CD or Mutual Fund

[RootDet]

Looking for advice from folks on about $25k of liquid cash. My various CD's are coming to expire and I am starting to research what to do with them. I looked at CD options within my portfolio of existing banks/credit unions and found that First Tech (4.35@ 13mos), BCU (4.15% @ 65mos), Interior FCU (4.41% @ 6mos), Service CU (4.5% @ 9mos), and Navy FCU (4.35% @ 10mos) are my top contenders depending on term.

I also considered not chasing CDs, doing the money shuffle, and looking at either SPAXX or SNOXX mutual funds. Currently, I have Schwab and Sofi for brokerages and could open Fidelity just as quickly. SNOXX seems to have  lower net expense ratio compared to SPAXX, but i know lots of people love SPAXX. 

Now i hear i can open a Fidleity CMA which can auto-put the money into SPAXX and simply not worry about manually doing it (unlike at schwab)

Just looking for opinions as i am trying to balance deal vs effort. 

[AndySoCal]

@RootDet  If I was going the CD I would take the 13 month CD from First Tech. The concensus of opinion was the rates would continue to go lower.  After some of the inflation data this week, I read there is a line of thought right or wrong that the Fed's next move maybe to increase rates. inflation has gone down yes but lately it showing signs of going back up. The Fed is waiting on more data. If I was going to go the mutual fund or EFT route I would go short term bonds. Why?  the stock market has advanced  quite a bit in the last two years. By historical measures the stock market prices are quite rich. Inflation may rear its ugly head again.

All that said I recently closed two mutual funds and transferred the proceeds to Vanguard. The proceeds are in a 6 month CD with Vanguard.  In my opinion there is more downside risk in the stock market than upside. I would consider investing in stock mutual funds if the market corrected 20 to 30 percent.

[RootDet]

the only thing i hate about the way i been doing it is moving money between banks. Right now the next batch of funds releasing is at red stone fcu. red stone does not have any good CD deals atm. 

I thought of maybe buying CD's on Schwab (or Fidelity) for one-stop shopping. 

[Gunnerboy]

If you like Fidelity, then the least effort & most liquid is parking it in SPAXX (4.03%).  Could also do a CD ladder (highest one-year new issues I see are 4.40%).  I would buy FXAIX.

[Blender]

---

@RootDet wrote:

the only thing i hate about the way i been doing it is moving money between banks. Right now the next batch of funds releasing is at red stone fcu. red stone does not have any good CD deals atm. 

I thought of maybe buying CD's on Schwab (or Fidelity) for one-stop shopping. 

---

Fidelity seems to be having money issues. Outgoing transfers are reportedly taking up to 4 weeks to settle. Not sure about incoming tho. The CMA is where I had my money too until these issues, but yeah very simple.

Now a days HYSA are matching or close to CD rates. Maybe I dont understand fully, but CDs just seem like a thing of the past when you considerearly withdraw penalties vs anytime access with HYSA

[AndySoCal]

@Blender  The difference between HYSA and a CD is this. HYSA account  the rate can change at any time in either direction. With a CD the rate is good for the term of the CD. I have money in both types of accounts. The HYSA  has my in case of emergency or unexpected expense funds the rate was around 4.5% now at 3.8%.  The CD(s)  has funds for which are not needed for the emergency case which I may need for expenses in April. The  rate of the CD is 4.6%.  IMO both are useful investment tools if used correctly. I have brokered CD in my IRA that is paying me 5.25% which will mature later this year.

[Anonymous]

---

@Blender wrote:

---

p to 4 weeks to settle. Not sure about incoming tho. The CMA is where I had my money too until these issues, but yeah very simple.

---

I have no problem paying bills out of my CMA.  I haven't done a transfer to another bank but that should be similar?   The major delay has been pulls into the CMA, it recently took 21 days to get the money available for cash withdrawal (although I could trade with it).  I am told that the delay is down to 10 days max.   So now I push money into it which works fine.

[GZG]

---

@Anonymous wrote:

---

@Blender wrote:

---

p to 4 weeks to settle. Not sure about incoming tho. The CMA is where I had my money too until these issues, but yeah very simple.

---

I have no problem paying bills out of my CMA.  I haven't done a transfer to another bank but that should be similar?   The major delay has been pulls into the CMA, it recently took 21 days to get the money available for cash withdrawal (although I could trade with it).  I am told that the delay is down to 10 days max.   So now I push money into it which works fine.

---

this is my experience as well, simply don't pull into fidelity and there's no hold and everything is fine

pushes credit instantly

[Windchill92]

---

@GZG wrote:

---

@Anonymous wrote:

---

@Blender wrote:

---

p to 4 weeks to settle. Not sure about incoming tho. The CMA is where I had my money too until these issues, but yeah very simple.

---

I have no problem paying bills out of my CMA.  I haven't done a transfer to another bank but that should be similar?   The major delay has been pulls into the CMA, it recently took 21 days to get the money available for cash withdrawal (although I could trade with it).  I am told that the delay is down to 10 days max.   So now I push money into it which works fine.

---

this is my experience as well, simply don't pull into fidelity and there's no hold and everything is fine

pushes credit instantly

---

+1. Definitely don't pull from Fidelity, only push from Fidelity or from another financial institution.

@AndySoCalsummed it up pretty good. Banks will drop the rate on an HYSA at the tip of a hat (email) in anticipation (read: before) of a prime rate drop, and the CD yield is locked it from start --> finish. Both are technically liquid, HYSAs moreso.

In general, I find that CD yields are higher and guaranteed than HYSAs but at the cost of reduced liquidity.

[markbeiser]

Shares of iShares SGOV are currently yielding 4.72%, and if you are holding them in a CMA margin account, they are 70% marginable immediately upon purchase, so if you have a big debit against the account, you have a couple of days to sell enough SGOV shares to cover it before margin interest kicks in.
I use them as the "cash" securing the put options I sell, and sell however many I need to when I get assigned stocks.