Thinking about going longer on CDs

So I’ve long since moved out of our cash banking accounts and into a variety of cash=equivalent instruments: CDs, T-bills, bonds, I-bonds, money markets etc. (We’re still about 60% in equities).

To this point I’ve been taking the shortest duration possible. (OK, that’s not true because the MM’s are basically 24 hours; I’m talking about the other stuff.) For instance, buying CD’s I’ve mostly stuck to 90 day deposits because it wasn’t worth tying up the funds for longer to get another 0.1% on the interest, or especially for 12 months to get another 0.2% (rates have varied, but not really by much.)

I just rolled over a couple yesterday, again for 90 days, earning 5.2% and have more coming due in the next couple weeks. This time, however, I’m thinking of going longer, perhaps much longer. Theory (and feel free to poke holes)

I see the economy slowing, albeit slightly.

  • Jobs creation is lower than expected, still not as low as the Fed might like, but getting there.

  • Shipping container shipments are tailing off, again slightly, but headed down for the first time since, well, ever, almost.

  • Rent prices are coming down, spottily I admit, but it seems the big jumps are over.

  • Housing prices are market-by-market, but there are more flattening than bouncing wildly higher as in the past 24 months.

  • Gas, egg, etc. all down, core inflation still rising but more slowly,

  • and I could put a bunch more ‘tells’ here but that’s enough. I’m expecting the Fed to stand pat for a while, perhaps forever. And if there is another increase it will be small, distant, and then it’s election season when they are even more measured in their increases.

All of which argues, to me at least, that rates are about as high as I’m going to find for a while, and there is a chance that they might have to start cutting towards the end of the year or early next. So while I’ll likely do one more round of “90”, I may start going longer, perhaps a lot longer - 1 year, 5, probably not 10.

Again, this affects only about 10-15% of our portfolio, so either way it’s not exactly critical, but I thought a little “rate interest” talk would be appropriate. Thoughts?


I have started (in the last 2 months) buying out to 1 year.

This is with about half of my FI and short term money.


We have a 529 plan for our 7th grader that we continue to pump money into. We started in 2016, sometimes putting in a bit, sometimes a lot. Last year was not great, as the value kept dropping as fast as we put new money in. From my possibly flawed spreadsheet it appears we have what amounts to a 5% ROI in that account overall. Disappointing considering there is investment risk there. We continue to add to it, but I also put a large amount into 5-year non-callable CD at 4.5% rather than dump it into the 529 plan. (we had a 5.3% option, but it was callable every quarter). The bad thing is we could get a 5% option today but that is the risk you take with long term CD’s.

We also have a large cash cushion in taxable accounts because we have several large purchases within the next 36 months (maybe sooner). So those are in MM’s and HYSA’s. I have considered some CD’s of varying durations for some of this money but have not pulled the trigger yet.


Well, we’re also buying some CD’s - although not necessarily for the same reasons that you folks are.

DW and I are at the age where we do not want to risk losing money by investing it in stocks of any form. So, I see CD’s as the safest possible place to put the money. (We also have some i-Bonds bought through Treasury Direct)

Over the last couple of months I’ve bought 4 CD’s (2 one-year and 2 six-month)- all paying 5.3%. And I have 3 older ones that pay 4.1%

These represent only about 30% of our invest-able funds. I’ll probably raise this up to about 50% over the next couple of months.


@Goofyhoofy I agree with your reasoning, which parallels my own. I have already begun extending fixed income out to 5 years and longer. I bought a secondary market 2029 TIPS yielding 1.9%, among others.


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I also have a fair amount of cash in cd’s, about 10% of my port, and my next rollover will probably be into a 90 day cd yielding roughly 5% in early September. You and Wendy are likely right, but I want most of my oversized cash position to be available to deploy in the event of a recession and depressed stock prices.


Interesting. Almost exactly a month ago, I bought my first 52-week bill. And then again, this month (the auction is tomorrow). Until now I’ve only been buying each week, some 8-week, some 17-week, and some 26-week bills, and some 42-day bills. It’s ended up being a long ladder extending out 26 weeks or so. The reason I like having a weekly ladder is because there are weeks in which I see a good stock opportunity and I buy some. So if there isn’t enough cash at the time, I can simply skip a week in the ladder. And when there is extra cash sitting, I can fill the gaps pretty easily as they auction weekly 4-week, 42-day, 8-week, 13-week, 17-week, and 26-week bills. So usually within a few weeks I can easily fill any gaps as necessary.

Since the T-bills have higher rates than CDs, I buy T-bills. A few weeks ago, I snagged some CDs with higher rates, but the best CD I’ve seen lately is 5.3% and the T-bill yields are higher. For example, the 26-week T-bill today was 5.499%

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Oooooh, I just found out that Vanguard will let me buy Treasuries directly from their website. Auction or secondary market… :slight_smile:


@MarkR this seems like a no-brainer…


The memory is still fresh in my mind of how the Fed cut the fed funds rate in 2020 and the previous higher interest rates on maturing short-term CDs were no longer available.

The reason to invest in longer-term fixed income is to lock in what might be a rare peak in interest rates…before the Fed cuts them again.



Darn. I was ready to roll my next maturing cd into a a 7 month, 5 pct apy cd at the bank nearby and saw Mark’s post about a 5,5 pct, 26 week treasury and bjurasz’ post on vanguard where I already have an investment account. An extra five minutes worth of work. How lazy am I?


Anyone looking at adding duration should also consider fixed annuities - some of which are now paying over 5% for 5 years. Not many CDs paying that much that far out.

Fixed annuities are not FDIC insured but in most if not all states, are insured by a state-based insurance that works in a similar manner.

Yes, if you intend to invest long-term in fixed income, it is best to capture the peaks of interest rates. But for me, a long term 4.5% doesn’t interest me at all. Even if they manage to keep inflation at 2-3%, that means real returns of only 2.5-3.5% which isn’t particularly exciting for long-term money.

Plus holding that 4.5% long-term exposes you to the substantial risk that inflation rises during the long-term period which destroys your overall returns. For example, let’s say you were able to lock in 4.5% for 10 years back in 2015 … then along comes 2021/22/23 with about 20% inflation … and that basically destroys a lot of that 10-year return.

If anything, wait for TIPS to trade over 2% and buy those. That might, in most years, get a lower real return than locking in 4.5% long-term, but it also eliminates the higher inflation years risk entirely. You will get a guaranteed real return of 2% period, in low inflation and in high inflation years.

That said, if we ever see double digit treasury rates again, I wouldn’t hesitate to lock in plain old 30-year treasuries. Greatest investment (risk adjusted) of the century was 13+% 30-year bonds in the early 80s.


I have been silent.

Just waiting.

CDs? Come on

Local credit union is offering 5.3% on 13-month CDs.

Maybe not, but I suspect the five year outlook for the market might not be great. There’s every chance that I’m wrong, of course, but I note that the market is overbought, P/Es are way higher than usual, consumer credit is maxed, and yes, there will probably be a recession sometime in the next 2-4 years.

Market returns are lumpy, so I’m considering 5 year fixed, looking closely at what the penalties might be for exiting early, which I would do if the market tanks. That would be a small penalty to pay to have a guaranteed rate for a few years and the opportunity to duck out and get in at a more propitious time, I think.


I started to ladder one-year CD’s. I’ve also bought some US bonds on the secondary market. I’m new at the bond thing, so I’m taking that slow. I’m trying to clean up my Roth portfolio, but I tend not to sell until I find something to buy, and I’m a scaredy cat when it comes to risk.

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Investing is interesting. You are one of my all time favorite posters, I have a similarly pessimistic outlook for the economy and stocks over next few years, but I am buying low cost etfs with my monthly SS checks in hopes of taking advantage of low prices. I am treating retirement as a new 30 year time horizon.

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The 52-week (12-month) T-bill maturing on 7/11/24 was 5.428%.
The 52-week T-bill maturing on 8/8/24 was 5.351%.

And T-bills are state income tax free as well (though that doesn’t affect me).

When Wendy says “longer term fixed income”, she doesn’t mean 13 months, she means a number of years.

One thing I’ve been considering and wanted to discuss here is buying agency bonds. They are yielding 6% and sometimes even a bit higher than that. My thesis is as follows: Maybe we can buy an agency (let’s say the 8/9/33 Federal Home Loan bond at the current rate) bond yielding 6.17% maturing in 10 years. Now, if interest rates remain the same, we will get the 6.17% for all 10 years (really a little less because mortgages tend to get repaid after about 7 or 8 years). But if the economy sinks, and there is a recession, the recovery from that recession will usually include lower rates, sometimes much lower rates, and if rates drop, then many of those 6%+ mortgages will refi into lower rates, and those bonds will be paid off much quicker. And that means money will be coming in early that can be deployed into equities at lower prices (having suffered from the recession).

This could be the equivalent of “5 year fixed” more less, but with some of the cash flowing back to you over the 2 to 3 year period, and then the remainder in dribs and drabs from year 4 through year 8 or maybe even 9.