Transition away from CDs

[Anonymous]

I have over 50k locked into CDs which mature at various times over the course of the year. Generally they’re getting around 5.1+%. With rate cuts coming, what’s a good long term plan for the money, transition to SP index funds? Or something else. I’m not risk averse.

[Anonymous]

S and P etf and Bitcoin.

[Anonymous]

Anonymous wrote:S and P etf and Bitcoin.

Wtf, not bitcoin. You crypto boosters are tiring.

[Anonymous]

The problem with getting into CDs esp with a 1 year maturity is that by the time they come due the stock market could be 10% higher. If you are diversified then it matters less. You just invest upon maturity into SPY QQQ SCHD or whatever ETF you like. Or if rates are similar you can redo the CD for another year. CDs have a role for limited time and have no market exposure. Just can't have the majority of your $$$ in CDs.

[Anonymous]

Anonymous wrote:The problem with getting into CDs esp with a 1 year maturity is that by the time they come due the stock market could be 10% higher. If you are diversified then it matters less. You just invest upon maturity into SPY QQQ SCHD or whatever ETF you like. Or if rates are similar you can redo the CD for another year. CDs have a role for limited time and have no market exposure. Just can't have the majority of your $$$ in CDs.

OP - it’s my emergency fund.

[Anonymous]

Oh, its your emergency fund. And you are not risk adverse?? There is no risk free investment that is going to provide liquidity and earn over 5% today. I would stay with some laddered CDs in your case. Maybe you can get by with just $40k in the emergency fund. If you have other investments in the stock market, who cares about interest rates in the future, you have your safety funds.

[Anonymous]

It doesn't look like interest rates are going down very fast any time soon. Keep laddering the CDs. Or put it in a money market fund or treasury MMF (like VUSXX which is largely state tax free).

[Anonymous]

4 week t-bills

[Anonymous]

We’re mostly using digital downloads and streaming. Our newest car doesn’t even support CDs.

[Anonymous]

Anonymous wrote:I have over 50k locked into CDs which mature at various times over the course of the year. Generally they’re getting around 5.1+%. With rate cuts coming, what’s a good long term plan for the money, transition to SP index funds? Or something else. I’m not risk averse.

I mean, CDs are about as risk adverse as it gets. Buy some friggin stocks.

[Anonymous]

Anonymous wrote:We’re mostly using digital downloads and streaming. Our newest car doesn’t even support CDs.

Are you still doing streaming? We are doing AI listening. Our newest car doesn’t even support streaming anymore.

[Anonymous]

Anonymous wrote:The problem with getting into CDs esp with a 1 year maturity is that by the time they come due the stock market could be 10% higher. If you are diversified then it matters less. You just invest upon maturity into SPY QQQ SCHD or whatever ETF you like. Or if rates are similar you can redo the CD for another year. CDs have a role for limited time and have no market exposure. Just can't have the majority of your $$$ in CDs.

Depends on the purpose of the funds. 1 year CD at 5% risk free return is great for rainy day funds.

[Anonymous]

OP - I’m considering leaving 30k in CDs and putting 20k in IVV or VOO.

[Anonymous]

CDs vs stocks are apples and oranges. Not even close to a reasonable comparison.

If this is safe money (i.e. money you may need or emergency fund), then you have to leave it in CDs, money market, or Treasuries. (At least you are getting paid something)

If not safe money, then consider stocks, but would dollar cost average, given the recent run up.

And, the upcoming election will likely cause some movement.

[Anonymous]

CDs are a terrible vehicle for your emergency fund. You need to have access to that money as fast as possible, within a day or two at the most. You lose money when you break a CD early. Put your e-fund in a HYSA or your brokerage’s cash account and call it a day.