Sun, 10 Feb 2008
Brokerage CD's
Brokerage CD's are nothing but regular CD's which can be bought in the market just like stocks/bonds etc.There are some nuances like callable etc but don't get intimidated by it.Once you understand 3-5 terminologies of Brokerage CD's you will realize how similar they are.
I particulary like Brokerage CD's because , then Im not stuck to one bank and the market competes for my dollars.I can buy CD's from any bank i.e. whoever pays me highest interest wihtout having to open a checking/saving account with them.
There is another advantage of Brokerage CD's.Say if you wanted to have CD's in your 401k , in that case obviously it will not be possible to link your personal bank's CD's with the 401k.
However with Brokerage CD's you can buy CD's in your 401k, if you have setup a brokerage link with your 401k(also called Self Directed 401k).See the other post for advantages of Self-Directed 401k
There is one more advantage over the FDIC limit.With Brokerage CD's you can buy as many CD's as you want , and since you will be dealing with so many banks you don't have to worry about the 100K FDIC limits , unless you buy 100K CD's from one bank only.
I personally believe that Brokerage CD's are going to become more and more popular because of the reasons outlined above.
You can take a look at various Brokerage CD's offered at places like Fidelity.
I particulary like Brokerage CD's because , then Im not stuck to one bank and the market competes for my dollars.I can buy CD's from any bank i.e. whoever pays me highest interest wihtout having to open a checking/saving account with them.
There is another advantage of Brokerage CD's.Say if you wanted to have CD's in your 401k , in that case obviously it will not be possible to link your personal bank's CD's with the 401k.
However with Brokerage CD's you can buy CD's in your 401k, if you have setup a brokerage link with your 401k(also called Self Directed 401k).See the other post for advantages of Self-Directed 401k
There is one more advantage over the FDIC limit.With Brokerage CD's you can buy as many CD's as you want , and since you will be dealing with so many banks you don't have to worry about the 100K FDIC limits , unless you buy 100K CD's from one bank only.
I personally believe that Brokerage CD's are going to become more and more popular because of the reasons outlined above.
You can take a look at various Brokerage CD's offered at places like Fidelity.
posted at: 05:25 | category: /personalfinance | permanent link to this entry
