Ask Terry Questions Renewing IRA CD

Renewing IRA CD

By Terry Savage on May 27, 2013 | Investments

Hi Terry,
I have an IRA CD ( 5 yr term ) that will mature this year in Sept. 2013.
I am a elderly senior & don’t wish to keep this with the same bank.
I plan to take my RMD just prior to maturity & will then have a balance of approx. $100,000.
Any suggestions as to what & where would be the best secure place to for me to invest this ?
Thank you !

SAVAGE SAYS: You don’t say why you are considering moving your CD, but I’ll assume it has to do with rates. I checked at (go there and search for a “jumbo 1-year CD” — and you can get nearly 1 percent for one year — but you’ll have to wire money to another bank. None of those offerings are from major well-known banks. By the time you pay the fees to wire the money, it might not be worth it to move. Also note, that some of the higher rate offerings compound monthly, not daily.

Why did I jump to the assumption that you needed another CD Because you said you wanted your money to be secure. And that means “chicken money” which must stay in relatively short-term FDIC insured bank CDs. I’d stay with nothing longer than a year because I do expect rates to rise at some point in the future.

I know that is disappointing, but remember the motto of the chicken money investor:? I’m not so concerned about the return ON my money, as I am about the return OF my money!

Oh one more thing:? If you are taking your RMD out of this CD it will be easier if you keep it short term. And since there’s not much of a premium for the jumbo $100,000 CD, you might want to break it into two smaller CDs, one with a shorter maturity. Most banks do not charge a penalty if you break a CD in order to take an RMD, but you should check to be sure.



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