Buying TBills and managing them on Fidelity is pretty easy. I’ve been rolling over 4 week T bills for almost 2 years now. Fidelity has an auto roll feature that automatically reinvests in the same Tbill upon maturity. All happens the same day, with no gaps in the investment. The proceeds are deposited in the core position which in my case is SPAXX but other options are available. Fidelity does not charge for this service. The only difference between buying direct from the treasury and Fidelity is the minimum investment is $100 on Treasury Direct vs $1K on Fidelity. And of course the major tax advantage is no state taxes on TBill proceeds.
I have been buying from treasury direct for a long time, and it is totally hassle free, you can schedule the reinvestment and it keeps rolling to re-invest as you please.
BIL ETF invests in 1 to 3 months T Bills. Prices had been super stable for 20+ years. Annual 5%, pays monthly. Great option for retirees to keep 12 months of living expenses, and draw out one month at a time.
Also SGOV, USFR, TBIL, CLIP, SHV, and probably a few more I forget. If you plan on using it like a checking account, the most important thing to look at is the bid/ask spread. Smaller is better. BIL and SGOV are both 0.01%. This spread is how much you lose buying and selling due to market friction. (You lose have the spread when buying, and half when selling.)
You can buy T-bills at Vanguard and just have excess cash just gone into your money market fund. I live in California and pay 9% state income tax so it is worth the little extra hassle, to save on the tax.
I moved my cash to Vanguard with my IRA's recently and it feels good having it all under one umbrella. Also gives me the option to put a small portion of cash in something a bit more agressive(the cash i shouldnt need for a year or two)
Rob. I really like your knowledge and objective approach to finance. I like to keep self educating on finances on RUclips, but when I need the sensible practical answers I seem to come back to your sight. This video is a great example. You can park money here or there or use some creative tactic, OR just use the Vanguard money market or CDs and keep it simple and manageable for the average person 👍👍.
I have most of my cash in a t-bill ladder. Works great for me, and it avoids state income tax. I live in PA with a 3.07% rate, so it's not saving me that much. But if you live in a highly taxed state then I think it's a no brainer to go with t-bills. And if you live in a state without an income tax, then just go with a money market fund.
Hi Rob. I went to Fidelity's Cash Mgmt account on your suggestion some months back. Surprised you didn't mention it here. Did you change your mind on it?
@@suzycreamcheese8888SPAXX is paying out 4.01 percent as of today Jan. 23rd (if you selected that as your ticker). Although there is probably a better option for more growth. And i’d really only use it for checking and savings personally like you mentioned.
Does transferring funds in and out of a money market fund (like VMFXX) through a linked bank account trigger a tax event? Similarly, does selling shares of stock and leaving them in your settlement fund result in a tax event?
Vmfxx has a stable $1.00 price, so buying/selling won’t generate a taxable event, however, if you receive any dividends while holding the fund in a taxable account, the dividends paid are taxed in the year received. Buying/selling stocks in a taxable account will generate a taxable event in the year the transaction takes place…doesn’t matter what you do with the proceeds.
@@generic_officialanything sitting in a Traditional IRA is tax deferred. You won’t have any tax events while the money sits in the IRA. When you withdraw the money, you will be taxed at ordinary income rates on the amount withdrawn. And if you withdraw prior to age 59 1/2 you will also face additional penalties.
@@coltondotdev Thank you for the heads up on Vbil., will check it out as soon as it goes live, have used SGOV whenever fed funds rates are going down And I have used USFR whenever fed funds rates are going up. they are easy to use, pay better than money market funds. And since June first of last year when the country switched to T + 1 settlement it makes getting your cash out very easy and fast now.
RAISIN is the way to go with online banks all FDIC insured and I don’t have to go through the hassle of setting up a new account if they lower their interest rate.
@ Raisin is not a bank. They transfer your money to a bank, but there is a float period. If Raisin ever had troubles, any funds not in the banks are not insured (as has happened recently). The risk is admittedly low, but on the front end you are not dealing with a FDIC insured bank.
What do you think of capital preservation bond funds like JAAA or CLOA? I have a 3-4 year time horizon for some of my cash and was thinking about investing some of it here. Returns are 6% right now.
I use USFR and FLTR within my Schwab accounts. My experience is it's much easier to move money between short term cash and investments using ETFs vs. MM funds as the latter usually take 1-2 days to settle when selling on Schwab. I've also used SGOV and ICSH, but the floating rate funds have consistently had higher yields, at least over the last 5 years.
Hey Rob, you mentioned using Money market accounts, any reason why not high heel savings? I'm not sure if I understand the nuances between the two. Thanks in advance.
I have my emergency money in IBonds. Pros: Ultrasafe treasury investment, State tax exempt. Inflation protected. Tax deferred compounding. Balance never declines (the granny test.) Cons: 1 year lockup, 10K per year contribution limit (but unlimited w. work-arounds,) 3 month interest penalty if redeemed before 5 years.
I'm not an investor but I find buying Treasury Dept Tbills very simple. Bought 4 week Tbills lattered, all on auto roll/ reinvesting....get divideds weekly. Pretty simple, even for me.
Just checked out your "CD Rates" link. Thank you for putting the info together. If is possible for you to please add the feature to sort the CD options by APY? Thank you again.
I have a brokerage account at Vanguard and have been trying to decide where to put cash, between the Money Market Funds you mentioned or the Cash Plus Account.
XHLF - 1/2 year duration, pays monthly, rolling 1 year T-bills, low ER (0.03%) CON: as an ETF it has a small B/A spread... so good for income but perhaps some performance drag when buying / selling.
I keep some of our cash in a staggered set of three 13-week T bills at Fidelity. With no transaction fees, Fidelity will auto-roll into new bills as they mature and you can stop that anytime. The rates have been competitive with other cash pots and it’s more liquid than CDs.
Did I miss a discussion of CDs? Schwab brokerage online accounts allow one to buy CDs from around the country. They are FDIC insured. The rates are generally higher than all the rates discussed here for T-bills, money market accounts, etc. They can be bought with terms of 1 month to 10+ years. Why would you not use these?
What about AAA CLO etfs such as JAAA or PAAA? The yield is near 6% with monthly distributions. Price of a share is about $50, but the price can rise or fall 2-3%.
JAAA is a near-cash equivalent but not 100% risk free like T-bills. It wasn't around during the COVID crash but would have probably plunged (and eventually recovered) just like anything that wasn't T-bills. I keep ~20% of my 'cash' in it.
Rob - can you compare target date funds from fidelity, vanguard, and Schwab? It seems that performance wise there are some differences (fidelity and vanguard have similar allocations but vanguard outperforms on all periods. Might be due to duration?)
Rob. Thank You very much for the useful video. Any thought how to deal ahead in case market is down when it is time for take the RMD . Some people do the treasury bill ladders. It will be great if you could create a video about this topic.
I have a Navy Federal 4.7% add-on CD that has one penalty free withdraw. Maybe bank bonuses then add-on CD's would work. Also no-penalty CDs and t-bills.
Hi, David and Annie, Thanks for the posts! Are you all veterans or have relatives that served? I served with the Air Force from 1971-2001, a great way of life! I also have a CD with Navy Federal (joined in 2010), 4.59%, matures in Nov. My CDs with PENFED (joined in 1973) will mature soon, I am transferring the funds to Vanguard MM, Navy and T-Bills.
@@lg7728I didn’t serve, but 6 men of my family were Navy. I was able to join through my brother. And same as you, when this CD matures the funds will go to my Vanguard MM. great minds think alike!
How do municipal bonds compare with treasuries and CDs .... considering if you buy munis of the state of residence, you can avoid state and federal tax. The lower returns on munis are offset by zero tax.
I keep my cash in a money market mutual fund with Schwab and sell cash secured puts using that cash to own long term dividend stocks so i am double dipping.
My broker recently recommended diversifying my fixed income with CLOs such as JAAA. I see a couple of commenters on this video have mentioned CLOs as well but I'm pretty green to investing and the old adage "don't invest in what you don't understand" applies here. Do you have experience with these? What are your thoughts on them? JAAA has a short track record but has been way less volatile than even BND, so it seems like maybe its a good fit?
I hold a small portion of my savings in cash and the balance in Vanguard Federal Money Market Fund Investor. I hold this through my primary bank so that if I needed the money, I can access it quickly. I do t hold emergency savings at my brokerage bank as access takes longer.
Rob left Vanguard! Oh my! I live with the frustration. Thanks for your advice. For those of us over 59 1/2, I'm wondering if it makes some sense to roll over assets from a traditional IRA to a money market fund in a Roth since we're spending some of our portfolio and then draw from that as needed.. That would avoid taxes on some interest income.
There are a few ultra-short bond ETFs that have been very good in recent years. SGOV or CLIP for treasuries. ICSH or PULS for corporate and cash equivalent holdings.
Hello, Thank you for sharing. Do you have any opinion on Index Universal Life (IUL) Insurance? I have seen some information which claims this is to be swiss army knife for unlimited tax free retirement income since it allows unlimited contribution to IUL.
You mention all your cash is in my funds etc, but what if a person is All in cash, no stocks, bonds etc. Is NOW a time to try balance things out? And yes, I am old , 70 +. Thank you!
At 3:37 - SNAXX has a $1,000,000 minimum investment. USFR invests in floating rate Treasury Bonds and has a 30-day SEC yield of 4.27%, but an average YTM of 4.37%. TFLO is a similar ETF. I also have some cash in TMCXX at Merrill Edge paying 4.39%. I believe the minimums for all of Merrill Edge's Money Market Mutual funds is $1, but they don't act as automatic sweep accounts.
I have 5600 USD I can play with as the rate drop hit me and I am about to switch to 3.8% HYS from this, now, 1%. I went looking to see if I could get more, or split the HYS with something else, as it will sit there just to gain passive safe income.
Hey Rob - know you just posted this video 3 days ago, but with the Fed rate cuts, it looks like Vanguard has just cut off new investment in their Money Market funds unless you're brokering directly with Vanguard.
Most of those ST government money market funds invest 50% or more in repos not straight Tbills. Seems like that could be a little risker esp given the US Treasury is employing emergency procedures? Also if legislation isn't enacted could you see the US treasury being unable to paid or deferring maturing tbills ?
I have cash in VUSXX, about 80% of which was state tax exempt in 2023. I live in New York City, so that's significant. I have a ladder of 13 week t-bills at Fidelity, on auto roll, so no management necessary. Every month when a bond matures some cash ends up in SPAXX, currently paying 4%, so not bad. Periodically I move money from SPAXX to a HYSA, and if cash builds up there I move it into VUSXX. It's mostly no muss no fuss, with minimal effort to manage.
How about fixed annuities? They CD rates, sometimes a little more plus the interest is not taxed until cashed out. There is a penalty for early withdrawal but of course you don’t tie up money you are going to need in the next few years. I know older people that laddered annuities. When they passed they had never paid income taxes on the interest. They beat the Man!
I would be careful with the tax-exempt municipal MM funds as their yield is extremely volatile. The yield it shows now could be halved in a few weeks, so even the current tax equivalent yield would not be indicative of what it will actually yield you in the next few months, even if the fed doesn’t make any movements in the short term rates.
I'm with Schwab, so I have my cash in SWVXX. I then sell way OTM cash secured puts against my favorite high IV stocks on about 20% of the total cash in the fund which increases my yield to ~12%.
Jenius bank is currently offering 4.5% on savings accounts. I don't know all the limitations off hand, I have a small amount there and it is indeed earning that rate.
Fidelity MMs generally lag behind Vang and expense ratios are much higher. I think I bonds will go up since inflation is going up as was the situation when this president reigned'. I am always looking for brokered CD's to rise above mm's but they have been pretty wimpy of late-not worth the extra hassle tho if you very large sums a couple basis points can add up. Do the math and i am thinking that there can be a loss of a day or two interest during the money transfer process especially over weekends? Anyone know if this is true or not?.
Why invest in bonds or money market funds at all if they are currently paying essentially the same as a high yield savings account and you have no fluctuation in your principal value.
@Rob Berger...you exercised TERRIFIC restraint with this posting by not mentioning THE Ohio State University winning the national championship football game. Question...was beating Notre Dame in the championship game (analogous to having a winning investment) enough to overcome the regret of an investment loss of getting beat by Michigan? Any correlation in behavioral finance with investment gains/losses and being a sports fan?
Not, Rob Berger. But, as a fellow Buckeye fan/alum, we don't hang banners for beating the team up north, but we do for winning the national championship. Gold pants are nice, but that big gold trophy is nicer. :) GO BUCKS!
Buying TBills and managing them on Fidelity is pretty easy. I’ve been rolling over 4 week T bills for almost 2 years now. Fidelity has an auto roll feature that automatically reinvests in the same Tbill upon maturity. All happens the same day, with no gaps in the investment. The proceeds are deposited in the core position which in my case is SPAXX but other options are available. Fidelity does not charge for this service. The only difference between buying direct from the treasury and Fidelity is the minimum investment is $100 on Treasury Direct vs $1K on Fidelity. And of course the major tax advantage is no state taxes on TBill proceeds.
Used to use SGOV, moved to BIL as SGOV has some non-treasury holdings.
I have been buying from treasury direct for a long time, and it is totally hassle free, you can schedule the reinvestment and it keeps rolling to re-invest as you please.
I do the same. Easy and peace of mind.
BIL ETF invests in 1 to 3 months T Bills. Prices had been super stable for 20+ years. Annual 5%, pays monthly. Great option for retirees to keep 12 months of living expenses, and draw out one month at a time.
Also SGOV, USFR, TBIL, CLIP, SHV, and probably a few more I forget. If you plan on using it like a checking account, the most important thing to look at is the bid/ask spread. Smaller is better. BIL and SGOV are both 0.01%. This spread is how much you lose buying and selling due to market friction. (You lose have the spread when buying, and half when selling.)
As someone who uses a version of the Buffet 90/10 portfolio, I hold all cash in SGOV. Great for taxes and liquidity with a solid return.
I was expecting Rob to mention SGOV. Easier than dealing with individual t-bills.
What is it?
@@mvann5it’s an ETF for ultra short term treasuries.
@@janc.8197easier and far more tax efficient.
@@mvann5 an exchange traded fund owned by Blackrock
Google it- that’s what I did 😂
You can buy T-bills at Vanguard and just have excess cash just gone into your money market fund. I live in California and pay 9% state income tax so it is worth the little extra hassle, to save on the tax.
I moved my cash to Vanguard with my IRA's recently and it feels good having it all under one umbrella. Also gives me the option to put a small portion of cash in something a bit more agressive(the cash i shouldnt need for a year or two)
I've considered the all under one umbrella.. until there is a cyber attack... best not to keep all your eggs in one basket
@jh1982a that's when it pays to be poor, you'd be the last account the crooks drain🤣
Great length of video!
Congratulations Rob on Ohio's big WIN!!
You mean THE Ohio State University…not Ohio University 😊
O-H
Appreciate the comprehensive overview, Rob. Cheers!
Rob. I really like your knowledge and objective approach to finance. I like to keep self educating on finances on RUclips, but when I need the sensible practical answers I seem to come back to your sight. This video is a great example. You can park money here or there or use some creative tactic, OR just use the Vanguard money market or CDs and keep it simple and manageable for the average person 👍👍.
I have most of my cash in a t-bill ladder. Works great for me, and it avoids state income tax. I live in PA with a 3.07% rate, so it's not saving me that much. But if you live in a highly taxed state then I think it's a no brainer to go with t-bills. And if you live in a state without an income tax, then just go with a money market fund.
Thank you, Rob for this video. I like T-Bills and Money Market Funds with Schwab.
Hi Rob. I went to Fidelity's Cash Mgmt account on your suggestion some months back. Surprised you didn't mention it here. Did you change your mind on it?
I opened an account there as well just to get the feel of fidelity. Currently paying 4.01% less .42 in fees (yikes). Still unsure about fidelity.
What about the 'Fidelity Cash Management Account' you mentioned a few months ago?
paying 2.19% as of today. more of a checking acct. than a savings vehicle
@@suzycreamcheese8888 You can now change Fidelity's CMA core position from money market to SPAXX. SPAXX is 4.00% as of 01/21/2025 for the 7 day yield.
I’m getting 4.01% by using SPAXX in my Fidelity Cash Mgmt account.
@@suzycreamcheese8888SPAXX is paying out 4.01 percent as of today Jan. 23rd (if you selected that as your ticker). Although there is probably a better option for more growth. And i’d really only use it for checking and savings personally like you mentioned.
SPAXX is still north of 4%. That’s my default CMA
What about T-Bill ETFs like USFR or TFLO? Aren’t they better or equal to any MM fund or such. That’s where I park cash…am I missing something?
You're not missing anything, those are fine.
Does transferring funds in and out of a money market fund (like VMFXX) through a linked bank account trigger a tax event? Similarly, does selling shares of stock and leaving them in your settlement fund result in a tax event?
Vmfxx has a stable $1.00 price, so buying/selling won’t generate a taxable event, however, if you receive any dividends while holding the fund in a taxable account, the dividends paid are taxed in the year received. Buying/selling stocks in a taxable account will generate a taxable event in the year the transaction takes place…doesn’t matter what you do with the proceeds.
@ thank you 😊
@@generic_official Yes, @reflgwa is right. Keep (or trade) your highest-yield securities in your IRA.
@@reflogwa follow-up: What if the mutual fund (stocks) is a traditional IRA? And any RMD’s are years away?
@@generic_officialanything sitting in a Traditional IRA is tax deferred. You won’t have any tax events while the money sits in the IRA. When you withdraw the money, you will be taxed at ordinary income rates on the amount withdrawn. And if you withdraw prior to age 59 1/2 you will also face additional penalties.
Rob, I use SGOV ETF to park my IRA and brokerage account cash. It pays SEC 4.48% with a Fee of 0.09%. Your thoughts?
I think it's an excellent fund. I believe its SEC yield is no 4.33% as of a few days ago.
I use sgov and TBLL as well
Vanguard is also releasing it's own with a lower ER than SGOV, VBIL, it will come out later this quarter apparently.
@@coltondotdev Thank you for the heads up on Vbil., will check it out as soon as it goes live, have used SGOV whenever fed funds rates are going down And I have used USFR whenever fed funds rates are going up. they are easy to use, pay better than money market funds. And since June first of last year when the country switched to T + 1 settlement it makes getting your cash out very easy and fast now.
Me too
I appreciate this video. I highly prize simplicity. Our cash mainly sits in Vanguard VMFXX federal money market fund.
Sticking with my online bank accounts, simple and same returns. I have however verified that the ones I use are actual FDIC insured banks.
RAISIN is the way to go with online banks all FDIC insured and I don’t have to go through the hassle of setting up a new account if they lower their interest rate.
@ Raisin is not a bank. They transfer your money to a bank, but there is a float period. If Raisin ever had troubles, any funds not in the banks are not insured (as has happened recently). The risk is admittedly low, but on the front end you are not dealing with a FDIC insured bank.
What do you think of capital preservation bond funds like JAAA or CLOA? I have a 3-4 year time horizon for some of my cash and was thinking about investing some of it here. Returns are 6% right now.
I put some money in JBBB (7.65%), but like JAAA as well.
Hello, take a look at my post above on both of those. I’ve had them for just shy of 2 years now and they’ve been great
Another option would be a T-Bill ETF like SGOV
Vanguard is also releasing it's own with a lower ER than SGOV, VBIL, it will come out later this quarter apparently.
@@coltondotdev you have a date for this release? thx
@ The press release just said first quarter 2025. So soon™!
3:16 FYI: Yes, its 4.34% with a minimum initial $1,000,000 investment !!!
I use USFR and FLTR within my Schwab accounts. My experience is it's much easier to move money between short term cash and investments using ETFs vs. MM funds as the latter usually take 1-2 days to settle when selling on Schwab. I've also used SGOV and ICSH, but the floating rate funds have consistently had higher yields, at least over the last 5 years.
Curious as to why you weren’t happy with their services. Sounds like a video worth watching
Hey Rob, you mentioned using Money market accounts, any reason why not high heel savings? I'm not sure if I understand the nuances between the two. Thanks in advance.
I have my emergency money in IBonds. Pros: Ultrasafe treasury investment, State tax exempt. Inflation protected. Tax deferred compounding. Balance never declines (the granny test.) Cons: 1 year lockup, 10K per year contribution limit (but unlimited w. work-arounds,) 3 month interest penalty if redeemed before 5 years.
I'm not an investor but I find buying Treasury Dept Tbills very simple. Bought 4 week Tbills lattered, all on auto roll/ reinvesting....get divideds weekly. Pretty simple, even for me.
That’s investing.
@@suzanneemerson2625 I think of "investing" as in the stock market.. T bills are like banking to me.
Agreed. I have a ladder of 3, 4, 6 and 12 month T-bills.
Too much work
@@kw7292 / nah, you can schedule multiple reinvestments for each bill. Takes me 5 minutes every other month.
What about SGOV? The fees are lower than money market and it should be state tax-free. Yielding ~ 4.33%
Just checked out your "CD Rates" link. Thank you for putting the info together. If is possible for you to please add the feature to sort the CD options by APY? Thank you again.
I have a brokerage account at Vanguard and have been trying to decide where to put cash, between the Money Market Funds you mentioned or the Cash Plus Account.
I thought you could automate the t-bills to where they renew automatically?
XHLF - 1/2 year duration, pays monthly, rolling 1 year T-bills, low ER (0.03%)
CON: as an ETF it has a small B/A spread... so good for income but perhaps some performance drag when buying / selling.
The Schwab Value Advantage MMF at 4.34% required a million dollars??? (time 3.38)
I keep some of our cash in a staggered set of three 13-week T bills at Fidelity. With no transaction fees, Fidelity will auto-roll into new bills as they mature and you can stop that anytime. The rates have been competitive with other cash pots and it’s more liquid than CDs.
Did I miss a discussion of CDs?
Schwab brokerage online accounts allow one to buy CDs from around the country.
They are FDIC insured.
The rates are generally higher than all the rates discussed here for T-bills, money market accounts, etc. They can be bought with terms of 1 month to 10+ years.
Why would you not use these?
Tax us fed state local. I'm in it now but doing Treasuries next & won't get tax fed.
@@liv9534 Interest income on US Treasuries are subject to federal income tax but not state and local income taxes
You have to be careful with CDs because I found that some of them are re-callable, so if interest rates come down, they cash you out.
I'm trying to decide between a flat fee financial advisor and 1% aum financial advisor. Would you ever do a video comparing the two?
What about AAA CLO etfs such as JAAA or PAAA? The yield is near 6% with monthly distributions. Price of a share is about $50, but the price can rise or fall 2-3%.
JAAA is a near-cash equivalent but not 100% risk free like T-bills. It wasn't around during the COVID crash but would have probably plunged (and eventually recovered) just like anything that wasn't T-bills. I keep ~20% of my 'cash' in it.
Good stuff! Thank you. You need to make a video covering your hot beverage preferences. Tea or coffee?
@Rob Berger. Pros vs cons. Money market funds or cash plus. Vanguard example in terms of parking cash? Thank you.
Rob - can you compare target date funds from fidelity, vanguard, and Schwab? It seems that performance wise there are some differences (fidelity and vanguard have similar allocations but vanguard outperforms on all periods. Might be due to duration?)
Rob do you have any insight in ICSH? I have some money in there but agregáis the expense is too higher
Rob. Thank You very much for the useful video. Any thought how to deal ahead in case market is down when it is time for take the RMD . Some people do the treasury bill ladders. It will be great if you could create a video about this topic.
I have a Navy Federal 4.7% add-on CD that has one penalty free withdraw. Maybe bank bonuses then add-on CD's would work. Also no-penalty CDs and t-bills.
I’ve got that Navy Federal CD and keep adding chunks of money to it when other CD’s mature. Mine will mature in Oct. this year. It’s been great!
Hi, David and Annie,
Thanks for the posts! Are you all veterans or have relatives that served? I served with the Air Force from 1971-2001, a great way of life!
I also have a CD with Navy Federal (joined in 2010), 4.59%, matures in Nov. My CDs with PENFED (joined in 1973) will mature soon, I am transferring the funds to Vanguard MM, Navy and T-Bills.
@@lg7728I didn’t serve, but 6 men of my family were Navy. I was able to join through my brother. And same as you, when this CD matures the funds will go to my Vanguard MM. great minds think alike!
How do municipal bonds compare with treasuries and CDs .... considering if you buy munis of the state of residence, you can avoid state and federal tax. The lower returns on munis are offset by zero tax.
I keep my cash in a money market mutual fund with Schwab and sell cash secured puts using that cash to own long term dividend stocks so i am double dipping.
My broker recently recommended diversifying my fixed income with CLOs such as JAAA. I see a couple of commenters on this video have mentioned CLOs as well but I'm pretty green to investing and the old adage "don't invest in what you don't understand" applies here. Do you have experience with these? What are your thoughts on them? JAAA has a short track record but has been way less volatile than even BND, so it seems like maybe its a good fit?
I hold a small portion of my savings in cash and the balance in Vanguard Federal Money Market Fund Investor. I hold this through my primary bank so that if I needed the money, I can access it quickly.
I do t hold emergency savings at my brokerage bank as access takes longer.
What is the second best thing money can buy?
I say freedom is first and the ability to help others is second. What do you have in mind?😊
A great football team! O H I O 🤛🏿
So easy to buy t-bills at Treasury Direct...
What was your issue with Vanguard?
Rob left Vanguard! Oh my! I live with the frustration. Thanks for your advice. For those of us over 59 1/2, I'm wondering if it makes some sense to roll over assets from a traditional IRA to a money market fund in a Roth since we're spending some of our portfolio and then draw from that as needed.. That would avoid taxes on some interest income.
There are a few ultra-short bond ETFs that have been very good in recent years. SGOV or CLIP for treasuries. ICSH or PULS for corporate and cash equivalent holdings.
ICSH gives a nice return but could blow up in a GFC event
Great information.
Hello, Thank you for sharing. Do you have any opinion on Index Universal Life (IUL) Insurance? I have seen some information which claims this is to be swiss army knife for unlimited tax free retirement income since it allows unlimited contribution to IUL.
@Rob Berger. Hi Rob, what about FDLXX? is Fidelity a good option?
What do you think of ICSH?
Thank you, Rob.
What about tbill short term etf. I have fidelity account and bought some tbill etfs
How about JAAA. Safe to put a lot of money?
You mention all your cash is in my funds etc, but what if a person is All in cash, no stocks, bonds etc. Is NOW a time to try balance things out? And yes, I am old
, 70 +. Thank you!
T bills can be purchased directly from Treasury Direct for as low as $100
At 3:37 - SNAXX has a $1,000,000 minimum investment.
USFR invests in floating rate Treasury Bonds and has a 30-day SEC yield of 4.27%, but an average YTM of 4.37%. TFLO is a similar ETF.
I also have some cash in TMCXX at Merrill Edge paying 4.39%. I believe the minimums for all of Merrill Edge's Money Market Mutual funds is $1, but they don't act as automatic sweep accounts.
I have 5600 USD I can play with as the rate drop hit me and I am about to switch to 3.8% HYS from this, now, 1%. I went looking to see if I could get more, or split the HYS with something else, as it will sit there just to gain passive safe income.
CIT Bank Online offers a HYS at 4.45% APY currently.
I moved most of my cash to the SGOV ETF, short duration T-bills (0-3 month).
Same
CLIP is the exact same thing as SGOV with a lower expense ratio
Fidelity SPAXX, SPRXX, FDRXX and there's probably more.
Hey Rob - know you just posted this video 3 days ago, but with the Fed rate cuts, it looks like Vanguard has just cut off new investment in their Money Market funds unless you're brokering directly with Vanguard.
Most of those ST government money market funds invest 50% or more in repos not straight Tbills. Seems like that could be a little risker esp given the US Treasury is employing emergency procedures? Also if legislation isn't enacted could you see the US treasury being unable to paid or deferring maturing tbills ?
Wealthfront is at 4.25%. Ive made 25k in the last 2 years!
very helpful
I put mine in 1 month T-bill 1 to renew as needed .
I have cash in VUSXX, about 80% of which was state tax exempt in 2023. I live in New York City, so that's significant. I have a ladder of 13 week t-bills at Fidelity, on auto roll, so no management necessary. Every month when a bond matures some cash ends up in SPAXX, currently paying 4%, so not bad. Periodically I move money from SPAXX to a HYSA, and if cash builds up there I move it into VUSXX. It's mostly no muss no fuss, with minimal effort to manage.
How about fixed annuities? They CD rates, sometimes a little more plus the interest is not taxed until cashed out. There is a penalty for early withdrawal but of course you don’t tie up money you are going to need in the next few years. I know older people that laddered annuities. When they passed they had never paid income taxes on the interest. They beat the Man!
Thank You
Love your content, Rob! Thank you.❤
CDs are a pain in the arse to manage. Besides bond ETFs, go with VMFXX for a sweet 5% yield... Keep it simple.
I would be careful with the tax-exempt municipal MM funds as their yield is extremely volatile. The yield it shows now could be halved in a few weeks, so even the current tax equivalent yield would not be indicative of what it will actually yield you in the next few months, even if the fed doesn’t make any movements in the short term rates.
Tbills are automatically reinvested at Fidelity
But not the interest which is the problem. You always have something left over.
Raisin offers really good deals
I'm with Schwab, so I have my cash in SWVXX. I then sell way OTM cash secured puts against my favorite high IV stocks on about 20% of the total cash in the fund which increases my yield to ~12%.
Why not something like BOXX which is highly liquid and more tax efficient (pay capital gains rates on growth, not income tax rates)?
I am 95% BIL ETF, 5% XRMI
Jenius bank is currently offering 4.5% on savings accounts. I don't know all the limitations off hand, I have a small amount there and it is indeed earning that rate.
Fidelity MMs generally lag behind Vang and expense ratios are much higher. I think I bonds will go up since inflation is going up as was the situation when this president reigned'. I am always looking for brokered CD's to rise above mm's but they have been pretty wimpy of late-not worth the extra hassle tho if you very large sums a couple basis points can add up. Do the math and i am thinking that there can be a loss of a day or two interest during the money transfer process especially over weekends? Anyone know if this is true or not?.
Timely question. Thanks.
Why invest in bonds or money market funds at all if they are currently paying essentially the same as a high yield savings account and you have no fluctuation in your principal value.
I get only 2.5% returns but I feel nice without the stress of market uncertainty
T-Bills aren’t a hassle. Use Fidelity, setup a ladder with auto roll, let it go, done.
SGOV. Done.
Tbills and SPAXX
Congrats to Buckeyes 😢😢☘️
i have some cash in FDRXX and SPAXX but can SGOV replace my bond allocation instead?
🤘
Bask Bank is good now
Bask bank 4.50%.
You should go into teaching at a college or high school for finance, Mr Rob.
@Rob Berger...you exercised TERRIFIC restraint with this posting by not mentioning THE Ohio State University winning the national championship football game. Question...was beating Notre Dame in the championship game (analogous to having a winning investment) enough to overcome the regret of an investment loss of getting beat by Michigan? Any correlation in behavioral finance with investment gains/losses and being a sports fan?
Not, Rob Berger. But, as a fellow Buckeye fan/alum, we don't hang banners for beating the team up north, but we do for winning the national championship. Gold pants are nice, but that big gold trophy is nicer. :) GO BUCKS!
I have a really nice mattress and would be willing to hold your excess cash under it.
O-H...