what's a good amount to put into CDs?

I have around 80k in my savings at the moment and I am considering a year long CD for %5 What would be a good amount to place in there?

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_Nuba_ t1_jae2n3k wrote on February 28, 2023 at 7:42 PM

What is the plan for the money? When do you need the money? Those questions matter more. If you don’t need the money any time soon it should be invested.

Rattingaroundd OP t1_jae39u6 wrote on February 28, 2023 at 7:46 PM

Not really. I plan to move apartments in a few months but that's pretty much it

_Nuba_ t1_jae45a7 wrote on February 28, 2023 at 7:52 PM

You are probably holding too much cash, you should follow the flow chart in the wiki here.

MGK_1223 t1_jae5o2b wrote on February 28, 2023 at 8:01 PM

You'd want to keep a portion in an emergency fund though. Size of that fund is up to you and based on your typical monthly expenses (general rule of thumb is emergency fund would last you ~3-6 months). Then can invest the rest.

nozzery t1_jae2mnc wrote on February 28, 2023 at 7:42 PM

If you pay state income tax, $0, because you can make more yield on <1yr TBills due to there being no state tax on tbills. A 1mo Tbill earns 4.6%, which is 5.11% effective yield if you have 10% state tax (do the match for your own situation).

Rattingaroundd OP t1_jae37w0 wrote on February 28, 2023 at 7:46 PM

I'm not sure what you mean

MGK_1223 t1_jae54ry wrote on February 28, 2023 at 7:58 PM

An alternative to investing in CDs is investing in Treasury bills (can do through Treasury Direct or your brokerage account). Currently, the annualized yield for a Treasury bill is higher than the 5% you're seeing for a CD (the 6-month one is 5.11% on Schwab for example). And while interest on CDs is taxable at the federal and state level, interest on Treasury bills is exempt from state and local taxes. Could be advantageous if you live in a high income tax state.