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Should you open a short-term CD now? What experts say
In the post-pandemic era, certificate of deposit (CD) interest rates soared with many offering rates above 5%. These rates, which were the highest in years, were prompted by multiple increases in the benchmark interest rate as part of the Federal Reserve’s inflation-fighting efforts.
Since CDs allow investors to lock in those high rates, investors flocked to them even as savings account rates also increased — despite the fact CDs require you to lock up money and penalize early withdrawals.
Conditions are changing, though. As the Federal Reserve has cut interest rates, CD rates have also started to fall. While it’s still possible to get a CD at a good rate, yields are declining and this trend could accelerate as the Fed has hinted more rate cuts are coming. This has many investors wondering whether it’s still worth investing in a short-term CD right now. Below, we’ll break down what you need to know to help you decide.
See how much more you could be earning on your money with a top CD here.
Should you open a short-term CD now?
Short-term CDs are generally defined as those with a term (or length) of a year or less. While short-term CD rates are down off recent highs and expected to fall further, there are still good opportunities for investors to find products with competitive yields.
“Six-month fixed-rate non-callable CDs are yielding roughly 4.5% right now, which is still relatively high by recent standards,” explains Gary Quinzel, Vice President of Portfolio Consulting at Wealth Enhancement Group. “CDs still make sense as a cash proxy for individuals with short-term liquidity needs.”
One benefit of CDs versus high-yield savings accounts is that your rate is locked in, or guaranteed for the duration of the CD term. If you open a 6-month CD today, you’ll keep that rate until the CD matures. Savings accounts and money market accounts have variable rates, so rates are likely to decline within six months as experts predict an additional rate cut of 25 basis points as early as the Fed’s November meeting.
“We are in an environment where interest rates are likely to decrease twice more by the Fed by the end of 2024,” advises Domenick D’Andrea, AIF, CRC, CPFA, financial advisor and co-founder of DanDarah Wealth Management. “If you’re looking for a place to invest emergency money, then short-term CDs are still a great option. With rates decreasing, they should pay higher rates than money market accounts.”
October could also present one of your last opportunities for the foreseeable future to enjoy today’s ultra-competitive yields on these FDIC-insured, low-risk investments.
“The rate of return on short-term CDs tends to mirror the federal funds rate quite closely,” according to Jonathan Ernest, an economics professor at Case Western Reserve University. “With expectations for the Fed to continue cutting rates at their November meeting and in subsequent meetings stretching into 2025, we can expect that rates of return on certificates of deposit will fall as well.”
Get started with a top-rate CD before that happens now.
If you have money to tie up for longer periods, look elsewhere
While short-term CDs are a good option if you want to maximize yields on money you want to keep relatively accessible, there may be other, better choices for funds you’re looking to invest over a longer time horizon. That’s especially true as buying short-term CDs today could leave you with fewer good options in the coming months when your CD matures.
“Rates are set to go down in six months so any investor will be forced to reinvest the proceeds at what almost certainly will be lower yield,” warned Quinzel. “Instead, investors should look at fixed-income securities with longer maturities to lock in yields before they go down. For example, investors can purchase a 10-year treasury that yields just over 4% and won’t have reinvestment risk until the year 2034.”
Ernest also stresses the importance of considering the opportunity cost of investing in CDs versus other investments offering potentially higher yields over the long term. “Remember, you always want to consider how putting dollars into a CD compares with expected returns and the amount of risk faced from other investment options,” he says.
While CDs are very low risk, returns are limited. An S&P 500 index fund comes with a greater chance of loss but also has a consistent track record of producing 10% average annual returns over the long term. If you have an investing timeline spanning five or more years, you may want to take on the added risk to double your potential ROI compared with short-term CDs.
“Ultimately it is important to look at what is the purpose of the dollars to see if short-term CDs work best for your situation,” D’Andrea says. By evaluating the risks and potential rewards of CDs, treasuries, savings and money market accounts, and equities, you can make the most informed choice about where your money should go.
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Sen. Tammy Duckworth says Pete Hegseth is “flat-out wrong” about women in combat roles
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Sen. Duckworth says Trump defense secretary pick is “flat-out wrong” about women in combat roles
Democratic Sen. Tammy Duckworth said Sunday that Pete Hegseth, President-elect Donald Trump’s pick for defense secretary is “flat-out wrong” in his view that women should not serve in the military in combat roles.
“Our military could not go to war without the women who wear this uniform,” Duckworth said on “Face the Nation with Margaret Brennan.” “And frankly, America’s daughters are just as capable of defending liberty and freedom as her sons.”
Trump tapped Hegseth, a former Fox News host and Army veteran who served in Iraq and Afghanistan as his pick to head the Defense Department earlier this month. The 44-year-old has drawn criticism for his stance on women in combat roles, along with his level of experience.
Duckworth, who in 2004 deployed to Iraq as a Blackhawk helicopter pilot and sustained severe injuries when her helicopter was hit by an RPG, outlined that women who serve in combat roles have met the same standards as men, passing rigorous testing. She said Hegseth’s position “just shows his lack of understanding of where our military is,” while arguing that he’s “inordinately unqualified for the position.”
“Our military could not go to war without the 220,000-plus women who serve in uniform,” Duckworth said. She added that having women in the military “does make us more effective, does make us more lethal.”
Hegseth has also drawn scrutiny amid recently unearthed details about an investigation into an alleged sexual assault in 2017. Hegseth denies the allegation and characterized the incident as a consensual encounter. The Monterey County district attorney’s office declined to file charges as none were “supported by proof beyond a reasonable doubt.” His lawyer has acknowledged that Hegseth paid a confidential financial settlement to the woman out of concern that the allegation would jeopardize his employment.
Duckworth, an Illinois Democrat who serves on the Armed Services and Foreign Relations Committees, said it’s “really troubling” that Trump would nominate someone who “has admitted that he’s paid off a victim who has claimed rape allegations against him.”
“This is not the kind of person you want to lead the Department of Defense,” she added.
The comments come after Trump announced a slew of picks for top posts in his administration in recent days. Meanwhile, one pick — former Rep. Matt Gaetz for attorney general — has already withdrawn his name from consideration after he faced intense scrutiny amid a House Ethics Committee investigation and a tenuous path to Senate confirmation.
While Duckworth acknowledged that she’s glad her Senate Republicans “held the line” on Gaetz and also elected Sen. John Thune as leader over a candidate favored by many in Trump’s orbit, she said she’s “deeply concerned” her Republican colleagues will green light Trump’s nominees.
“From what I’m hearing from my Republican colleagues on everything from defense secretary to other posts, it sounds like they are ready to roll over for Mr. Trump,” Duckworth said.
But Duckworth didn’t rule out supporting some of the nominees herself during the Senate confirmation process, pledged to evaluate each candidate based on their ability to do the job, and their willingness to put the needs of the American people before “a retribution campaign for Mr. Trump.”
Meanwhile, a CBS News poll released on Sunday found that 33% of Americans say Hegseth is a “good choice” for defense secretary, including 64% of Trump voters. But 39% of Americans said they hadn’t heard enough yet about the pick. More broadly, Americans generally say they want Trump to appoint people who’ll speak their minds and who have experience in the field or agency they’ll run.
Sen. Rand Paul, a Kentucky Republican who also appeared on “Face the Nation” on Sunday, said he believes that Hegseth can run the massive Defense Department, despite his lack of experience managing a large organization. Though he did not address Hegseth’s comments about women in combat roles, Paul said he believes the “vast majority of people” support leaders who are picked based on merit, citing Hegseth’s criticism of the Pentagon for what he says has been a move away from merit-based hiring and toward hiring based on “racial characteristics.”
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Israeli strike kills Lebanese soldier as Hezbollah fires at least 185 rockets at Israel
Hezbollah fired at least 185 rockets and other projectiles into Israel on Sunday, wounding seven people in the militant group’s heaviest barrage in several days, in response to deadly Israeli strikes in Beirut while negotiators pressed on with cease-fire efforts to halt the war.
Meanwhile, an Israeli strike on a Lebanese army center killed one soldier and wounded 18 others on the southwestern coastal road between Tyre and Naqoura, Lebanon’s military said. Israel’s military expressed regret and said the strike occurred in an area of combat against Hezbollah, adding that its operations are directed solely against the militants. The strike was under review.
Israeli strikes have killed over 40 Lebanese troops since the start of the war between Israel and Hezbollah, even as Lebanon’s military has largely kept to the sidelines.
Lebanon’s caretaker prime minister, Najib Mikati, condemned it as an assault on U.S.-led cease-fire efforts, calling it a “direct, bloody message rejecting all efforts and ongoing contacts” to end the war.
“(Israel is) again writing in Lebanese blood a brazen rejection of the solution that is being discussed,” a statement from his office read.
The strike occurred in southwestern Lebanon on the coastal road between Tyre and Naqoura, where there has been heavy fighting between Israel and Hezbollah.
Hezbollah began firing rockets, missiles and drones into Israel after Hamas’ Oct. 7, 2023, attack out of the Gaza Strip ignited the war there. Hezbollah has portrayed the attacks as an act of solidarity with the Palestinians and Hamas. Iran supports both armed groups.
Israel has launched retaliatory airstrikes since the rocket fire began, and in September the low-level conflict erupted into all-out war, as Israel launched waves of airstrikes across large parts of Lebanon and killed Hezbollah’s top leader, Hassan Nasrallah, and several of his top commanders.
Hezbollah fired a total of around 160 rockets and other projectiles into Israel on Sunday, some of which were intercepted, the Israeli military said.
Israel’s Magen David Adom rescue service said it was treating two people in the central city of Petah Tikva, a 23-year-old man who was lightly wounded by a blast and a 70-year-old woman suffering from smoke inhalation from a car that caught fire. The first responders said they treated three other people in northern Israel, closer to the border, including a 60-year-old man in serious condition.
It was unclear whether the injuries and damage were caused by the rockets or interceptors.
Israeli airstrikes early Saturday pounded central Beirut, killing at least 20 people and wounding 66, according to Lebanon’s Health Ministry.
Israeli attacks have killed more than 3,500 people in Lebanon, according to Lebanon’s Health Ministry. The fighting has displaced about 1.2 million people, or a quarter of Lebanon’s population.
On the Israeli side, about 90 soldiers and nearly 50 civilians have been killed by bombardments in northern Israel and in battle following Israel’s ground invasion in early October. Around 60,000 Israelis have been displaced from the country’s north.
The Biden administration has spent months trying to broker a cease-fire, and U.S. envoy Amos Hochstein was back in the region last week.
The European Union’s top diplomat called for more pressure on both Israel and Hezbollah to reach a deal, saying one was “pending with a final agreement from the Israeli government.”
Josep Borrell spoke Sunday after meeting with Mikati and Lebanese Parliament Speaker Nabih Berri, a Hezbollah ally who has been mediating with the group.
Borrell said the EU is ready to allocate 200 million euros ($208m) to assist the Lebanese military, which would deploy additional forces to the south.
The emerging agreement would pave the way for the withdrawal of Hezbollah militants and Israeli troops from southern Lebanon below the Litani River in accordance with the U.N. Security Council resolution that ended the 2006 war. Lebanese troops would patrol the area, with the presence of U.N. peacekeepers.
Lebanon’s army reflects the religious diversity of the country and is respected as a national institution, but it does not have the military capability to impose its will on Hezbollah or resist Israel’s invasion.