Treasuries vs Bank CDs.

[David Donner]

I posted a thread about this a while back & it seemed pretty unanimous that Treasuries make more sense over bank CDs as they are state tax free & are marginable.

I was just thinking...

What about in an IRA or other retirement account? Since those accounts are non-marginable anyway, and taxes are irrelevant, would Bank CDs make sense over Treasuries in that case? ...obviously, the amounts in the Bank CDs would have to be within the FDIC limits.

Thoughts?

PS: I am not referring to stocks vs fixed income, just the type of fixed income.

 

[engineering]

Treasuries are still better. They can be sold through your broker at will. Even if the tax advantages don't matter to you they may to the next owner.

CDs really should be paying more to offset their credit risk, lower flexibility and tax status. Of course banks have access to special borrowing facilities that we don't.

 

[murray t turtle]

I posted a thread about this a while back & it seemed pretty unanimous that Treasuries make more sense over bank CDs as they are state tax free & are marginable.

I was just thinking...
What about in an IRA or other retirement account? Since those accounts are non-marginable anyway, and taxes are irrelevant, would Bank CDs make sense over Treasuries in that case? ...obviously, the amounts in the Bank CDs would have to be within the FDIC limits.

Thoughts?

PS: I am not referring to stocks vs fixed income, just the type of fixed income.

%%
I like what Dave Ramsey notes;
most always better than 2 choices .
Local bank CD also has advantage of if you want to buy RE, handy + may help;
+ some local banks give free coffee+[ candy, which i seldom take.]
I like payin' state tax when i buy gas or ammo.[Capitalist nationalist LOL]
Dont pay tax in Roth or back door Roth.
Like money market better , I looked @ all SCHW mm was buying.
I have enough T bills ladder when i buy UPRO .........
Looks LIKE bank rate rated Credit Unions CDs are much better than bank CDs;
still prefer SCHW mm myself.

 

[David Donner]

still prefer SCHW mm myself.

In the current environment, though, when rates "should" be falling later this year, a CD or Treasury gives a way to lock in a rate (granted they are priced for the upcoming fall) than a MM which will fall.

 

[murray t turtle]

In the current environment, though, when rates "should" be falling later this year, a CD or Treasury gives a way to lock in a rate (granted they are priced for the upcoming fall) than a MM which will fall.

%%
True;
but I mostly do on average/ much better in business/ ETFs\than bank cd\bonds/ money market. And credit union CDs. Its a bull market you know; i guess you know??
[Tried a few, small size+ medium test penny stocks, 2024, but do more on the ones noted earlier LOL; +made more on money market than penny stocks 2024LOL]

 

[engineering]

Why does anyone think rates are going to fall when debt is exploding?

If the US wants to protect the exchange rate, they have to pay interest.
If they don't protect the exchange rate other countries will stop using the USD and they can't export inflation.
Then domestic inflation goes nuts.

Then there is the issue of bankrupting government pensions.
"In 2021, Social Security costs exceeded total income, including interest, for the first time."
https://www.investopedia.com/ask/answers/110614/how-social-security-trust-fund-invested.asp

I suppose it's theoretically possible that the could drop rates to zero.
They'd eventually bankrupt public pensions, drive the spy pe ratio to infinity and make energy unaffordable. Crashing the whole economy. Hopefully they're not that stupid.

 

[murray t turtle]

Why does anyone think rates are going to fall when debt is exploding?

Then there is the issue of b...... government pensions.
"In 2021, Social Security costs exceeded total income, including interest, for the first time."
https://www.investopedia.com/ask/answers/110614/how-social-security-trust-fund-invested.asp
.....SPY-PE ratio....

%%
Because that's the most likely scenario, listening to FED J Powell, as David D guessed also.
NOT hard to fix SS @ all;
most likely 95% of traders-investors here could fix it easy .
Like stopping all the fraud in SS disability + lazy+ real lazy+ real real real lazy in SSD.
NOT that anybody with sense is counting 100% on SS to live on LOL.
His big spending time most likely ends in NOV;
but a crisis tends to be good for stocks, maybe not for gov bonds . But chicoms + russia evil empire accidently helps US credit markets, just by thier crookedness LOL.
Tha's your business, Mr engineering , if you love low PE ratio;
but that is why low PE DOW-DIA underperforms SPY + QQQ .
Since you like extremes ok;
MSFT has PE ratio of 48 + down 00.04%;
DLTR has PE of 22 + down -[14.21] %
NOT a stock tip