I’ve got some intermediate-term (Don’t need it yet, but will in several months) cash at a brokerage firm and would like to park some of it in something fairly liquid, very safe, and paying better than the amount I can get at a local bank CD. I’m posting here because I trust that you folks don’t have a vested interest in selling me your own product.
So I have a few questions:
-
Some of the offerings on the “Search CDs” page list “FDIC Insured.” Some do not. The rates between them are about equal. If I invest in an FDIC-insured CD, am I protected against loss of principal?
-
So a given CD might have a Coupon Rate of 4% but isn’t a new issue as we’re in November so it tells me it has a Yield To Maturity of about half that. That seems fair to me if it was originally a one-year CD. But since it’s a secondary CD, does that mean it might not be available to buy? How is it that they let people into the issue once it’s started?
-
If I hold it to maturity, and I haven’t given any instructions to re-invest, auto-rollover, or similar terminology, what happens at maturity? Does the principal and accumulated interest just go back into the cash part of my account?
-
If the CD is listed as “callable” and the bank calls it, same question about the principle: Would it just go into my cash part of my account?
-
The value is listed at $100 with the price at $101.659. Does that mean I actually pay $101.659 instead of $100 and thus it eats into the actual amount of my return? Further, it tells me that the cost of the transaction would be $101.73. This is the set of numbers that confuses me most and I prefer not to put money into things where I don’t understand the numbers.
-
Anything else you want to tell me about this? Warnings? Praises? Anything else I should know?