Have 200k in synchrony bank's 5yr CD that matures in 12months. 2.25% APY. Was planning to move it to vtsax. Penalty to break CD is 6 month interest. It seems as long as vtsax pays 3.375%+ over next 1 yr it'd be advantageous to break CD. Is vtsax 7% yield safe to assume? Anyone done this? Is it worth to break CD? (Fixed the penalty) #stock #vtsax #CD
Invest 200k over 90 days Never buy in a single transaction Also do it after January (google it why post jan)
How is VTSAX safe?! Sorry, but you are either trolling or have absolutely no idea of how the stock market works. If the latter, invest $10k to watch what happens and read about mutual funds, ETFs and other investment products ASAP.
Not trolling. New to money matters. All i heard on here and elsewhere is vtsax is the best to invest in stocks and long term yield has been consistent above 7%.
Okay then. Just put VTSAX in Google and see the chart. Select 5Y or All and see the price fluctuation. Basically, as with any investment, you may lose principal (meaning at the end of the year end up with significantly less than your original $200k instead of getting any interest). Depending on when you think you need the money you may or may not want to take this risk. To be very clear, I don't advise you completely against investing in stocks. It is a good idea to invest. But make sure you keep enough cash to buy whatever you might need within 1-2 years in case the market tanks and your investment loses 20%+ of its principal.
Why u wanna buy it at all time high
This!!. People keep saying time out of market beats timing market. Just think had you invested during 15-20% downtime of dec2018, you would be 40% up as of now. I am not saying you will be able to time the market at the exact moment, just invest overtime or wait for few bad days in a row. This is not the right time to add any money into the market.
Yeah let’s just dump everything into vtsax when stocks are trading at all time highs. Fomo is real.
Yah specially for a person who was stuck in CD for 5 years getting a lousy return compared to what the market did
I'd prob just leave it at this point. To frame things differently, I wouldn't take a loan at 4.5% in order to invest in VTSAX. But I wouldn't think you're crazy either way.
Yes a CD is a mistake and poor place to keep it even with penalty. As long as your intention is to leave the 200k invested over the next couple years or longer it would be well worth breaking the CD now and putting it into VTSAX. Personally however I would actually split it and put 100k in VTSAX (vanguard total stock market admiral) and the other 100k in VFIAX (vanguard S&P 500 admiral).
If you look at vtsax in its worst, what you'd probably pick is the case of someone buying it at peak on oct 2007 (price 37.5) and selling right before recent years rally in june 2015 (price 52). Thats 1.45X up in 8 yrs = 4.3% APY. So even in the worst case scenario for long term 4.3% is not bad.
It is definitely not the worst period. Moreover, in your example you assume you somehow weren't laid off in 2009 and didn't need any of the money for over 8 years.
It is an example of a reasonable counterpoint. What you seem to suggest is absolute extreme case, almost irrelevant. Ofc there is risk w any investment.
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