Update:
If you have a bank CD, be aware both Ken and Bauer have already updated their bank health ratings using Q3 2021 data.
There is nothing yet regarding updates of credit union health ratings.
1 Like
Thanks, Shinobi.
1 Like
Sure, no problem. Always happy to be of service.
Actually it was a learning experience for me. After doing my best I was only able to better your number by ten basis points. Nobody is gonna get too fat on ten basis points, though I guess for people with a million bucks it might make an meaningful difference.
Point is, interest rates really stink. It was a help to me to be reminded of that . . . . forcefully.
2 Likes
I feel like the current CD environment in particular is difficult because of the uncertainty of the next couple of years. Financial institutions arenât willing to commit to much beyond the bottom of the barrel in terms of rates due to this, even if rates might creep up.
In contrast, the âdealsâ seem to be on reward checking accounts and savings accounts thru fintechs. If youâre willing to jump through those hoops, there are several accounts that have appeal. Evansville Teachers at 3.3% on up to $20k is a popular RCA, and then of course the infamous HM Bradleyâs 3% APY savings account if you feel like rolling the dice with tech startups.
All that said, given that rates are indeed so low, I think youâre better off going the credit card route and using that money to MS and rack up rewards points and bonuses (which are untaxed) rather than tying up your cash in a CD for a multi-month term. Or, even go Shinâs side hustle route and try short term CDs. For my wife and I, the tax man takes 35.8% of our dividends anyway, thanks to the net investment income tax and our marginal rate.
1 Like
A pity poster @harish7631 does not have just a bit more time (see above). You see:
Ken has just posted a CCU (Consumers Credit Union) CD deal paying 1.1% APY on sixteen month money. That is four months too long for harish7631. 
Still, Kenâs deal might work for others. And the interest rates are even higher if you invest more money.
I happen to be a CCU member. Itâs an OK credit union, a little quirky maybe, but these days that is not unusual. Were I not already a member I would not hesitate to join up.
2 Likes
Earlier today, over on the inflation/stagflation thread, I posted news that some economists anticipate 6% core inflation going forward from here. Letâs take a closer look at that from the standpoint of us CD aficionados.
Many of you are likely already familiar with the ârule of 72â. Itâs a very rough, âback of the napkinâ, method to see how long it takes to double your money. You divide your APY into 72 and your dough will double in that many years. For example, at 3% APY your money will double in 24 years . . . very roughly.
But the rule of 72 works in reverse as well. Referring now to the piece I posted earlier, if core inflation runs at 6% as predicted there, the buying power of your nestegg will be roughly half what it is today in just twelve years!
If youâre a young retiree, say 65, invested in CDs for safety, this means your buying power will be halved by the time you reach age 77, ignoring whatever growth your CDs provide you after taxes. Even if you never lose a dime in the (for example) stock market, inflation alone will hit you very hard.
The answer, the solution, to all this is straightforward. Do not retire until you have saved up a nestegg of sufficient size to weather some pretty nasty inflation and still leave you above water. Inflation is just another form of taxation. And you have to pay your taxes.
1 Like
As of this morning, Ken has become the first of the âbig threeâ reporting services to provide health ratings for credit unions based on Q3 2021 data.
For you GTE Financial followers, Ken has awarded them an âAâ rating. 
1 Like
Thatâs only IF inflation runs at 6% per year for twelve years (and your nestegg is earning 0% for twelve years).
Rentals? Rental income should go up with inflation, expenses â not as much. 
Agreed, unless you live in a city/state/country with rent control, or where youâre not allowed to evict people for non-payment.
1 Like
I donât think thereâs a place where youâre not allowed to evict for non-payment. That was a temporary thing due to pandemic.
The places I know with rent control have lots of exceptions. Rent control is usually less of a problem for individual investors (vs corporate / REIT) and single family homes (vs duplex and up). Even the more recent rent control proposals around here allow for rent increases of x% plus inflation (and the strictest and most ridiculous one of all in Santa Ana, CA which limits increases to the lesser of 3% or 80%-of-CPI exempts SFHs if I understand it correctly).
COVID-19 eviction moratorium expired on Sept 30, 2021 in Los Angeles, but landlord still canât evict tenant for non-payment for anther 12 months!!!
2 Likes
I hear thereâs a bunch of government money available for renters who are behind on rent paymentsâŚ
Only the renters can apply for these money and they donât have any insensitive to do so when they can stay for free.
Itâs not free, theyâll still owe that money and the landlord can sue them for it and even garnish wages after. The incentive is to not get sued and evicted after the moratorium ends. I suppose the landlord could also offer some other incentive, though it may be illegal if the money is ultimately coming from the govt program.
I have discovered an inexplicable anomaly in Kenâs rating for NFCU (Navy Federal Credit Union). The old rating was âAâ or âA+â. Kenâs new rating is âC-â.
This has to be an error on Kenâs part. However, until Bauer and/or Weiss publish their latest ratings I cannot be absolutely certain.
If something really has gone wrong at NFCU I think many of us would be concerned. NFCU is the largest CU in the USA.
1 Like
I just went to the NCUA website and downloaded the Sept 2021 call report for Navy Federal Credit Union. According to their data, their capitalization level is 11.14% and they are classified as well capitalized. Ken is showing a cap rate of 1.32%, which if true would be catastrophic. Kenâs data must be wrong.
3 Likes
And does the money go directly to the landlord? If not, dollars to doughnuts (or bitcoin to dollars) that more of that money will go to cellphone, nails, hair, and cable bills than the landlord.
It shouldnât be, but if it walks like a duck ⌠
Can they garnish their entitlement, or other government issued funds?
2 Likes
Do you really think that the people not paying care about those consequences at all? For most, their only thought is âYay! Dont gotta pay the rent again this month! What a deal!â
And once evictions for non-payment do start, anyone wanna bet that itâll quickly be made illegal to use prior evictions as part of the decision to accept new tenants?
4 Likes
Efforts to remain on topic here will be appreciated. Thanks.
Pursuant to that:
Kenâs CU ratings are apparently askew in other instances, not just for NFCU. My suggestion:
Give Ken a little time to put his house in order.
I have checked Bauer this morning and their new Q3 2021 ratings are not yet posted. For visitors here who care about the health rating of financial institutions where their CDs reside, suggest you give the matter just a bit more time. Still anticipate all services will have Q3 2021 ratings available prior to Christmas.
ETA
Brief review for thread newcomers:
If you have an existing higher yielding CD at this or that financial institution (FI), and if that FI goes belly up, there is no guarantee your CD will continue to be serviced at the higher rate of interest. Worst case in such a scenario you might even end up with your CD funds being returned to you. And today, as has been the case for a while now, there are no good from scratch CD options out there.
Hence some of us follow the health fortunes of our chosen financial institutions. For me it has been so far so good. But I still keep a weather eye.
1 Like