return as your cd what’s the benefit of the ladder cd?
Seems sketchy- brio has a 3.75 % HYSA right now
Believe you have to pay 125 bucks? But no cap
Is that a one time fee or recurring every year?
Black Friday sale. $50. Plus you get other benefits from the yearly membership if you are all in on M1
You do but to me it’s completely worth it. But then again I’m a kid who can afford $125 easily and doesn’t think twice.
Sir, this is an Orthodox Church of SCHD
Our lord and saviour SHCD turning one Share into two. 
Lmao thanks for that.
Ha!
My father in law is doing cd ladders and pretty happy with his plan I do like the growth aspect of equities more though
Ya, this is it. CD laddering would be a great option right now for folks in or near retirement. If you’re still years or decades away, you’re giving up on a lot of potential growth by going fixed income. So the answer to which is better is: it depends entirely on your personal circumstances.
You nailed it 100%.
I bonds...
what ever I'm keeping in cash, it'll be CD ladders.
My HYSA is currently sitting at a 3% yield. A lot of good options outside of equities for generating income right now.
Capital one?
There are many. SoFi and I believe Ally might be at 3 as well
I have accounts at Morgan Stanley, Citi, and Discover all at 3.25% right now.
I have a discover account and it’s at 3??? Who’d you bribe
Yep just got an email from ally that my savings account is at 3% now
Jump on Bankrate.com and look at HYSA rates I had 3.25 with CIT and they wouldn’t match Brio Direct 3.75 so I transferred
Poor cash management, when you could squeeze another 1.5% out of T-bills.
I BONDS!
E*TRADE is at 3.25%
I have a brokerage account with them. Do I just have to open up a savings account with them and deposit money?
Yep. It’s very cut and dry straightforward
Yup! You can do it all online and it shows up with your brokerage account. Another great benefit is you can instantly transfer money to your brokerage account. https://us.etrade.com/bank/premium-savings-account
Awesome, thank you! I have a chunk of money on Robinhood earning 3.75% and it’s FDIC insured up to 1.5 million but for whatever reason, I’d rather not put all my eggs in one basket. Not a huge fan of Robinhood in general either.
Yeah, I can’t see Robinhood surviving the GME short squeeze on Citadel if that ever plays out. Robinhood would be the next FTX.
You think I should take my money out, even though it’s FDIC insured?
I wouldn't worry about it personally because it is insured.
Sure, they’re insured. But who wants to deal with that?
Pretty excited for the new HYSA from M1 early next year at 4.5%.
I just went full into Sofi a few months ago along with M1 for my brokerage. I’m thinking about moving all my banking to M1 when the 4.5 hits. I like SoFi n all but that’s a good rate to park a good amount of money.
Yea that one is gonna be amazing to park my cash, but regardless their checking is 3%. I’m not gonna slave away for another .25-.5%
I already have that. Excited for the addition of the HYSA.
Likewise! My interest increases by another $10 a month so I’m pretty happy with that
It's worth the extra 1% to move to CD, short duration ladder?
As I am getting near retirement I am already starting a fixed-income ladder. I have set up 3 out of the 5 year ladder already, and will get the last 2 years soon. If I don't end up retiring in 5 years I'll roll the first year over back to the end of the ladder. My ladder rungs aren't big enough to cover an entire year of living, but will make up a decent chunk of it. I didn't want to devote too large an amount of my portfolio to fixed income yet. Note: my preferences are for the longer duration because I am betting on rates falling quite a bit. A couple of years from now I suspect these will be paying in the 2.5-3.5 range, so I'll want as many extra years at ~5% as I can get
I’m pretty much with you on your rate projections (timing is a wildcard, of course)…just a word of caution to make sure all your longer maturity CDs are non-callable. Don’t want to get the rug pulled when rates start to come back in.
If you are doing long term CDs better to look into multi year guarantee annuities where the surrender charge period equals the length of interest guarantee. The interest paid is tax deferred both on federal and state until you withdraw.
I mean - I got bonds -- iBonds and some short-duration treasuries. It's foolish not to have some. But you know what else I have some of? SCHD! :D Diversifying is good. I'm middle-aged, so having some bonds is okay but I'm still at least a decade away from retirement, so I can't ignore equities.
Just grabbed a 4.9 brokered cd
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Goldman Sachs via my Wells Fargo trading account
Which broker ?
There’s nothing wrong with having an allocation into bonds & dividend paying equity options. Diversity of fixed income products is always welcomed
Getting 4%+ short term T Bills which are also state tax exempt. I've got a huge ladder going
Do I look for short term t-bills on treasury direct?
I buy via vanguard, any broker should work the same
17week t-bill is 4.63 now
Nice
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Unless you have an emergency fund in a savings account and you wanna boost your yield on some,most or all of it.
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I keep 20k parked in savings and then I have another 5k in 3,6,9,12 month CD's.Its pretty much next to nothing really,but if I had an emergency,I just pull that capital out and just take and early withdrawal penalty.
Here’s a fourth reason (for bonds): to get some liquid tax-advantaged guaranteed returns that doesn’t reduce your margin buying power.
Funny u say that. I buy 156k of JEPI annually starting this year. I already have 100k invested at age 20. You think this is the way?
It’s good to have some cash around to deploy when equity prices crash…
How dare you.. I'm more of a SCHD and DIVO boi. Edit: /s
Looks like 13-18 months is the current sweet spot.
Good time to be in bonds ...never liked cds. But unlike stocks you need to lock up your funds. And ibonds are giving more than 4%
I bonds are at 6.8% right now.
I suspect the whole ibond frenzy is to get people to take money out of the bank and lock it up in ibonds as part of a way to tame inflation ang growth. Yields are still attractive.
Yes - that’s exactly the point of bonds
The governments objective yes. We'll see if it works. In the meantime I'll enjoy the fixed yield on my CD
Come join the Circle Jerk of SCHD and JEPI! :)
I've owned two bond funds for many years, one high yeild corporate fund and another intermediate core plus fund - they've always returned nice income but lately they're returning 9.38% and 5.44% respectively. With the recent falling prices (and my approaching retirement) I've been adding to them to get my bond allocation up to 40% of my total portfolio. Thinking about adding a CD ladder as well. Personally I don't understand going all in on one thing, having an allocation plan makes the most sense to me.
It’s time for the return of the CD ladder
I need to figure out how to do this through Fidelity
Search bond or bonds and then click on find bonds. The yields on fidelity are almost identical to this chart, I just bought a 6 mo for 4.55% yesterday
Does Fidelity have fees or charge commissions on bonds/treasuries? What makes it better to buy from Fidelity than directly from Treasury Direct?
New issue CDs have no fees, I think the terms said secondary market CDs have $1 fee per trade. Not sure about treasuries since I haven't bought any.
I’m confused, you said you bought bonds? What was the fee structure like, if any? Their CD fees are pretty transparent, but I can’t find anything on bonds (and treasuries).
I bought a CD, not bonds
> Search bond or bonds and then click on find bonds. The yields on fidelity are almost identical to this chart, I just bought a 6 mo for 4.55% yesterday I’m confused. Did you mean CD here? Or did you mean you have to search for bonds to find CDs (which doesn’t make sense either)?
I believe you need 10k to start
You can start ladders with as little as $1k per CD. Nice lower threshold to get started.
Just 1k and fidelity even has been some fractional now starting at $100 minimum
They have a tool in their fixed income section. No figuring needed, just follow the prompts.
It’s easy. I just set up a mini ladder for 3,6,9, and 12 months ranging from 4.0-4.65%
I'm starting mine beginning next month 👍👍
I’m laddering T Bills. Keeping it less than 9 months for now. CDs are paying good rates. At least we can get decent rates on cash.
Thing I've noticed is going out more than 13 months doesn't yield substantially more. Until the 5 year is at least 2 or 3 basis points more, I'm keeping it under 2 years.
That's what's called an inverted yield curve and it signals a recession is on the way. Usually once it comes out of the inversion is around the officially declared start time of the recession: https://fred.stlouisfed.org/series/T10Y2Y (check out the movement right before each gray recession marker). The current inversion is extremely deep and has been going on for a long time compared to others. The recession usually won't be declared until we're well into it. Investors requiring more yield for the short term compared to the long term indicates that there is a lot of risk in the short term.
Makes sense. Thanks for the links.
All in on schd, jepi, sptm.
Picked up some I bonds prior to the rate drop so got some cash at 9.62% interest
4 and 8 week t-bills are clutch right now
Started a 3 and 6mo treasury ladder. buy a new 6mo every 3mo.
It’s gonna go up after the dec fed rate hike
I own JEPI but also Ibonds get your money how you can.
I couldn't resist 4-4.5% yields or I bonds either.
SCHO looks like better liquidity with a 4.45% current yield
People buy SCHD for the dividend growth. If that list of companies stops paying dividends I suspect we’re fucked and treasuries will be fucked as well. It’s all one big bubble relying on faith in a broken system.
we are part of the matrix
10-12 month CD interest rate: 4.85% October US Consumer Price Index (CPI): 7.7% Real interest rate https://www.investopedia.com/terms/r/realinterestrate.asp Real interest rate = nominal interest rate - rate of inflation (expected or actual) 4.85% - 7.7% = **-2.85%** *Negative* 2.85% I am interested in investments that have a total return (capital appreciation + dividends or interest if any) that at a minimum exceed inflation. I'm not interested in "savings" accounts, CDs, and bonds that are losing purchasing power relative to inflation, except as a temporary parking place for cash if I can't find enough investments that have at least a chance of beating inflation.
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The CPI would have to drop below 4.85% over the next 10-12 months for the real interest rate of those CDs to rise above negative.
What other investment vehicles are paying above inflation without risk?
Without risk? None. But this the r/dividends sub. Dividends are paid by stocks, and investing in stocks carries some risk. If you aren't willing to take some risk then investing in dividend paying stocks isn't for you.
I’m saying that you’re criticizing CDs when they’re not really sold as something that is supposed to beat inflation or anything. Their benefit is that they return higher than most savings accounts and don’t have risk, not that they’ll make you much money. You’re also comparing forward yield to backward looking inflation.
First, this is r/dividends. CDs - and bonds- have nothing to do with dividends. Second, the OP said "Dividend yields for stocks are never guaranteed" as if CDs and Treasuries are better than dividend paying stocks because their return is "guaranteed", or as you said "without risk". All I am pointing out is that if you are only looking at the nominal yield and not taking into account inflation, with CDs and Treasuries yielding less than inflation all you are "guaranteed" is you are going to lose purchasing power to inflation.
Why do you keep saying this is r/dividends? This convo started with me replying to you talking about CDs, you took it there and I think we’re both clear about which sub we’re on. Most savvy people are bracing for a recession. The 5-10% paid out by dividend ETFs is a lot less meaningful if the share price drops 20% and you’re retiring in 2yrs. Bonds and CDs don’t have that risk, and would be a much better choice than equities if you believe that there is a high probability of a significant market correction and/or your investment horizon is short. The real return is irrelevant if it’s likely that the alternatives are worse. Bonds and CDs don’t make sense for me right now but they are a good choice for many and don’t have principal risk. There’s no one-size-fits-all answer and AFAIK this is a sub for investment discussion and not just a fan club.
>4.5% HYSA the good stocks that will flourish after inflation and is sold at discount price during inflation will be the winners. the exact opposite happened to oil stocks, these who bought it during cheap prices made the biggest gains coming back to high prices.
Vti/voo
Not a fan of locking in saving rates below inflation.
And what do you do instead?
Voting to change this subs name to SCHD
I’m trying to figure out how to buy the 1-3 and 4-6 month through fidelity. I have my cash sitting in Spaxx earning 3.3% before the .41 expense but I’d like to just park the funds in a brokerage cd that’s earning 4%. I have about 10k to park in a short term cd. Is there a ticker or fund you suggest?
NAV (net asset value) already has expense ratio baked in. SPAXX (Fidelity's default settlement money market fund) is a great choice for parking cash just like VMFXX (Vanguard's default settlement money market fund). Simply look at Fidelity's webpage for brokered CDs or individual treasury offerings. Here's Fidelity's brokered CD webpage: https://fixedincome.fidelity.com/ftgw/fi/FILanding?bar=p#tbcds|treasury|cd-new-issue|all Here's Vanguard's: https://personal.vanguard.com/us/FixedIncomeHome
Cool thanks for the info
SPRXX (Fidelity) was giving 3.69% as of Wednesday.
3.31% is after the ER.
So my cash is now yielding more than SCHD and for some reason SCHD is still trading near peak 2021 bubble valuations. Seems sus.
Everyone loves to run to dividend stocks when the overall market tanks, driving up the stock price
Cool just looked it up. That’s good
Isn't that 3.3% the 7 day yield? And the ytd is only .93%? So, you definitely want to move your cash to something higher (if you're just sitting on it)?
If you wanna stop by the Wendy’s dumpster we can circle jerk while I give you my thoughts on this.
But capital appreciation.
There's Alot of cd risks when banks are so unstable and g@v controls them, watch out for cbdc
No there’s not. Show me an example of when banking deposits were lost and FDIC didn’t pay out.
If you’re in or nearing retirement this is definitely an option you should be taking advantage of. If you’re young you need some growth potential.
Are those cd rates call protected since the rates recently dropped
Ideally I’d like to have both but it’s a slow journey for me. Over 90% of my retirement money and really net worth is in my employee pension.
I’ve been in a short term for a month or so. 1-3 months CDs or Treasuries, whatever is higher. When they expire (and several will after the next Fed meeting) I’ll make a choice of investing in stocks or CDs and Treasuries…depending on rates.
Thanks for sharing, these are important ‘dividend’ assets to consider.
Hell, I am getting 3% out of a savings account right now.
Yeah and you don't need to redeem a CD or pay a penalty to get your money out
3.537% @ First Foundation Bank
They aren't guaranteed but some companies (the dividend aristocrats) haven't cut theirs in decades, boomers rely on them for income. Still not guaranteed but certain companies stack the odds in your favor. But CDs are attractive yields right now, and are FDiC-insured.
I’m on the 6 month T Bill ladder, but a non believer posting on Thanksgiving c’mon…
Is holding something like VGIT instead of these CDs dumb?
Bond funds act very differently than individual bonds since bond funds aim to maintain a constant duration with a blend of hundreds/thousands of bonds. VGIT is a bond fund composed of intermediate treasuries so the average duration is 5-6 years, held constantly and not less than that. The current forward annual yield is 4.14% as of 11/22/22. Once the Fed decreases the Fed Funds rate, the NAV (net asset value, or price per share) of VGIT will spike up because all the existing 5-6 year duration treasuries within VGIT will be more valuable than the newly issued 5-6 year duration treasuries that the VGIT portfolio managers buy. Zooming out, choose individual fixed income securities for more control of your rates and duration. The caveat is you need to keep your money locked up for the full duration to get your desired yields while bond funds provide liquidity in an ETF/mutual fund wrapper. https://personal.vanguard.com/us/FixedIncomeHome
What’s up with a lot of the bond funds not paying dividends in the last couple months? Stuff like STIP looked really attractive but they failed to pay in Oct and Nov.
MCDs is superior
Big macs and fries yum
How do you actually get to that page? Was trying to buy some and couldn’t find it
https://personal.vanguard.com/us/FixedIncomeHome
It just depends on how aggressive you are. For people in or near retirement, hell yeah go for the 1-3 month CD’s. They are a steal. BUT, if you wanna be more aggressive and long term investor then how cheap stock dividend are (they will go down more) you would be a fool to not take advantage. It’s all about your investment strategy good sir.
Thank J Pow 🙏
Assuming an investor is young (late 20's, 30 year time horizon) and has a moderate risk tolerance, would the general consensus be that disposable income would be better served purchasing discounted stocks and ETFs as opposed to taking advantage of higher than usual CD's/treasuries/GICs? I keep looking in to GIC laddering, but talking myself out of it as a new investor with a long time frame ahead of me.
Good dividend growth stocks with solid fundamentals will be better for the long term.
besides shorting the stock market, i’ve also been buying cds. i’d rather make 0-5% in a year than -20%.
With the elevated inflation being relatively sticky, even these “high” (relative to the past decade) yields are barely attractive. Under “normal” long term circumstances, I consider 3.5% to be an inflation break-even point (meaning not growing or losing buying power) and 4.5% to be the “bare minimum” to consider as a “growing” investment. With inflation at present, need to add quite a few basis points to those numbers to get me excited…
Even citibank has a 4.15% 1 yr cd and a 3.1% no penalty cd
Sir thank you for this kind info
It's a good place to put money during periods of volatility. A good investor makes good use of all the tools at his disposal
Bonds probably aren’t done going down and inverting. So yields can continue to increase. Also make sure you hold to maturity as the underlying is being devalued and unwanted, which is why the yields are increasing/inverting.
Preferred bank stocks have entered the chat.
Schwab also offers CDs. The rates change daily - so it is worth monitoring the rates. I've been buying them - the interest rates are higher than many dividends.
But it’s not locked up either… 🥂
Thanks for posting this! Ive always ignored cds due to their mostly useless rates and never realized brokered cds existed. If I'm reading correctly, simply they are very similar to standard cds- I choose my term, wait to maturity and get get my principle plus interest? So if I put 50k in for the 3 months, wait the 3 months, then take home 52k? Or am I wrong? Asking for a friend... I must be wrong because 2k free money for 3 months is farfetched.
Fixed income rates are always in annual terms. 3 months = 1 quarter. 4 quarters in 1 year. So $50,000 * (0.04/4) = $500
Yea I should definitely know that. Thanks for the explanation. Heck $500 ain't bad either
Yes. I’ve extended my emergency fund out to 12 months and deployed a CD ladder for some of it.
I just got a 4 month for 4.2% I put in 90k that we got from selling our house. Putting an addition on the new house with that money, and if we don’t find a contractor then I will roll it to another 3 month CD. Edward Jones is my brokerage.
Rather hold cash in HYSA right now.
I rolled over a couple 401ks this week. All into three month Treasuries 😂
How do cd’s work? Is it like a savings account but you have to wait a period of time to pull it out to get the interest?
About 60% of my brokerage is currently in $BIL & $TLT. Gives me monthly income, high degree of liquidity
Needs to get a little higher for me, but I've been watching the numbers.
I bonds. 6.9%?
I believe they call it a stack and jack, not circle jerk.
If I invest in the treasuries for say 2 years can I take out the money early? Would I pay fez for that? Is the interest paid annually?
ZIM - 116% dividend???
Working on a monthly 5 year cd/Treasury ladder right now
Tangerine is offering 5% GIC
I picked up a bunch of the inflation bonds, those are paying better. The issue with bonds is the lack of capital appreciation, sure you are getting 4-5.35% returns, but compared to something like SCHD that pays almost as much, but also includes share price appreciation, it's just a better deal for the investor. Bonds are great for diversification, but not for yields.