As CDs Come Up for Renewal, the New Rates Aren’t Quite as Exciting
By Rachel Wood
Over the past couple of years, we all got excited about CD rates, but they’ve recently come down. As those CDs come up for renewal, the new rates aren’t quite as exciting.
Renewing the CD could still be the best option for some. However, if you're looking to improve your yield and are comfortable evaluating alternatives, here are a few directions worth reviewing:
✅ 𝗙𝗶𝘅𝗲𝗱 𝗔𝗻𝗻𝘂𝗶𝘁𝗶𝗲𝘀 – These might offer higher fixed rates than what CDs are currently paying. That said, fixed annuities require you to lock in your money for a set period, typically several years. This is only an option if you’re willing to lock in the money for a few years.
✅ 𝗕𝗼𝗻𝗱 𝗙𝘂𝗻𝗱𝘀 – Many bond funds today are yielding more than CDs, which makes them an appealing option for some. However, they do come with market exposure and the possibility of price fluctuations, meaning the value of your investment could go up or down over time.
✅ 𝗗𝗶𝘃𝗶𝗱𝗲𝗻𝗱 𝗦𝘁𝗼𝗰𝗸𝘀 – For investors comfortable with stock market risk, some dividend-paying stocks currently offer dividends that exceed the yields on CDs. This approach involves more volatility, so it’s essential for you to be willing to ride the market fluctuations and feel confident about the future of the company you invest in.
✅ 𝗣𝗮𝘆𝗶𝗻𝗴 𝗗𝗼𝘄𝗻 𝗛𝗶𝗴𝗵-𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗗𝗲𝗯𝘁 – In certain cases, especially if you’re carrying debt with a higher interest rate than your CD’s yield, you might consider paying off the debt instead of reinvesting in a CD.
Each investor has different goals and financial situations. Our advisors at Legacy Financial Group are happy to discuss the option that fits you the best.
Planning doesn’t have to be about control.
It can be about freedom.
We work with people who want more intention-not more to-do lists.
Disclosures: The material presented by Rachel Wood is for informational purposes only. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Actual economic or market events may turn out differently than as presented. Rachel Wood is a Partner and Financial Advisor with Legacy Financial Group. Advisory services are provided by Legacy Financial Group, a registered investment advisor with the Securities and Exchange Commission. Materials posted to this site are from external sources and are provided for your convenience in locating related information and services. Legacy expressly disclaims any responsibility for and does not maintain, control, recommend, or endorse third-party sites, organizations, products, or services, and make no representation as to the completeness, suitability, or quality thereof.
Fixed Annuities are long term insurance contracts and there is a surrender charge imposed generally during the first 5 to 7 years that you own the annuity contract. Withdrawals prior to age 59-1/2 may result in a 10% IRS tax penalty, in addition to any ordinary income tax. Any guarantees of the annuity are backed by the financial strength of the underlying insurance company.
