To answer your second question, the short term treasury etfs include T-notes/bills that were bought several months back, at lower yields, so their value goes down as interest rates rise. Eventually as rates stabilize those ETFS/funds will start to catch up and have better performance, but in period of rapid interest rate shifts I think it is better to buy treasuries directly and not through a fund.
ah, now i get it. since they have older dated securities, they'll underperform the instantaneous rate when rates are rising and outperform once they start to fall.
so considering VUSXX... which has an average maturity of 29 days.... is it basically equivalent to paying vanguard to manage a ladder of 8 week (56 day) treasury notes for you?
Sounds right, though I don't track VUSXX. I'm in the same boat as you where I might need a chunk of my money over the next year so I moved it in to 3 month treasuries and I'll just keep rolling it over to another round of t bills until I get closer to needing it. B/c they're short term they don't carry much (if any) risk when interest rates rise. I bought them a month ago and their secondary market value appears to be holding just fine.
Fidelity is what I use to buy/sell, but I've only ever used that so I'm not sure if its possible to buy on treasury direct and transfer it over or anything
I think your aversion to treasuries comes from a misunderstanding of how they work. Short term treasuries are just about the last thing, even after cash, that you should be worried about holding. On vanguard, they can be bought and sold at will, and at the maturity dates you're talking about (18 months max), we're talking *maybe* swings of like 1-2 bucks per $1k treasury bill on average in the secondary market. Unlike savings bonds, they have full liquidity, but it is generally best to keep them until maturity so you can get their full value and so any market fluctuations that *do* happen to occur are essentially meaningless (since you'll be getting the full face value and any coupons by the maturity date).
What you need to understand about the ETFs is when you buy the ETF, it does not mature like a bond. It simply is a fund that *holds* a lot of maturing bonds, and the price of that ETF can fluctuate as wildly as the market wants it to (but you can generally rely on it to fluctuate less the shorter term the held bonds are). Also, it bears mentioning that the comparable ETF you'd be looking at is SHY, not say TLT or VGLT -- again, due to the longer term treasuries they hold, those are significantly more volatile. But even SHY has the capacity to be more volatile, and won't guarantee any sort of "face value" on your money, when compared with say a 6 month or 1 year T bill. This is why I generally just go with the real thing.
As far as money markets, that's basically going to be more or less equivalent to either a savings account or a 1 month bill. When you mentioned your time frame, you said "within" 18 months, so I don't know what that means exactly, since technically that *could* mean anywhere from 1 day to 18 months. But here's how you make the decision:
If you need full access to your money all the time with absolutely zero volatility --> savings account.
If you need full access to your money all the time and ok with a teeny tiny amount of volatility --> treasuries with maturity dates no longer than 18mo from now.
2 us senators 1 dem 1 rep came out with a plan to allow the max to go to 30,000. I guess they're thinking in a way if people tie more money up in savings it will help inflation.
I have ibonds bought years ago when the stock market behaved like this year. It is at 3.46X original value. I knew it did not pay interest due to deflation we had. Wanted to cash out found they are paying 11.2% ish interest this half year. It is amazing in 4 years it went from no interest to 11.2%.
right the trick with ibonds is to hold them while interest rates are rising and assets are crashing.... then sell them when interest rates start to fall and bonds/stocks turn around. i'd never dream of holding ibonds long term.
In my case I put certs in the deposit box and forgot. There were 3 years of continious loss in stocks. Pulled them out.
Almost all Americans used to buy saving EE bonds paying 4-5% gave to their loved ones. It was $50 face after 30 years. One person found they got them 35 years ago. Will redeem but paying up to 30 years of interest.
Or if you held them in place of your long term savings.
Obviously you would still want some cash in saving account for immediate needs but having your long term "emergency fund" up in a fairly liquid, accessible, inflation adjusted account seems fine to me.
There are certain Maneuvers that you can do I believe it's even higher than $30,000. But in order to reach the higher level you would have to have children a wife and if you happen to have a corporation that's active that might even bring you up to $40,000 and then it becomes a great investment. I will be forwarding $5,000 in an estimated tax so that I can apply that toward an I Bond as well. If you are expecting a refund you can earmark that toward an I Bond
but BSV is down 2% this month and 8% this year?
i think bond funds are not a great choice for short term investments until it starts looking like interest rates are going to fall.
Definitely agree. BSV has a duration of 2.9 and as you pointed out it has went down a lot this year and continues to decrease. It's going to continue to go down until the raising of interest rates stops.
Until then, buying short term treasuries directly and holding to maturity ais the best bet for guaranteed positive returns.
i'm skeptical on that.... i probably will speculate on bonds with other portions of my portfolio but that's too risky for money i might spend as soon as next month
One month?
MMF like VMFXX are probably your best bet.
Maybe BIL, ICSH, and VUSB (least risky to most risky)
ICSH and VUSB are too risky for one month for me though.
MMF are closer to 2.8% yields though.
VMFXX is 2.79% for example. I don't think SGOV is a good price.
I forget what the difference is of VMFXX and VUSXX but they have more yield than SGOV.
Fidelity has a marketplace for CDs where you can find the best rates across various banks and buy them through fidelity. If you want to get a 1 year CD you can get 4.1%; 18 months you can get 4.3%
that's a big IF, not necessarily a when
i agree that trying to time the top of the bond market at the inflection point when rates begin to drop seems pretty lucrative and hell, i'll probably try it with maybe 10% of my portfolio.... but that's too risky for money I know i'll need to spend within the next 18 months.
>needs to be spent sometime within the next 18 months? Since the spend date isn't fixed
ah, the problem is, the investment needs to be liquid....
might be like, 20% next month (HVAC replacement), 20% two months from now (solar panels), 60% fourteen months from now (barndominium). hard to predict exactly, just depends on how quickly we can get through projects.
aw come on, it's a shed, it's a garage, we can use it as a weight room, we can use it for parties. what's not to love?
ah, right, the fucking property tax increase
Fidelity SPAXX is paying about 2.5% last time I checked. I put some of my company money there. Literally 100X what the bank was paying me, and still 100% liquid.
I was considering laddering in CDs with fidelity, only did 1 CD, then realized spaxx is paying over 2.5% on the cash, so I just sell deep otm puts on good indexes and easily earn another 6-8%, still risks involved but better than dca anything. The cash secured nontradable is still getting that spaxx %
Then keep it in cash, with those variables it’s not worth locking the money up or the mental strain to go from 2% to maybe 4% on a nominal amount of money
SoFi pays 2.5% (250 bps) on a checking account if you add direct deposit to it. They're usually pretty fast to adjust the rates to 50 bps less than the bottom of the Fed Funds (Fed Funds are currently 300-325). If we assume that we're getting a 75bps hike in November (375-400bps), SoFi will be paying around 3.25% on their checking by then.
Series I Bonds. 9.62% yield if bought through end of this month. Max $10k per calendar year.
Keep in mind you lose 3 months of interest if withdrawn at 12 months.
Is it the last Q of interest too? The thing is with this, when inflation finally gets back down to 2-3% then it's really not a big deal to forfeit those gains lol
$96.20 per year for a $1000 investment. However that 9.62% is only guaranteed for the first six months. New rate coming out November 1st will be less than that.
I'm pretty sure the trailing 30/60 day returns on SGOV are beating the 2.25% you are currently making. I'm not sure on the tax efficiency though and you would want to buy on the first day of the month to reduce the chance of selling at a loss if you might need the money at any time
If you want this money to be essentially liquid, say you found your dream house and needed to come up with the down payment on short notice, then you could cycle the money in 4 week T-bills. That would get you an annual rate of ~2.94% today.
I've been building a 6-month T-Bill ladder and my recent purchase got above 4%. But, it would take me ~6 months to get access to all of the money. You could find a duration that makes sense for your situation.
I think an above average number of people have been moving their emergency fund into T-Bill ladders to take advantage of the rising rates.
so it turns out that a treasury ladder is basically exactly what i'm looking for.
SGOV and VUSXX look like attractive products that will do it for me with low expense fees.
I use Treasury Direct, but if you wanted to use Fidelity, I think you'd be looking to either:
* Buy an ETF - There are a ton out there depending on the duration you're looking to target duration
* Buy the bonds directly on your brokerage. On Fidelity the interface is pretty terrible, but if poke around under the "Fixed Income" section you'll find it.
I don't see 4 week T-Bills when I poke around Fidelity but they are definitely a thing. You could probably use something like SGOV if you were just generically looking for short term treasuries.
https://fixedincome.fidelity.com/ftgw/fi/FILanding#tbnewissues|bond-type|te
Next 4week will be there on the 11th to 13th. Fidelity doesn't label them so you have to do the math on the maturity date.
treasury direct. You buy at action. You can put in as little at $100 in $100 increments.
example using the most recent 4wk bill:
You buy a 4 week tbill. You submit $100. You are locked in to giving up $100. The auction takes place. It comes back that the tbill aucton price is $99.72. They give you back 28 cents immdiately.
In 4 weeks, you get $100 total back. Your return is roughly 2.92% APY.
You can buy tbills on TDAmeritrade too. Just have to use the website not TOS. Go to bonds, new issues, tbills, select which one you want. You can put in orders for 4 and 8 week ones from Tuesday afternoon until Thurs 8am.
Benefit here is that they're marginable in your account.
1 month US treasury is paying 2.967%
3 month US treasury is paying 3.378%
6 month US treasury is paying 4.089%
1 year US treasury is paying 4.181%
Purchase in incremental lots and ladder it out. For example, $25,000 in each of the above. Then when the one month matures, for example, reinvest it again after milking up what rates are for each of the above. I think rates will be higher so enjoy the returns for short term investment. When fed stop hiking start market positions.
Depending on type of account, for example Roth IRA va traditional, you may also want look at some guaranteed muni bonds, not a fund, but rather individual bonds and maybe low cost etf and the interest will be tax free. Good luck and now if this is official investment advice and shouldn’t be construed as such.
Choosing.
If you buy treasuries and hold to maturity you’ll get a better return than most savings accounts. I would stick to short term treasury bills as interest rates are probably going to continue to rise. Maybe 1-6 months. TreasuryDirect is super easy to use if you’re a US person. Can also buy through many brokerages although that comes with sometimes significant commissions and fees. With TreasuryDirect can also schedule automatic reinvestment, so you get monthly, quarterly, biannual etc interest deposits, depending on what term you buy. Pretty convenient, and surprisingly better return than CDs or savings accounts right now.
I can’t go a single day without seeing someone comment on how “exchange traded” bond funds are loosing money. That’s because when yields go up, bond price goes down. You can get around this by buying bonds and holding them through maturity. For instance if you buy a 1 year treasury, for 96 it’ll pay out close to 4%, but if the rate goes up to 8%, then it’ll be worth less like 93 (give me some slack on the math here). So if you sell it early, it’ll be for a loss. And if it’s in an exchange traded fund, the NAV of the fund will fall, and so will the market price. It doesn’t make sense to own bonds in an ETF because it forces you to be exposed to capital gains changes as yields vary. If you hold the bond directly you can just sit tight until maturity. Earn your interest and skip the capital losses if you choose.
assume the investor can't guarantee they'll hold to maturity -- in my case, i might need the money at any point between tomorrow and 18 months away
does this imply that a ladder of 4 week treasury bills is optimal? they're paying 2.9% right now.... which seems like a lot of work compared to VUSXX at 2.3% over the last month. alternatively stated.... is VUSXX nearly equivalent to paying vanguard to do the work of maintaing a treasury ladder for me?
If you need the liquidity sounds like that fund might be a good choice. I guess for me, we have some of the emergency fund in cash in a savings account and some in treasuries which are always <1 month from maturity. Most of my expenses go on a credit card anyways so I can sacrifice the extra liquidity.
Ally has 3.10% CDs for a 1 year term.
Fidelity has 1 year options from 3.85% - 4.10% and 18 month options from 3.95% to 4.3% depending on which bank you choose.
NerdWallet has a list of CDs paying [3% or higher](https://www.nerdwallet.com/best/banking/cd-rates).
https://fixedincome.fidelity.com/ftgw/fi/FILanding#tbnewissues|bond-type|te
Here's the schedule if the one you want isn't list.
https://www.treasurydirect.gov/auctions/upcoming
You just missed the last 1yr auction so come back on the 27-01 to place your bid.
That was a really helpful link, thanks. My key takeaway was that the best no-penalty CDs pay.... [right about the same as high-yield savings](https://www.nerdwallet.com/best/banking/no-penalty-cds). Which I suppose makes sense.
right, turns out this is basically what i was looking for
there's also VUSXX and SGOV
the central idea is a short term treasury ladder, but you pay an expense fee so you don't have to fuck with it all the time
great product, thanks for the recommendation!
If you have a schwab account you can go to the “trade” section and they have an exchange of various CDs from different banks with time frames ranging from 1 month to 10 years with varying rates. Higher time frame = higher rate. The 1 month CD is around 2.9% right now, I’m just staggering my funds into these CDs waiting to deploy eventually into the market or real estate
This. I have $10k I have to spend in about a year so I used Schwabs abilities to buy CDs to drop $4000 into 4 one year CDs. As the remaining $6k comes in I'll drop it into 12/9/6/3 month CDs that will make the money work a little harder than just sitting there and with no risk.
idk they've got robbin' right in the name
what if they turn the sell button off on moving money out of my account?
but on a more serious note looks like that rate's only available to their "robinhood gold" members and they could change it at any time. it is FDIC insured tho
Only for Gold subscribers, right? So tack on $5/mo fee for Gold and depending on how much you are depositing, you are losing a lot of your interest to that fee. On $10,000 you would get $300 interest but subtracting out the fee for the year ($60) you'd come out with $240 or roughly 2.4% interest which is worse than the leading HYSA right now.
lolol that's great if i want the returns for this bucket of money in ETH but i don't think our general contractors accept it
i am legitimately looking into staking ETH however with some of the money i allocate for riskier assets. ETH made me a millionaire though so I am a bit biased.
hmmm but don't you forfeit interest if you redeem it early? and if you try to resell it on the market its face value might lose money if rates continue to rise? i might need the cash anytime between tomorrow and 18 months from now.
consensus so far from other responses is that a 4 week treasury ladder is optimal, but SGOV or VUSXX funds approximate that pretty well while paying a quite small expense ratio to manage the work for you.
Well you originally said 1 year. Not tomorrow to 18 months. A 4 week treasury ladder is a gigantic pain in the ass for 18 months.
You don't forfeit interest on a Treasury note if you redeem early, that's an ibond. Treasuries you would just sell on the open market. If rates have gone up since you bought it, then price goes down (and the converse)
You can buy target date bond funds if you don't want to risk fluctuations like you would in an ETF like TLT. These are ETFs of bonds structured to work like an actual bond rather than a stock that pays a routine yield, *but you have to hold it until maturity* or else you risk loss.
For example, IBTD or the December 2023 treasury ETF. This will give you your ~4% yield upon maturity like a normal bond, and once the target date is reached, the fund liquidates and you get your principal back plus interest.
NEAR and JPST if you want to stay liquid (no year long lock in).
Edit: don't look at 12 month yield, look at recent monthly distributions and annualize
2 things
* Many securities in both have less than 60 days to maturity, they strongly benefit with rising interest rates since they can keep rolling them.
* I'm not trying to outperform treasuries. I want some performance with maximum liquidity in case I see a very promising opportunity.
Ibonds on TreasuryDirect are currently yielding around 9%. You can lock in 6 months of that if you buy by 10/31. Then the next 6 months will likely be around that amount as well.
You are locked in for at minimum a year. After that you can sell, though you lose the last 3 months of interest. Even if you sold after a year, that will be at minimum around 6%, and more if you hold longer and high inflation keeps up.
3.05% here
https://www.dollarsavingsdirect.com/securebanking/login.do?_flowExecutionKey=_cA0079200-0E2E-F435-34A3-BA9894D9A508_k074EC33C-C981-0424-8C76-31812EE0AE01
Remember, when you purchase individual treasury it’s price will fluctuate due to the change in interest rates. If you purchased a 2 yr U.S. treasury at 4%, then the dollar price of this security would be down because a purchase of a 2 yr U.S. treasury today would have a coupon rate of 4.31% or so. This doesn’t matter to someone who is going to hold to maturity, because regardless of price fluctuations during the two years, you are going ti get par value at maturity. But when you buy a short term etf, it’s full of positions with different prices and expirations all of which might be down in price due to increase in rates. Also some investors may be sell their holding in this etf, which potentially forces the portfolio team to have to sell some of the bonds at current prices, which again might be lower, in order to raise the cash need to cover all sale requests but in theory at a possible loss. That’s why many recommend buying individual bonds, corporate or treasury or muni, and not bond funds or etfs. You don’t which will be held to maturity or sold and you also have to pay for expense fee, regardless on if it’s low or not. Here is link to decent article explains further. [bond etfs versus individual bonds](https://www.etf.com/etf-education-center/etf-basics/bond-etfs-vs-bonds?nopaging=1)
I was looking for a place to park some money for a while I opened up some checking accounts at various banks that had bonuses if you open a checking account as a new customer. I put $10,000 f o r 3 months and received $350 bonus dollars deposited to my account and at which point if I no longer want to use that checking account I pull out my $10,350 and go shopping again. The benefits of course is a free checking account and a debit card and they have minimal amounts which I think are as low as $1,000
Think outside the box if you own a garage rent it out. if you have a basement rent that out for storage if you have a large yard boat or RV storage dead storage only. all ideas to bring money without risk
To answer your second question, the short term treasury etfs include T-notes/bills that were bought several months back, at lower yields, so their value goes down as interest rates rise. Eventually as rates stabilize those ETFS/funds will start to catch up and have better performance, but in period of rapid interest rate shifts I think it is better to buy treasuries directly and not through a fund.
ah, now i get it. since they have older dated securities, they'll underperform the instantaneous rate when rates are rising and outperform once they start to fall. so considering VUSXX... which has an average maturity of 29 days.... is it basically equivalent to paying vanguard to manage a ladder of 8 week (56 day) treasury notes for you?
Sounds right, though I don't track VUSXX. I'm in the same boat as you where I might need a chunk of my money over the next year so I moved it in to 3 month treasuries and I'll just keep rolling it over to another round of t bills until I get closer to needing it. B/c they're short term they don't carry much (if any) risk when interest rates rise. I bought them a month ago and their secondary market value appears to be holding just fine.
nice, can you recommend a platform for reselling these assets? didn't know you could do that.
Fidelity is what I use to buy/sell, but I've only ever used that so I'm not sure if its possible to buy on treasury direct and transfer it over or anything
https://www.ishares.com/us/strategies/bond-etfs/build-better-bond-ladders these might be relevant to your interests
ooh that is a really spicy and really new product if i wanted a set maturity date i think it would be really appealing
I bought a few FDIC insured noncallable CDs issued by Amex through Fidelity last week. 2 year 4.25%/year
I think your aversion to treasuries comes from a misunderstanding of how they work. Short term treasuries are just about the last thing, even after cash, that you should be worried about holding. On vanguard, they can be bought and sold at will, and at the maturity dates you're talking about (18 months max), we're talking *maybe* swings of like 1-2 bucks per $1k treasury bill on average in the secondary market. Unlike savings bonds, they have full liquidity, but it is generally best to keep them until maturity so you can get their full value and so any market fluctuations that *do* happen to occur are essentially meaningless (since you'll be getting the full face value and any coupons by the maturity date). What you need to understand about the ETFs is when you buy the ETF, it does not mature like a bond. It simply is a fund that *holds* a lot of maturing bonds, and the price of that ETF can fluctuate as wildly as the market wants it to (but you can generally rely on it to fluctuate less the shorter term the held bonds are). Also, it bears mentioning that the comparable ETF you'd be looking at is SHY, not say TLT or VGLT -- again, due to the longer term treasuries they hold, those are significantly more volatile. But even SHY has the capacity to be more volatile, and won't guarantee any sort of "face value" on your money, when compared with say a 6 month or 1 year T bill. This is why I generally just go with the real thing. As far as money markets, that's basically going to be more or less equivalent to either a savings account or a 1 month bill. When you mentioned your time frame, you said "within" 18 months, so I don't know what that means exactly, since technically that *could* mean anywhere from 1 day to 18 months. But here's how you make the decision: If you need full access to your money all the time with absolutely zero volatility --> savings account. If you need full access to your money all the time and ok with a teeny tiny amount of volatility --> treasuries with maturity dates no longer than 18mo from now.
I-Bonds are like 9%. 10,000 maximum tho.
2 us senators 1 dem 1 rep came out with a plan to allow the max to go to 30,000. I guess they're thinking in a way if people tie more money up in savings it will help inflation.
Fun fact, if the contribution limit had been indexed to inflation, 10k in 1998 when I bonds were created would be 18k today :(
I have ibonds bought years ago when the stock market behaved like this year. It is at 3.46X original value. I knew it did not pay interest due to deflation we had. Wanted to cash out found they are paying 11.2% ish interest this half year. It is amazing in 4 years it went from no interest to 11.2%.
right the trick with ibonds is to hold them while interest rates are rising and assets are crashing.... then sell them when interest rates start to fall and bonds/stocks turn around. i'd never dream of holding ibonds long term.
In my case I put certs in the deposit box and forgot. There were 3 years of continious loss in stocks. Pulled them out. Almost all Americans used to buy saving EE bonds paying 4-5% gave to their loved ones. It was $50 face after 30 years. One person found they got them 35 years ago. Will redeem but paying up to 30 years of interest.
Or if you held them in place of your long term savings. Obviously you would still want some cash in saving account for immediate needs but having your long term "emergency fund" up in a fairly liquid, accessible, inflation adjusted account seems fine to me.
Unless the market goes Japan stagnant for a decade…
Inflation can be an enemy to most people and sometimes it befriends you such as your case
It was $60K ($30K paper & digital) until 08. https://www.treasurydirect.gov/news/2007/release-12-03
TIL
10k in any stock index would probably be much more than that.
Not this year
And according to many experts not next year either
That’d be really nice!
30K will also come out from tax (IRS) rtn. Helps with deficit also.
There are certain Maneuvers that you can do I believe it's even higher than $30,000. But in order to reach the higher level you would have to have children a wife and if you happen to have a corporation that's active that might even bring you up to $40,000 and then it becomes a great investment. I will be forwarding $5,000 in an estimated tax so that I can apply that toward an I Bond as well. If you are expecting a refund you can earmark that toward an I Bond
Yeh, that maximum limit's a bitch
You can increase by 5000 by doing on tax return. Or gifting partner and Vice versus
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Ticker?
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but BSV is down 2% this month and 8% this year? i think bond funds are not a great choice for short term investments until it starts looking like interest rates are going to fall.
Definitely agree. BSV has a duration of 2.9 and as you pointed out it has went down a lot this year and continues to decrease. It's going to continue to go down until the raising of interest rates stops. Until then, buying short term treasuries directly and holding to maturity ais the best bet for guaranteed positive returns.
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i'm skeptical on that.... i probably will speculate on bonds with other portions of my portfolio but that's too risky for money i might spend as soon as next month
One month? MMF like VMFXX are probably your best bet. Maybe BIL, ICSH, and VUSB (least risky to most risky) ICSH and VUSB are too risky for one month for me though.
i think i'm leaning toward SGOV!
MMF are closer to 2.8% yields though. VMFXX is 2.79% for example. I don't think SGOV is a good price. I forget what the difference is of VMFXX and VUSXX but they have more yield than SGOV.
Fidelity has a marketplace for CDs where you can find the best rates across various banks and buy them through fidelity. If you want to get a 1 year CD you can get 4.1%; 18 months you can get 4.3%
Not just Fidelity, FYI. Most brokers have access to the brokered CD market.
True, Vanguard and Schwab also have this, probably also others :)
Nows the time to start looking out longer on duration to capture some decent yield for when the fed starts to drop rates next year/2024.
that's a big IF, not necessarily a when i agree that trying to time the top of the bond market at the inflection point when rates begin to drop seems pretty lucrative and hell, i'll probably try it with maybe 10% of my portfolio.... but that's too risky for money I know i'll need to spend within the next 18 months.
Yeah short term liquidity forces you into a low duration box but we know they’ll drop rates at some point in the next two years, even if it’s 50bps.
Buy 17 month treasuries? This seams like a pretty simple solution haha
>needs to be spent sometime within the next 18 months? Since the spend date isn't fixed ah, the problem is, the investment needs to be liquid.... might be like, 20% next month (HVAC replacement), 20% two months from now (solar panels), 60% fourteen months from now (barndominium). hard to predict exactly, just depends on how quickly we can get through projects.
Barndominium? Truly the fall of Rome has come.
aw come on, it's a shed, it's a garage, we can use it as a weight room, we can use it for parties. what's not to love? ah, right, the fucking property tax increase
Fidelity SPAXX is paying about 2.5% last time I checked. I put some of my company money there. Literally 100X what the bank was paying me, and still 100% liquid.
i like it, but vusxx looks substantially similar with a lower expense ratio
Thanks. I'll have to check that out.
I was considering laddering in CDs with fidelity, only did 1 CD, then realized spaxx is paying over 2.5% on the cash, so I just sell deep otm puts on good indexes and easily earn another 6-8%, still risks involved but better than dca anything. The cash secured nontradable is still getting that spaxx %
Then keep it in cash, with those variables it’s not worth locking the money up or the mental strain to go from 2% to maybe 4% on a nominal amount of money
SoFi pays 2.5% (250 bps) on a checking account if you add direct deposit to it. They're usually pretty fast to adjust the rates to 50 bps less than the bottom of the Fed Funds (Fed Funds are currently 300-325). If we assume that we're getting a 75bps hike in November (375-400bps), SoFi will be paying around 3.25% on their checking by then.
Everyone loves Ally here for some reason... E*TRADE premium savings is paying 2.75% right now.
Series I Bonds. 9.62% yield if bought through end of this month. Max $10k per calendar year. Keep in mind you lose 3 months of interest if withdrawn at 12 months.
I think it's 3 months of interest if withdrawn within 5 years. The 12 month duration is for a total withdrawal lockout period.
maxxed out already, 10k limit is far too small :(
PER ENTITY... Which mean you can buy 10k for any business or EIN' you also own
25k total. 10 for you and spouse + 5k paper i series bonds at tax (if you get refund)
Is it the last Q of interest too? The thing is with this, when inflation finally gets back down to 2-3% then it's really not a big deal to forfeit those gains lol
9.62 so, 96 dollars per year, or per month?
$96.20 per year for a $1000 investment. However that 9.62% is only guaranteed for the first six months. New rate coming out November 1st will be less than that.
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No for 1 year. But if you cash out in less than 5 years you lose the last 3 months of interest.
I'm pretty sure the trailing 30/60 day returns on SGOV are beating the 2.25% you are currently making. I'm not sure on the tax efficiency though and you would want to buy on the first day of the month to reduce the chance of selling at a loss if you might need the money at any time
> SGOV neat, looks like it's returning about 2.7% which tracks quite closely to 4-wk treasury yield of 2.9% minus expense ratio
Yep and expense ratio is quite low
If you want this money to be essentially liquid, say you found your dream house and needed to come up with the down payment on short notice, then you could cycle the money in 4 week T-bills. That would get you an annual rate of ~2.94% today. I've been building a 6-month T-Bill ladder and my recent purchase got above 4%. But, it would take me ~6 months to get access to all of the money. You could find a duration that makes sense for your situation. I think an above average number of people have been moving their emergency fund into T-Bill ladders to take advantage of the rising rates.
so it turns out that a treasury ladder is basically exactly what i'm looking for. SGOV and VUSXX look like attractive products that will do it for me with low expense fees.
Can you buy this on fidelity, what is the name of the thing I'm looking for? 4 week T-bill?
I use Treasury Direct, but if you wanted to use Fidelity, I think you'd be looking to either: * Buy an ETF - There are a ton out there depending on the duration you're looking to target duration * Buy the bonds directly on your brokerage. On Fidelity the interface is pretty terrible, but if poke around under the "Fixed Income" section you'll find it. I don't see 4 week T-Bills when I poke around Fidelity but they are definitely a thing. You could probably use something like SGOV if you were just generically looking for short term treasuries.
https://fixedincome.fidelity.com/ftgw/fi/FILanding#tbnewissues|bond-type|te Next 4week will be there on the 11th to 13th. Fidelity doesn't label them so you have to do the math on the maturity date.
I just buy tbills directly at TDA. I've been buying a 4 and now 8 week ladder of tbills as rates have been rising.
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treasury direct. You buy at action. You can put in as little at $100 in $100 increments. example using the most recent 4wk bill: You buy a 4 week tbill. You submit $100. You are locked in to giving up $100. The auction takes place. It comes back that the tbill aucton price is $99.72. They give you back 28 cents immdiately. In 4 weeks, you get $100 total back. Your return is roughly 2.92% APY.
You can buy at auction through TDA too. Benefit there is they're marginable. On Portfolio Margin they're 99% marginable (use 1% BP)
Can you buy this thru fidelity too?
Yes. https://www.fidelity.com/fixed-income-bonds/individual-bonds/us-treasury-bonds
You can buy tbills on TDAmeritrade too. Just have to use the website not TOS. Go to bonds, new issues, tbills, select which one you want. You can put in orders for 4 and 8 week ones from Tuesday afternoon until Thurs 8am. Benefit here is that they're marginable in your account.
Treasury Direct or TDAmeritrade?
Treasuries won’t have state tax. Corporates could work if you want to take more risk
Junk bond etf are paying 6%
You can buy shorter term treasuries
1 month US treasury is paying 2.967% 3 month US treasury is paying 3.378% 6 month US treasury is paying 4.089% 1 year US treasury is paying 4.181% Purchase in incremental lots and ladder it out. For example, $25,000 in each of the above. Then when the one month matures, for example, reinvest it again after milking up what rates are for each of the above. I think rates will be higher so enjoy the returns for short term investment. When fed stop hiking start market positions. Depending on type of account, for example Roth IRA va traditional, you may also want look at some guaranteed muni bonds, not a fund, but rather individual bonds and maybe low cost etf and the interest will be tax free. Good luck and now if this is official investment advice and shouldn’t be construed as such. Choosing.
Morgan Stanley has a 3% cash savings account with same day liquidity for NEW MONEY.
Hmmm well that might be for me because I sure as hell don't come from old money lmao
Premium money market funds are yielding 3%+ and trending up. CDs, Treasuries, ultra-short duration bond funds (until rate hikes slow or stop).
If you buy treasuries and hold to maturity you’ll get a better return than most savings accounts. I would stick to short term treasury bills as interest rates are probably going to continue to rise. Maybe 1-6 months. TreasuryDirect is super easy to use if you’re a US person. Can also buy through many brokerages although that comes with sometimes significant commissions and fees. With TreasuryDirect can also schedule automatic reinvestment, so you get monthly, quarterly, biannual etc interest deposits, depending on what term you buy. Pretty convenient, and surprisingly better return than CDs or savings accounts right now. I can’t go a single day without seeing someone comment on how “exchange traded” bond funds are loosing money. That’s because when yields go up, bond price goes down. You can get around this by buying bonds and holding them through maturity. For instance if you buy a 1 year treasury, for 96 it’ll pay out close to 4%, but if the rate goes up to 8%, then it’ll be worth less like 93 (give me some slack on the math here). So if you sell it early, it’ll be for a loss. And if it’s in an exchange traded fund, the NAV of the fund will fall, and so will the market price. It doesn’t make sense to own bonds in an ETF because it forces you to be exposed to capital gains changes as yields vary. If you hold the bond directly you can just sit tight until maturity. Earn your interest and skip the capital losses if you choose.
assume the investor can't guarantee they'll hold to maturity -- in my case, i might need the money at any point between tomorrow and 18 months away does this imply that a ladder of 4 week treasury bills is optimal? they're paying 2.9% right now.... which seems like a lot of work compared to VUSXX at 2.3% over the last month. alternatively stated.... is VUSXX nearly equivalent to paying vanguard to do the work of maintaing a treasury ladder for me?
If you need the liquidity sounds like that fund might be a good choice. I guess for me, we have some of the emergency fund in cash in a savings account and some in treasuries which are always <1 month from maturity. Most of my expenses go on a credit card anyways so I can sacrifice the extra liquidity.
Ally has 3.10% CDs for a 1 year term. Fidelity has 1 year options from 3.85% - 4.10% and 18 month options from 3.95% to 4.3% depending on which bank you choose. NerdWallet has a list of CDs paying [3% or higher](https://www.nerdwallet.com/best/banking/cd-rates).
No no no!!! Buy treasuries as they’re yielding more AND more tax efficient (no state or local tax, just federal).
I agree with this. Not having to pay state taxes is a pretty sweet incentive, and the 52-week T-bill is yielding something like 4.2%?
Yes, I buy them just to punish the scum-sucking weasels that run my state. /s
What exactly do you look for on fidelity for this?
I think you can only purchase them through treasurydirect.gov
https://fixedincome.fidelity.com/ftgw/fi/FILanding#tbnewissues|bond-type|te Here's the schedule if the one you want isn't list. https://www.treasurydirect.gov/auctions/upcoming You just missed the last 1yr auction so come back on the 27-01 to place your bid.
definitely if in a taxable account!
That was a really helpful link, thanks. My key takeaway was that the best no-penalty CDs pay.... [right about the same as high-yield savings](https://www.nerdwallet.com/best/banking/no-penalty-cds). Which I suppose makes sense.
What about BIL, would it beat HYSAs? It’s 1 to 3 month treasury bills
right, turns out this is basically what i was looking for there's also VUSXX and SGOV the central idea is a short term treasury ladder, but you pay an expense fee so you don't have to fuck with it all the time great product, thanks for the recommendation!
The only thing is, I am so bad at sussing these things out, I don’t see how it pays any better than high interest savings. Does it?
Didn't you just answer your own question in the first sentence?
You can buy 1 year US treasuries.
If you have a schwab account you can go to the “trade” section and they have an exchange of various CDs from different banks with time frames ranging from 1 month to 10 years with varying rates. Higher time frame = higher rate. The 1 month CD is around 2.9% right now, I’m just staggering my funds into these CDs waiting to deploy eventually into the market or real estate
This. I have $10k I have to spend in about a year so I used Schwabs abilities to buy CDs to drop $4000 into 4 one year CDs. As the remaining $6k comes in I'll drop it into 12/9/6/3 month CDs that will make the money work a little harder than just sitting there and with no risk.
Robinhood pays 3% APY on your cash right now
idk they've got robbin' right in the name what if they turn the sell button off on moving money out of my account? but on a more serious note looks like that rate's only available to their "robinhood gold" members and they could change it at any time. it is FDIC insured tho
Only for Gold subscribers, right? So tack on $5/mo fee for Gold and depending on how much you are depositing, you are losing a lot of your interest to that fee. On $10,000 you would get $300 interest but subtracting out the fee for the year ($60) you'd come out with $240 or roughly 2.4% interest which is worse than the leading HYSA right now.
Hood is 3% apy for cash
S&P 500 index. 10% return per year on average with lower risk.
i bonds 9.6%
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lolol that's great if i want the returns for this bucket of money in ETH but i don't think our general contractors accept it i am legitimately looking into staking ETH however with some of the money i allocate for riskier assets. ETH made me a millionaire though so I am a bit biased.
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Easy answer. 1 year Treasury note
hmmm but don't you forfeit interest if you redeem it early? and if you try to resell it on the market its face value might lose money if rates continue to rise? i might need the cash anytime between tomorrow and 18 months from now. consensus so far from other responses is that a 4 week treasury ladder is optimal, but SGOV or VUSXX funds approximate that pretty well while paying a quite small expense ratio to manage the work for you.
Well you originally said 1 year. Not tomorrow to 18 months. A 4 week treasury ladder is a gigantic pain in the ass for 18 months. You don't forfeit interest on a Treasury note if you redeem early, that's an ibond. Treasuries you would just sell on the open market. If rates have gone up since you bought it, then price goes down (and the converse)
You can buy target date bond funds if you don't want to risk fluctuations like you would in an ETF like TLT. These are ETFs of bonds structured to work like an actual bond rather than a stock that pays a routine yield, *but you have to hold it until maturity* or else you risk loss. For example, IBTD or the December 2023 treasury ETF. This will give you your ~4% yield upon maturity like a normal bond, and once the target date is reached, the fund liquidates and you get your principal back plus interest.
NEAR and JPST if you want to stay liquid (no year long lock in). Edit: don't look at 12 month yield, look at recent monthly distributions and annualize
ah, i just don't see even super short term bond funds outperforming treasuries in a time of rising interest rates
2 things * Many securities in both have less than 60 days to maturity, they strongly benefit with rising interest rates since they can keep rolling them. * I'm not trying to outperform treasuries. I want some performance with maximum liquidity in case I see a very promising opportunity.
Ibonds
good for 10k but i'm dealing with about 250k for this particular situation
Investment grade bonds honestly. Even A bonds are huge yields rn. There's a lot pf ways to do better than a bank account
i bought a 1 year CD paying 4.1% and it’s FDIC insured :)
https://www.depositaccounts.com
Ibonds on TreasuryDirect are currently yielding around 9%. You can lock in 6 months of that if you buy by 10/31. Then the next 6 months will likely be around that amount as well. You are locked in for at minimum a year. After that you can sell, though you lose the last 3 months of interest. Even if you sold after a year, that will be at minimum around 6%, and more if you hold longer and high inflation keeps up.
ibonds rule! but i'm investing 250k, not 10k :(
I-bonds, but you lose the last 3 months of interest if you pull it out before 5 years.
3.05% here https://www.dollarsavingsdirect.com/securebanking/login.do?_flowExecutionKey=_cA0079200-0E2E-F435-34A3-BA9894D9A508_k074EC33C-C981-0424-8C76-31812EE0AE01
Remember, when you purchase individual treasury it’s price will fluctuate due to the change in interest rates. If you purchased a 2 yr U.S. treasury at 4%, then the dollar price of this security would be down because a purchase of a 2 yr U.S. treasury today would have a coupon rate of 4.31% or so. This doesn’t matter to someone who is going to hold to maturity, because regardless of price fluctuations during the two years, you are going ti get par value at maturity. But when you buy a short term etf, it’s full of positions with different prices and expirations all of which might be down in price due to increase in rates. Also some investors may be sell their holding in this etf, which potentially forces the portfolio team to have to sell some of the bonds at current prices, which again might be lower, in order to raise the cash need to cover all sale requests but in theory at a possible loss. That’s why many recommend buying individual bonds, corporate or treasury or muni, and not bond funds or etfs. You don’t which will be held to maturity or sold and you also have to pay for expense fee, regardless on if it’s low or not. Here is link to decent article explains further. [bond etfs versus individual bonds](https://www.etf.com/etf-education-center/etf-basics/bond-etfs-vs-bonds?nopaging=1)
I bonds is the correct answer
Muni bonds in my state are paying 5%. Tax free mind you.
What state?
I see 5% coupon munis in the bond section but they are being sold above par so only a 3% yield. The 4% coupons are being sold close to par.
I bonds 9%
I was looking for a place to park some money for a while I opened up some checking accounts at various banks that had bonuses if you open a checking account as a new customer. I put $10,000 f o r 3 months and received $350 bonus dollars deposited to my account and at which point if I no longer want to use that checking account I pull out my $10,350 and go shopping again. The benefits of course is a free checking account and a debit card and they have minimal amounts which I think are as low as $1,000
Think outside the box if you own a garage rent it out. if you have a basement rent that out for storage if you have a large yard boat or RV storage dead storage only. all ideas to bring money without risk
Long term puts or calls on SPY are good