Guiding Investors on What to Do with Maturing CDs ๐
If youโve been investing in short-term certificates of deposit during the Federal Reserveโs rate-hiking period, you may be wondering what to do with your money once it matures. Since March 2022, yields on investments have become more attractive due to the central bankโs higher rate regime. However, with expected rate cuts looming, investors with maturing CDs are facing reinvestment risks. Here are some strategies to consider:
Reassessing Your Financial Goals and Timeline โณ
- Review your original plans for the cash from the maturing CDs
- Consider holding up to 12 months of liquid cash as an emergency reserve
- Invest any excess cash beyond emergency savings
Exploring Diversification Options for Fixed Income ๐ผ
- Consider diversifying into longer-dated fixed income securities
- Look into municipal bond portfolios for tax advantages
- Extend maturities to lock in higher yields for the long term
Optimizing Fixed Income Investments ๐
- Diversify across different classes of fixed income securities
- Explore ETFs like iShares MBS ETF and BlackRock Flexible Income ETF
- Build a portfolio with varying maturities and credit qualities for stability and income generation
As the Federal Reserve adjusts interest rates, investors must be proactive in managing maturing CDs to optimize yields and mitigate risks. By reassessing financial goals, exploring diversification options, and optimizing fixed income investments, investors can navigate the changing landscape with confidence and foresight.
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