Author Topic: PenFed CDs - Yes? No?  (Read 1431 times)


  • Handlebar Stache
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PenFed CDs - Yes? No?
« on: October 16, 2014, 12:26:36 PM »
Thanks to my dad's service in WWII, I was able to create a PenFed account.

We have $100K+ sitting earning bupkus in a money-market account. I have been gathering the internal fortitude to put half of it into our taxable account but can't bring myself to pull that trigger. I want to keep a solid year's worth of expenses completely liquid as an emergency fund.

So now I see that PenFed is offering 2.1% APY on 5-year CDs, and it seems like maybe a good compromise? A $50K 5-year CD would mature the fall of my daughter's senior year in high school, just in time to pay for the first year of college without us having to sell any mutual funds. And 2.1% is certainly better than the piss-poor interest rate at the bank, but not as scary as throwing even more moolah into the market.

Talk me through the downside. We'd miss out on any gains in the market - I know, I know, it's actually a great time to throw moolah into the market since I can buy more today than yesterday.

We have 90% of our portfolio in a 75/25 asset allocation. No individual stocks. The rest is cash earning nothing and life insurance cash value.

I feel like we're missing that in-between stage - safe (FDIC-insured) but earning a higher return than ordinary savings.

If it makes any difference, I just turned 50, my mister is 49, and we hope to retire in 10 years.

What say you, MMMfolk?


  • Pencil Stache
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Re: PenFed CDs - Yes? No?
« Reply #1 on: October 16, 2014, 12:33:12 PM »
Personally I don't see much downside beyond what you mention.