Longer Term CDS

[NitroZ7]

Bought a bunch of CDS over the last two months mostly in the 1-3 year maturity range. The 10 year just rose over 3% so I took another look today and found a 3.61% yield on a monthly pay from Celtic Bank that matures in 8 years. I didn't really want to go out all that long but I don't see the 10 year really getting over 4% (although it could). Still got plenty of dry powder and some CDS that will mature the end of this year and early next year so if rates go higher I can re-deploy. Anyone looking to go out longer or is everyone still waiting to see where rates go?

[Tfall]

Waiting for rates to keep going up but definitely going to pick up some CDs in the future.

[TampaJim]

What's the downside? Loss of three months interest, if pulled early?

[NitroZ7]

What's the downside? Loss of three months interest, if pulled early?

Probably sell in the secondary for a loss if I was to sell but I have laddered them so I really can't see me selling it. I'm have about another 10% of the portfolio I want to put in bonds, cds etc, but trying to figure out if the rates are already pricing in the future hikes. I'm not sure the 10 year gets over 3.5% so getting an 8 year at 3.6% seemed like a good deal but who knows. I should just be thankful we can actually get some yield on cash and cash equivalents. I hope we never see rates low again like we did the last few years but I have a feeling we may see them again. That is why I'm really sort of mulling over locking a part in longer term. Very tough game to really win

[TampaJim]

Commodities, max out Series I bonds, stock up the house, spend and enjoy, upgrade ________ before it's more expensive, etc.
Standard bond purchases? Wish you'd purchased ours awhile ago. Nowhere is safe, aside from a few smart investments, maybe.

[Bassin08]

TJ, The wife and I are working with Schwab in transferring from Stifel. We are looking at mostly fixed, so they are suggesting CD’s and Treasury Bills laddered. When you buy a Treasury Bill, does the yield stay the same until maturity? What about when we die, will our children take a penalty for cashing them?

[TampaJim]

Treasury Notes you just spell out "Payable on Death" and the person's name, not an estate, zero probate this way.
Yields are fixed, unless something has changed. We tend to do funds, including a variety of instruments to diversify.
Not aware of any penalties, but they're subject to Federal tax on the interest, exempt from state and local taxes.
You're always better to ask the manager of your account. They're going to be current and have plenty of resources.

[NitroZ7]

TJ, The wife and I are working with Schwab in transferring from Stifel. We are looking at mostly fixed, so they are suggesting CD’s and Treasury Bills laddered. When you buy a Treasury Bill, does the yield stay the same until maturity? What about when we die, will our children take a penalty for cashing them?

On a treasury, the yield stays the same as it was at the time you purchased the bond. It may look like it changes if the price of the bond goes up and down but you receive the same interest payment regardless of the price fluctuation. If you buy them on the secondary market you will see some trading under par so the yield will be higher than the coupon rate and vice versa. If you are buying to hold until maturity then the price fluctuations do not matter since you will be repaid at par (100). Same goes for CDs if you look at them in the secondary market. All the stuff we keep hearing about bonds largely relates to bond mutual funds. People are exiting those as the price drops so it is causing the funds to have to sell bonds and realize the loss in order to meet redemptions.