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Brokered CD
Posted on 7/11/18 at 9:41 pm
Posted on 7/11/18 at 9:41 pm
What are the negatives of buying a brokered CD from a brokerage firm?
3
Posted on 7/11/18 at 10:49 pm to oldtimefootball
The only question is, after fees and commissions to the broker, what is the return?
Are they better that the return on Treasury Bills (which are exempt from state tax).
Are they better that the return on Treasury Bills (which are exempt from state tax).
Posted on 7/11/18 at 11:28 pm to oldtimefootball
quote:
What are the negatives of buying a brokered CD from a brokerage firm?
I have done it before and was able to get some pretty good rates simply, easier to let them handle it than deal with transfers and contacting different banks.
Well worth the fee IMHO, others may feel differently
Posted on 7/12/18 at 6:48 am to oldtimefootball
Bankrate lists some pros and cons. The main pro is diversification among institutions, important if you have over 250K.
The cons include that those institutions are often risky banks in Puerto Rico or such that offer higher rates out of desperation and are prone to fail. They may be FDIC insured, but it can still be a PITA if they go under.
The main con I see:
LINK
I have no personal experience with them.
The cons include that those institutions are often risky banks in Puerto Rico or such that offer higher rates out of desperation and are prone to fail. They may be FDIC insured, but it can still be a PITA if they go under.
The main con I see:
quote:
What’s the early withdrawal policy? Banks typically charge an early-withdrawal penalty of 90 days’ worth of interest, but brokered CDs are different, Laura says. If you want to exit your investment, you must sell your CD on the secondary market, where CDs are sold by brokers and prices are driven by investor demand. That means you could lose principal, especially when interest rates rise and CD demand slumps.
LINK
I have no personal experience with them.
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