High yield savings, money markets, CDs, or T bills?
High yield savings, money markets, CDs, or T bills?
Where all my cash hoarders at and where do you park your savings?
Also, how do you decide how much cash to hold vs invest?
Personally I enrolled in Robinhood Gold for the 4.9% APY. It costs $5/month.
That really depends on your local state tax situation. Fidelity has a great tool to compare yields of differently taxed fixed income options here. Basically:
- t-bills are not taxable at the state level
- municipal bonds are generally not taxable at the federal or state level
- CDs are taxable at the federal and state level
So that's why I park my savings in t-bills, I pay state income tax, and t-bills have a higher after tax return than CDs, and are more reliable than municipal bonds. The money that needs to be a little more liquid is in a money market fund.
How much cash
I don't hoard cash, so it's only my efund and my slush fund (i.e. the money that I've charged on my credit card or expect to pay in bills this month).
My money market fund yields 4.97% last I checked, and I think t-bills are >5% right now.
My total portfolio is almost entirely stocks, outside that efund, with any 75% US stocks and 25% internal stocks. My target is 70% US, 30% international, but I haven't bothered rebalancing yet this year so it's a bit lopsided.
Treasury yields aren’t that amazing right now. If you need it liquid, just find a HYS. Some short term CDs go over 5% if that’s liquid enough for you
VMFXX has a 7 day SEC yield of 5.28%.
Really? I'm seeing t-bills between 5.3-5.4% yield right now, depending on duration. Treasuries have been great this year.
I have about 80% in index funds and Roth IRA that I never plan on touching until way later. About 15% in Ally savings account at 4.5%, and the rest on hand. The nice thing about Ally is that you get the nice interest rate, and you can pull from that pretty easily.
I was super into chasing the highest possible saving accounts. I’ve always used this link when I was shopping.
I’ll say that it can be great to get a little higher % but there is also value in keep it simple. I think at my worst I had 7 entirely separate savings accounts (not counting checking or investing). I now have 2 and I’ll probably merge them in the next few months.
It would be good for you to consider your limits on what you’ll chase. If you find account that will give you an extra 0.1% it doesn’t make since to change but 2% likely does. However, if it’s 2% higher but it has a $500 limit maybe that doesn’t make since.
I’m now mainly using Ally and I really do like their bucket system.
SNAXX is yielding 5.37%.
It really depends on why you’re holding the cash though- how long you plan on sitting on it. At some point it probably makes sense to lock in a longer duration t-bill/note.
I generally avoid holding cash unless there’s a specific spending goal in the next 3ish years.
Most of my savings is in IRAs, which are mostly invested in Vanguard index funds. I try to keep about what I’d need to live on for a year in short-term investments and high-yield savings, any extra in some longer-term investments. I have a couple of CDs, some T bills, an I bond, some stocks. I’ve been shifting money around lately depending on where the best interest rates are.
Bread Savings has a 4.88% rate (5% APY) right now, no fees. The T bills have rates between about 5.3% and 5.5%. Right now, even 4-week T bills have rates over 5%.
I keep a little in a MMF for quick access and the rest in a treasury bill ETF (TFLO). My HYS account is nearly empty now.