I'm aging myself, but I was in high school during the Jimmy Carter era when there was significant inflation, BUT historically high rates for Certficates of Deposit.


I can remember CDs rates over 15% (shown in the chart below)

Even with current inflation, CD rates are still historically low.



Certificate of Deposit Rate History (thebalancemoney.com)


What Is the Highest CD Rate in History?

According to data from the Federal Reserve Bank of St. Louis, CD rates reached an all-time high in 198018.65% for three-month CDs and 18.29% for six-month CDs


If high inflation continues, however, Carey expects CD rates to go up.

"If we continue to see historically high inflation, that is when we [may] see CD rates increase by a large amount," he said. "It might take another few months for this to occur, though."

not hedge said:

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18% Christ, just throw all my money in there and say eff markets

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I can remember as a 17 year old in 1980 the high CD rates. I think my parents have a few of those CDs

txaggieacct85 said:

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not hedge said:

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18% Christ, just throw all my money in there and say eff markets

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I can remember as a 17 year old in 1980 the high CD rates. I think my parents have a few of those CDs

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possibly an uptick

If high inflation continues, however, Carey expects CD rates to go up.

"If we continue to see historically high inflation, that is when we [may] see CD rates increase by a large amount," he said. "It might take another few months for this to occur, though."

5 year CD rates peaked in October at 5%. They are going to hell quickly. If you can find some 4-5 year CDs at 4-4.5% take advantage of it.

I was in banking when the rates were 15%+. Crazy times.

VMFXX is currently 4.29 %


Any reason not to just park emergency fund cash there?

AgsMyDude said:

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VMFXX is currently 4.29 %


Any reason not to just park emergency fund cash there?

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Dumb not to. PCOXX pays more, though.

That is where im parking cash.

AgsMyDude said:

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VMFXX is currently 4.29 %


Any reason not to just park emergency fund cash there?

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6 month treasuries are yielding 4.8%+. Can get a little more juice if you keep an eye on the maturities and roll the bills yourself.

I'm pretty sure CDs won't go up from here (4.5%). My financial advisor is recommending that I book these rates in 1, 2, 3, & 4 year CDs to guarantee these higher returns for the next 4 years.

I'm a beginner in money management, but at the point career wise where I need to learn.

What are the advantages to VMFXX/PCOXX over a Marcus account that is currently at 3.3%? I know the Marcus is variable, but it is an extremely liquid account.

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I'm pretty sure CDs won't go up from here (4.5%). My financial advisor is recommending that I book these rates in 1, 2, 3, & 4 year CDs to guarantee these higher returns for the next 4 years.

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100% agree

BQ_2010 said:

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I'm a beginner in money management, but at the point career wise where I need to learn.

What are the advantages to VMFXX/PCOXX over a Marcus account that is currently at 3.3%? I know the Marcus is variable, but it is an extremely liquid account.

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Higher interest. Those two are money market mutual funds, they don't carry FDIC insurance like the Marcus or other online savings accounts will. They also trade T+1, meaning if you want to get the money out, you'll have to sell your shares of the fund and that cash won't be available until the trade date +1 day.

For example, if you needed $10k out of PCOXX, you sell $10k worth on Monday, the cash will be available in your account on Tuesday. Another example, if you sold the $10k worth of shares on Thursday evening after the market closed, you wouldn't have the cash available in your account until Monday.

Thanks for the reply

VMFXX shows 7-day yield is 4.29 %. When you put money in, how often does your rate change?

Alternatively with the 6 month treasury, do you just buy now and rebuy in 6 months?

Ag13 said:

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AgsMyDude said:

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VMFXX is currently 4.29 %


Any reason not to just park emergency fund cash there?

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6 month treasuries are yielding 4.8%+. Can get a little more juice if you keep an eye on the maturities and roll the bills yourself.

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Best place to buy those?

AgsMyDude said:

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Ag13 said:

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AgsMyDude said:

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VMFXX is currently 4.29 %


Any reason not to just park emergency fund cash there?

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6 month treasuries are yielding 4.8%+. Can get a little more juice if you keep an eye on the maturities and roll the bills yourself.

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Best place to buy those?

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I buy them at Vanguard, it's very easy once you get your funding account set up.

Ag06Law said:

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AgsMyDude said:

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Ag13 said:

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AgsMyDude said:

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VMFXX is currently 4.29 %


Any reason not to just park emergency fund cash there?

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6 month treasuries are yielding 4.8%+. Can get a little more juice if you keep an eye on the maturities and roll the bills yourself.

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Best place to buy those?

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I buy them at Vanguard, it's very easy once you get your funding account set up.

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Just through the brokerage account?

When I looked I thought I read something in there about the rates being variable? But maybe I was looking at CDs purchased through Vanguard?

This high interest rate discussion brought back a memory from 1980-81. I was working for a CPA in Beaumont at the time and one day a client came by to drop off a check to go with his extension. My boss was out of the office at the time so the man handed me the check and said, jokingly, that if it got filed late, my boss owed the penalty. I laughed and said I would tell him. I knew he had sold his business but nothing of the details. I asked what he was going to do now that he had sold his business. He told me he was moving to his ranch and was going to sit out there and collect interest on the municipal bonds he had bought from the rest of the sale proceeds. He said he wasn't ever planning to pay income tax again.

After he left, I took the check out of the envelope. It was just a regular sized personal check, not a business check. It was for $1.3 or $1.4 million dollars, I can't remember. I remember just staring at it, I'd never seen anywhere close to that amount of money and there I was holding a check in that amount!

Municipal bond rates were pretty high back then as well, 12% to 14% if memory serves me. I imagine life was pretty good living in the Hill Country with that sort of tax-free income.

I'm getting 4.5% in my Goldman savings account. Obviously variable.

If you believe all the pundits, CD's are not going to get any higher because inflation has eased and will continue to do so.

However, keep in mind the experts like Goldman were unable to define inflation in the first place because they were lying or incompetent. So, buyer beware whatever route you take.

AgsMyDude said:

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Ag06Law said:

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AgsMyDude said:

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Ag13 said:

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AgsMyDude said:

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VMFXX is currently 4.29 %


Any reason not to just park emergency fund cash there?

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6 month treasuries are yielding 4.8%+. Can get a little more juice if you keep an eye on the maturities and roll the bills yourself.

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Best place to buy those?

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I buy them at Vanguard, it's very easy once you get your funding account set up.

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Just through the brokerage account?

When I looked I thought I read something in there about the rates being variable? But maybe I was looking at CDs purchased through Vanguard?

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Yeah, if you go up to buy and sell in the brokerage account page, there's an option to buy and sell treasuries. You can buy new treasuries at auction or buy off the secondary market. If you buy new treasuries, the rate is fixed as of the time of the auction for the term of the treasury. The day it matures, the money shows up in your Vanguard settlement account.

Why would someone buy a CD when a current ibond rate is 6.89%

astros4545 said:

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Why would someone buy a CD when a current ibond rate is 6.89%

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Depends on what rate you can lock in with a CD right now. These I bond rates chnage every six months and are expected to drop soon.

Might be able to make more with a locked in 1 yr CD than gambling that the next i bond change will stay at same level.

But I have no idea what CD rates are right now.

astros4545 said:

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Why would someone buy a CD when a current ibond rate is 6.89%

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Because the next 6 month I bond rate might be 0.

They won't be 0 since tied to inflation. I think most would agree it will be at least 4% in the 2nd 6 month period. But should be less than the 6.whatever it is currently.

AggieMainland said:

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They won't be 0 since tied to inflation. I think most would agree it will be at least 4% in the 2nd 6 month period. But should be less than the 6.whatever it is currently.

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It may not be 0, but it will be far below 4%. This article postulates somewhere around 1.8%:

https://tipswatch.com/2023/01/03/i-bonds-a-not-so-simple-buying-guide-for-2023/

Others have predicted closer to zero. The calculation is complicated and based on inflation over the past sox months, which has been much lower than the year to year average.

astros4545 said:

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Why would someone buy a CD when a current ibond rate is 6.89%

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Like others said. Those are variable rates right?

AgsMyDude said:

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astros4545 said:

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Why would someone buy a CD when a current ibond rate is 6.89%

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Like others said. Those are variable rates right?

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They are tied to an inflation formula and change every six months.

I have $20k maturing in April and another $10k maturing in September. I'm exiting those positions at that time and putting that cash somewhere else because rates are expected to be much lower.

Bizarro Jerry said:

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BQ_2010 said:

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I'm a beginner in money management, but at the point career wise where I need to learn.

What are the advantages to VMFXX/PCOXX over a Marcus account that is currently at 3.3%? I know the Marcus is variable, but it is an extremely liquid account.

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Higher interest. Those two are money market mutual funds, they don't carry FDIC insurance like the Marcus or other online savings accounts will. They also trade T+1, meaning if you want to get the money out, you'll have to sell your shares of the fund and that cash won't be available until the trade date +1 day.

For example, if you needed $10k out of PCOXX, you sell $10k worth on Monday, the cash will be available in your account on Tuesday. Another example, if you sold the $10k worth of shares on Thursday evening after the market closed, you wouldn't have the cash available in your account until Monday.

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Sorry to nit pick on this, but I keep cash in the vanguard money market with a vanguard account.

I was able to wire money from the money market to another account and received cash same-day. That was just a few weeks ago.

Then Vanguard must allow you to use that as your cash sweep account.