Gyroscopic Investing

Seems like a good place to park cash (2.39%) with only a 60 day penalty for early withdrawl.  FDIC insured and all.  To date I've been happy with Everbank, but this looks appealing for funds I don't expect to tap for at least a year or two.  Any ally customers here?

I am.  I am happy, though I haven't had to withdraw my funds in the midst of a financial panic the likes of which would test the reliability of even the FDIC.

All kidding aside, I'm very happy with Ally.  Great rates, easy to use, and they don't screw with you as far as I can tell.  In fact, I almost feel a little guilty doing exactly what you mentioned.  Like I'm cheating or something.

I feel like the guy buying a hammerdrill from home depot knowing he's going to bring it back as soon as he's done with the project.

I've got about half of my cash PP portion in Ally 5 year CDs, , 30% of my cash PP in the Fidelity stable value fund, one PenFed 7 year CD, and the rest in Ibonds and bank savings accounts.  My PP Cash portion is has an overall CAGR of 2.91% as a result of this, which is way better than the 0.1% it would be if I was all in 3-6 month treasuries.

For 2.91%, I'm willing to accept the FDIC risk, that I believe to be minimal.  I think the point when the FDIC fails is the same point when we are in some sort of doomsday scenario when treasuries fail as well - the government would just print money to avert both scenarios imo.

What is the redemption penalty on the PenFed 7 year CD.

12 months, but Penfed's 7 year rate is high enough that after year 2 Penfed is still a better deal. See http://www.depositaccounts.com/blog/201 ... enfed.html.

Correction - with newer (smaller) interest rate difference between Ally and Penfed, it takes until year 5 for Penfed to be the better choice. See http://www.depositaccounts.com/blog/201 ... posit.html.

fnord123 wrote: My PP Cash portion is has an overall CAGR of 2.91% as a result of this, which is way better than the 0.1% it would be if I was all in 3-6 month treasuries.

I was just curious as to the breakdown you have here to get a 2.91% overall rate.  That's good in this environment.

Ally CD: 2.4%
PenFed CD: 3.0%
Stable Value Fund: I don't have access to these so I don't know how well they pay.
I-Bonds: CPI-U has been all over the place, but mostly low-ish
Savings Account: 1.2-1.4%?

I got my Ally and Penfed CDs when the rates were higher than the current #s, that's why I have 2.91%.  Otherwise I think I'd be closer to 2.5% of so.  The Stable Value Fund is around 4% FWIW.

What is a "stable value fund?"

The Ally 5 yeard CD is the way to go

moda0306 wrote:What is a "stable value fund?"

http://www.thestreet.com/story/739812/w ... -fund.html

In a nutshell, it is a privately insured cash-like investment available in some 401k plans. It isn't as safe as FDIC insured instruments or treasuries, but offers a significantly higher return (around 4% for mine). That being said, the additional risk has caused me to reduce my exposure to it - currently around 30% and dropping slowly as I put more cash into other instruments (laddered CDs mostly)