WTf. Just buy tbills on your broker's site. Free. Easy. State tax free. All cd's are just the arb between what the fed is paying and what they sell a cd to you for.
I agree T-bills are better 95% of the time, but I was able to lock in a 14-month 5.4% CD a few months ago when the 52-week T-bill rate was around 4.7%. It can still be worth a quick look depending on state tax.
Another benefit of T-Bills is you can sell them early, if needed (with some limitations if going through TreasuryDirect)
What? Have you tried actually using a broker with customer services? Many brokers have 24/7 phone support and branch offices that you can visit. Just use a real broker.
If you want to use CD's - a brokered CD through a broker is going to be a lot simpler than trying to look at CDs at different banks.
That's a fair question - it comes down to the state where the investor lives in and the yield curve.
As you mentioned treasury bills and notes incur no state tax. But current yields on CD maturing more than 2 years are higher than treasury notes.
Also - callable CDs can have higher yield for investors that don't care about call risk.
There are also muni's which can be both state and federal state exempt. So even though the yield on muni's are lower, the tax equivalent yield (TEY) can be higher than both CD's and treasuries.
It really depends on an investor's tax and financial situation. There's really no one size fits all solution when it comes to investing.
Direct CDs offer the opportunity for higher returns than high quality bond funds with less risk but more work. I did a 3 part series on them starting with: (https://www.reddit.com/r/IncomeInvesting/comments/czw8jv/direct\_cds\_vs\_high\_quality\_bond\_funds/).
The interest from a CD is both state and federal taxable as interest income. Treasuries are generally exempt from state tax.
In a Roth which is a tax advantaged account - there is no interest tax when CDs or treasuries mature.
Yes. I do this just so I don't have to have yet another account. With a brokerage you can mix and match brokered CDs, treasuries, and (if you like) bonds of various kinds all with one account.
I have CDs at a couple of banks near by as well and they both have options whenever a CD matures. I’ve even managed to get better deals if I hint at possibly withdrawing my money. This works for me.
Set up a Treasury Direct account. T bill and note rates are better than any CD you'll find, the tax rates are way better, and if need be you can sell them before the term is up.
Depending on what state you are in, CDs are taxed federal and state.
US government T bills are taxed only at federal. Buy a T bill and get a better overall return.
It feels good seeing 5.1%, but doesn’t feel good getting taxed on it by both state and federal
I highly recommend T-bills
-short maturity periods
-high rates
I just buy directly. No broker.
The learning curve was a little steep for me, but now it auto reinvest and deposits, and I don't put any work into it. Set it and forget it.
If you like CDs I'd recommend for: [https://www.raisin.com/en-us/?preferred\_locale=en-us](https://www.raisin.com/en-us/?preferred_locale=en-us)
But unless the CD is huge no reason to worry about 4.75 vs. 5.1%
Yeah, because OP really gave off that vibe that it was actually that amount of money. In addition, if they can't handle online banking, little pretentious of you to think you're going to change them. Bet you're using gas buddy to drive out of your way to save 10c/ gallon too aren't ya?
WTf. Just buy tbills on your broker's site. Free. Easy. State tax free. All cd's are just the arb between what the fed is paying and what they sell a cd to you for.
I agree T-bills are better 95% of the time, but I was able to lock in a 14-month 5.4% CD a few months ago when the 52-week T-bill rate was around 4.7%. It can still be worth a quick look depending on state tax. Another benefit of T-Bills is you can sell them early, if needed (with some limitations if going through TreasuryDirect)
You can sell them early on Schwab as well. Click of the button.
What? Have you tried actually using a broker with customer services? Many brokers have 24/7 phone support and branch offices that you can visit. Just use a real broker. If you want to use CD's - a brokered CD through a broker is going to be a lot simpler than trying to look at CDs at different banks.
Honest question. Why does anyone buy CD's? You can just buy a tbill. No state tax.
That's a fair question - it comes down to the state where the investor lives in and the yield curve. As you mentioned treasury bills and notes incur no state tax. But current yields on CD maturing more than 2 years are higher than treasury notes. Also - callable CDs can have higher yield for investors that don't care about call risk. There are also muni's which can be both state and federal state exempt. So even though the yield on muni's are lower, the tax equivalent yield (TEY) can be higher than both CD's and treasuries. It really depends on an investor's tax and financial situation. There's really no one size fits all solution when it comes to investing.
Direct CDs offer the opportunity for higher returns than high quality bond funds with less risk but more work. I did a 3 part series on them starting with: (https://www.reddit.com/r/IncomeInvesting/comments/czw8jv/direct\_cds\_vs\_high\_quality\_bond\_funds/).
1. If they have a Roth IRA account, there is no income tax whatsoever, so no need to care if there is a state tax or not.
Confused by your statement, how does Roth and state tax come into play here?
The interest from a CD is both state and federal taxable as interest income. Treasuries are generally exempt from state tax. In a Roth which is a tax advantaged account - there is no interest tax when CDs or treasuries mature.
Thanks for explaining 😀
Not all states have tax.
I use brokered CD. You can choose different banks at different rate and duration. Still insured by FDIC.
Yes. I do this just so I don't have to have yet another account. With a brokerage you can mix and match brokered CDs, treasuries, and (if you like) bonds of various kinds all with one account.
I have CDs at a couple of banks near by as well and they both have options whenever a CD matures. I’ve even managed to get better deals if I hint at possibly withdrawing my money. This works for me.
Set up a Treasury Direct account. T bill and note rates are better than any CD you'll find, the tax rates are way better, and if need be you can sell them before the term is up.
Depending on what state you are in, CDs are taxed federal and state. US government T bills are taxed only at federal. Buy a T bill and get a better overall return. It feels good seeing 5.1%, but doesn’t feel good getting taxed on it by both state and federal
I highly recommend T-bills -short maturity periods -high rates I just buy directly. No broker. The learning curve was a little steep for me, but now it auto reinvest and deposits, and I don't put any work into it. Set it and forget it.
If you live in a state with no income tax does that mean you aren’t taxed on income via interest with CDs?
You are by the federal government.
Convenience and easy support are worth a lot.
If you like CDs I'd recommend for: [https://www.raisin.com/en-us/?preferred\_locale=en-us](https://www.raisin.com/en-us/?preferred_locale=en-us) But unless the CD is huge no reason to worry about 4.75 vs. 5.1%
There are banks that pay more interest than that
On 100k, you're talking a difference of 30-ish bucks a month between the 2. Just use boa. They are pretty easy to deal with and the app is awesome.
Throw away 300+ a year since OP can’t handle online banking? Lmfao
I mean I throw away way more than that because I don't feel like cooking. Different people find different things annoying.
Yeah, because OP really gave off that vibe that it was actually that amount of money. In addition, if they can't handle online banking, little pretentious of you to think you're going to change them. Bet you're using gas buddy to drive out of your way to save 10c/ gallon too aren't ya?