Personal Finance Advice and Education! (1 Viewer)

[NutterButter]

Thanks guys. You gave me some different options to explore. I do have a fidelity 401K thru work with investments in a brokerage link account. I assume the account you mentioned above is something set up outside of that account.

A 529? Yes, what state are you in?

I meant the brokerage account at Fidelity.

But yeah for 529s I'm in Arizona.

Az529.gov you have the ability to deduct $4k a year.

So if I'm understanding correctly...

529 contributions are like Roths where your contributions are after tax. Disbursement of principal and gains are tax free. For the state portion you also can deduct up to $4k per year. Which in AZ is now a 2.5% flat tax or $100 max on the $4K.

My only concern with a 529 is I can't afford the market to go sideways/down as I’ll need the funds each year after I put them in. My plan is to put away $750 every two weeks which is $19,500 a year. I'm going to start in the next month or so and will have to pull out roughly $8,500 in August and again in January. Repeating the same process for the next 4 years and probably something similar for the 4 years after. I'm thinking a 4-5% savings account might be the safest/best return I can get given the short term nature and lack of risk because I can't lose any $ that's needed to pay the school bill.

I’m sure the 529 will have money market type funds. So you’ll save $100 a year (per child/beneficiary), so $200 a year for the next 4, and $100 a year for the next four. All growth will be tax free as well, so long as the money is used for higher education.

Thanks

If you do open up the 529, can you let me know if you see something that looks like a money market? I looked at my NY 529 and its almost all stock and bond portfolios as well as one other that has part of it in a money market but a handful of other things as well. I too am just looking for somewhere extremely safe to dump some cash in the short term for college that gets the best return.

 

[stbugs]

Thanks guys. You gave me some different options to explore. I do have a fidelity 401K thru work with investments in a brokerage link account. I assume the account you mentioned above is something set up outside of that account.

You just need to deposit the money in there and make sure you change your core cash to one of the money market funds. Not sure if you have a full brokerage account if it was setup at work but you can easily add a new brokerage account with bill pay, checks, etc.

Personally, I actually have too many accounts setup, but it does help that I have accounts I can use for checks and bill pay that aren’t my main account. It’s so easy to transfer cash around so it means I never expose my main account.

 

[Nugget]

My 529 is through Learning Quest (Kansas). They offer the following that should pay similar rates to the savings account/MMA funds. 1 yr return is 4.43%, but I'm not sure on the exact math as a lot of the yields are changing weekly/monthly based on t-bill auctions. We get a $3K tax break per kid ($6K if married) and our state rate is around 5%.

Learning Quest Cash and Cash Equivalents Portfolio -The Cash and Cash Equivalents Account is a very conservative portfolio that seeks to earn the highest level of income while preserving the principal value of its assets. The portfolio invests most of its assets in high-quality short term debt securities issued by banks, corporations and the U.S. Government, as well as state and local governments. Because high-quality debt securities are typically among the safest securities available, the interest they pay is among the lowest for income paying securities.​

 

[skol asylum]

Thanks guys. You gave me some different options to explore. I do have a fidelity 401K thru work with investments in a brokerage link account. I assume the account you mentioned above is something set up outside of that account.

A 529? Yes, what state are you in?

I meant the brokerage account at Fidelity.

But yeah for 529s I'm in Arizona.

Az529.gov you have the ability to deduct $4k a year.

So if I'm understanding correctly...

529 contributions are like Roths where your contributions are after tax. Disbursement of principal and gains are tax free. For the state portion you also can deduct up to $4k per year. Which in AZ is now a 2.5% flat tax or $100 max on the $4K.

My only concern with a 529 is I can't afford the market to go sideways/down as I’ll need the funds each year after I put them in. My plan is to put away $750 every two weeks which is $19,500 a year. I'm going to start in the next month or so and will have to pull out roughly $8,500 in August and again in January. Repeating the same process for the next 4 years and probably something similar for the 4 years after. I'm thinking a 4-5% savings account might be the safest/best return I can get given the short term nature and lack of risk because I can't lose any $ that's needed to pay the school bill.

I’m sure the 529 will have money market type funds. So you’ll save $100 a year (per child/beneficiary), so $200 a year for the next 4, and $100 a year for the next four. All growth will be tax free as well, so long as the money is used for higher education.

Thanks

If you do open up the 529, can you let me know if you see something that looks like a money market? I looked at my NY 529 and its almost all stock and bond portfolios as well as one other that has part of it in a money market but a handful of other things as well. I too am just looking for somewhere extremely safe to dump some cash in the short term for college that gets the best return.

I looked at the AZ529 and I didn't see any money market there either. If I find something I'll make sure to pass it along. Appreciate it if you could do the same. Thanks!

 

[Andrew74]

Thanks guys. You gave me some different options to explore. I do have a fidelity 401K thru work with investments in a brokerage link account. I assume the account you mentioned above is something set up outside of that account.

A 529? Yes, what state are you in?

I meant the brokerage account at Fidelity.

But yeah for 529s I'm in Arizona.

Az529.gov you have the ability to deduct $4k a year.

So if I'm understanding correctly...

529 contributions are like Roths where your contributions are after tax. Disbursement of principal and gains are tax free. For the state portion you also can deduct up to $4k per year. Which in AZ is now a 2.5% flat tax or $100 max on the $4K.

My only concern with a 529 is I can't afford the market to go sideways/down as I’ll need the funds each year after I put them in. My plan is to put away $750 every two weeks which is $19,500 a year. I'm going to start in the next month or so and will have to pull out roughly $8,500 in August and again in January. Repeating the same process for the next 4 years and probably something similar for the 4 years after. I'm thinking a 4-5% savings account might be the safest/best return I can get given the short term nature and lack of risk because I can't lose any $ that's needed to pay the school bill.

I’m sure the 529 will have money market type funds. So you’ll save $100 a year (per child/beneficiary), so $200 a year for the next 4, and $100 a year for the next four. All growth will be tax free as well, so long as the money is used for higher education.

Thanks

If you do open up the 529, can you let me know if you see something that looks like a money market? I looked at my NY 529 and its almost all stock and bond portfolios as well as one other that has part of it in a money market but a handful of other things as well. I too am just looking for somewhere extremely safe to dump some cash in the short term for college that gets the best return.

I looked at the AZ529 and I didn't see any money market there either. If I find something I'll make sure to pass it along. Appreciate it if you could do the same. Thanks!

Looks like the direct sold plan through Fidelity has a Bank Deposit option, as well as a Stable Value fund. Those would be your two cash options.

 

[steelerfan1]

This may be a stupid question, but I’ll ask it anyway. Currently we have a 10% bond allocation. We are down approx 14%.

this is in a traditional IRA. the vanguard settlement fund money market is now aT 5.25%. Would it be stupid to sell all the bonds one just let them set in that fund earning that rate?

 

[Desert_Power]

This may be a stupid question, but I’ll ask it anyway. Currently we have a 10% bond allocation. We are down approx 14%.

this is in a traditional IRA. the vanguard settlement fund money market is now aT 5.25%. Would it be stupid to sell all the bonds one just let them set in that fund earning that rate?

So you're talking about swapping out a higher duration bond fund for a lower one?

 

[Sand]

Hey smart $ guys. College is starting this month for my oldest and in 4 years will be here for my youngest. Unfortunately didn't have any sort of 529 or other setup ready to go to help pay for it so am playing a little catch up. Doing loans for this first year with a goal to pay off by the time they graduate in some fashion.

Have also shifted some budget finances around and are going to start saving monthly going forward so that beginning next year our piece of the pie will be paid for each year, leaving their scholarship and smaller loans to cover the rest.

Was looking to open a high yield savings account to save the money in as we build it for each school year. Because of the short term nature of when the money is needed and not wanting to risk any of it on investments I was thinking a savings account was the way to go. Was wondering if anyone had a recommendation for which to use. I see a bunch out there advertising with 4.4 to 5.4 percent interest claims. Thanks!

I just use my brokerage account at Fidelity. Right now it’s 4.97% and I can write checks, pay bills, invest in stocks, etc. with 0 inconveniences or delays. Personally, at that rate I have no interest in creating another account or lock money up for any period of time.

I’d recommend starting there and work on building up long term investments from there as well. Another benefit is that many people use Fidelity for 401ks or could transfer/rollover other accounts easily.

Yep, but check on the minimum balance for SPAXX.

$0?

That's good. It was FDRXX that has minimums now.

 

[steelerfan1]

This may be a stupid question, but I’ll ask it anyway. Currently we have a 10% bond allocation. We are down approx 14%.

this is in a traditional IRA. the vanguard settlement fund money market is now aT 5.25%. Would it be stupid to sell all the bonds one just let them set in that fund earning that rate?

So you're talking about swapping out a higher duration bond fund for a lower one?

Hi DP, it’s just actually a money market.

 

[Orange&Blue]

It's Over: How Home Prices Destroyed the American Dream

ðª Hump Days Newsletter â https://humpdays.substack.comThis video we discuss home prices and the factors leading to high home prices this year and beyond.Pri...

youtu.be

 

[Juxtatarot]

This may be a stupid question, but I’ll ask it anyway. Currently we have a 10% bond allocation. We are down approx 14%.

this is in a traditional IRA. the vanguard settlement fund money market is now aT 5.25%. Would it be stupid to sell all the bonds one just let them set in that fund earning that rate?

They are down because rates went up so much. When rates go back down, your bond values should do quite well. I generally think we shouldn’t change our allocation percentages in an attempt to time markets.

 

[Andrew74]

This may be a stupid question, but I’ll ask it anyway. Currently we have a 10% bond allocation. We are down approx 14%.

this is in a traditional IRA. the vanguard settlement fund money market is now aT 5.25%. Would it be stupid to sell all the bonds one just let them set in that fund earning that rate?

I wouldn’t do it. While past performance doesn’t guarantee future returns, after the last 7 Fed hiking cycles ended bonds beat cash rates 2x-3x over resulting 6, 12 and 36 months. Last year was apocalyptic for bonds; it will take a while to recoup the losses. But you can’t recoup the losses moving to cash. Money markets won’t have capital gains when rates eventually fall.

 

[Sand]

This may be a stupid question, but I’ll ask it anyway. Currently we have a 10% bond allocation. We are down approx 14%.

this is in a traditional IRA. the vanguard settlement fund money market is now aT 5.25%. Would it be stupid to sell all the bonds one just let them set in that fund earning that rate?

They are down because rates went up so much. When rates go back down, your bond values should do quite well. I generally think we shouldn’t change our allocation percentages in an attempt to time markets.

There is no guarantee that rates will go back down.

 

[-OZ-]

This may be a stupid question, but I’ll ask it anyway. Currently we have a 10% bond allocation. We are down approx 14%.

this is in a traditional IRA. the vanguard settlement fund money market is now aT 5.25%. Would it be stupid to sell all the bonds one just let them set in that fund earning that rate?

They are down because rates went up so much. When rates go back down, your bond values should do quite well. I generally think we shouldn’t change our allocation percentages in an attempt to time markets.

There is no guarantee that rates will go back down.

Right, but if you want bonds as part of your mix, I still wouldn’t sell now. Just take the current rate.

 

[Juxtatarot]

This may be a stupid question, but I’ll ask it anyway. Currently we have a 10% bond allocation. We are down approx 14%.

this is in a traditional IRA. the vanguard settlement fund money market is now aT 5.25%. Would it be stupid to sell all the bonds one just let them set in that fund earning that rate?

They are down because rates went up so much. When rates go back down, your bond values should do quite well. I generally think we shouldn’t change our allocation percentages in an attempt to time markets.

There is no guarantee that rates will go back down.

That’s true, of course. I should have stated as such. As you know, long-term rates can still be considered low when looking through a wide, historical lens.

That said, there has been a societal shift over the decades on this. Barring persistent above target inflation, there will be tremendous will to lower borrowing costs. As they say, where there is a will, there is a way. I’d truly be shocked if that doesn’t happen.

 

[Sand]

This may be a stupid question, but I’ll ask it anyway. Currently we have a 10% bond allocation. We are down approx 14%.

this is in a traditional IRA. the vanguard settlement fund money market is now aT 5.25%. Would it be stupid to sell all the bonds one just let them set in that fund earning that rate?

They are down because rates went up so much. When rates go back down, your bond values should do quite well. I generally think we shouldn’t change our allocation percentages in an attempt to time markets.

There is no guarantee that rates will go back down.

That’s true, of course. I should have stated as such. As you know, long-term rates can still be considered low when looking through a wide, historical lens.

That said, there has been a societal shift over the decades on this. Barring persistent above target inflation, there will be tremendous will to lower borrowing costs. As they say, where there is a will, there is a way. I’d truly be shocked if that doesn’t happen.

Same here.

But markets...

 

[steelerfan1]

Thanks everyone. I’m talking about vanguard BND as well. Since it’s inception it’s showing a minus 4.29%. Ouch. I mean it’s not a crazy amount of cash we are down but I guess I’m just questioning the value now.

 

[stbugs]

Hey smart $ guys. College is starting this month for my oldest and in 4 years will be here for my youngest. Unfortunately didn't have any sort of 529 or other setup ready to go to help pay for it so am playing a little catch up. Doing loans for this first year with a goal to pay off by the time they graduate in some fashion.

Have also shifted some budget finances around and are going to start saving monthly going forward so that beginning next year our piece of the pie will be paid for each year, leaving their scholarship and smaller loans to cover the rest.

Was looking to open a high yield savings account to save the money in as we build it for each school year. Because of the short term nature of when the money is needed and not wanting to risk any of it on investments I was thinking a savings account was the way to go. Was wondering if anyone had a recommendation for which to use. I see a bunch out there advertising with 4.4 to 5.4 percent interest claims. Thanks!

I just use my brokerage account at Fidelity. Right now it’s 4.97% and I can write checks, pay bills, invest in stocks, etc. with 0 inconveniences or delays. Personally, at that rate I have no interest in creating another account or lock money up for any period of time.

I’d recommend starting there and work on building up long term investments from there as well. Another benefit is that many people use Fidelity for 401ks or could transfer/rollover other accounts easily.

Yep, but check on the minimum balance for SPAXX.

$0?

That's good. It was FDRXX that has minimums now.

It may if you are purchasing it separately. It’s my core cash position in my IRA and there’s no minimum. I’m sure I’m over the purchase minimum regardless now but there’s no minimum for the cash sweep when you sell securities or get the monthly dividends. It’s just an option in Fidelity accounts to use those two funds as your “cash” position in their accounts.

 

[fantasy stud]

https://youtu.be/eL9DBjfhWAE[/URL

http://

It's Over: How Home Prices Destroyed the American Dream

ðª Hump Days Newsletter â https://humpdays.substack.comThis video we discuss home prices and the factors leading to high home prices this year and beyond.Pri...

youtu.be

At the 1:25 mark, it says in the late 40's, early 50's, a 1,400 foot starter home would cost about $50,000 in today's money. That says a lot .

 

[The Z Machine]

At the 1:25 mark, it says in the late 40's, early 50's, a 1,400 foot starter home would cost about $50,000 in today's money. That says a lot .

I was thinking about that. How much subsidization of nee home construction was done by the government post WWII? I know there was a lot of subsidies for the down payment and mortgages for returning GIs, but what about direct subsidization of the building industry?

Is this something that should be done? More direct government grants for building smaller, less expensive homes (not just houses, but condos and multi-unit). Trying to build up inventory of starter homes again, not just 2500+ sq ft, $400+k homes that the Millennials and Gen Z cannot afford.

 

[Mitchie]

https://youtu.be/eL9DBjfhWAE[/URL

http://

It's Over: How Home Prices Destroyed the American Dream

ðª Hump Days Newsletter â https://humpdays.substack.comThis video we discuss home prices and the factors leading to high home prices this year and beyond.Pri...

youtu.be

At the 1:25 mark, it says in the late 40's, early 50's, a 1,400 foot starter home would cost about $50,000 in today's money. That says a lot .

Where?

 

[fantasy stud]

At the 1:25 mark, it says in the late 40's, early 50's, a 1,400 foot starter home would cost about $50,000 in today's money. That says a lot .

I was thinking about that. How much subsidization of nee home construction was done by the government post WWII? I know there was a lot of subsidies for the down payment and mortgages for returning GIs, but what about direct subsidization of the building industry?

Is this something that should be done? More direct government grants for building smaller, less expensive homes (not just houses, but condos and multi-unit). Trying to build up inventory of starter homes again, not just 2500+ sq ft, $400+k homes that the Millennials and Gen Z cannot afford.

Good question, I'm a teacher in Central Florida and when I was starting out in 2003, I bought a starter house for about $85,000. That same home is now about $240,000. Starting pay has gone up 1.8 times, but houses have tripled. I'm not sure how people starting out afford to live.

 

[The Z Machine]

The people that will be opposed to this are a) homeowners who think it will decrease the value of their home and b) free-market folks who think that the invisible hand will sorry it out.

What we will have is a few generation of folks that got locked into rentals because they didn't have the generational wealth to leverage home buying until they are 35-40. This will transfer wealth away from middle class folks to corporations that run real estate rental businesses. Sure there may be some upper middle class folks in the GenX and early Millenial generations that do even better because they leveraged their starter home into a bigger home and then into rental properties. But generally when the middle class gets screwed, it's the corporations that do best.

 

[Schmeabs]

The people that will be opposed to this are a) homeowners who think it will decrease the value of their home and b) free-market folks who think that the invisible hand will sorry it out.

What we will have is a few generation of folks that got locked into rentals because they didn't have the generational wealth to leverage home buying until they are 35-40. This will transfer wealth away from middle class folks to corporations that run real estate rental businesses. Sure there may be some upper middle class folks in the GenX and early Millenial generations that do even better because they leveraged their starter home into a bigger home and then into rental properties. But generally when the middle class gets screwed, it's the corporations that do best.

Corporations doing well is great, love that we live in a country where people can prosper.

 

[matttyl]

Is there a way in which to get a really good estimate of what your taxable income will be (isn’t it box 1 on your W2?) from a YTD paystub? As you don’t receive your w2 until we’ll into the next cal near year, and Roth conversions have to be done inside the calendar year, you’re kinda just going off estimates to see how much you can convert prior to the next tax bracket.

Looking at last years w2 and final December paystub, looks like it’s pretty close to the combined amounts of what was actually direct deposited into my account, any ROTH 401k contributions and withheld taxes - though I’m still off by about $2k. It’s likely close enough, but since my wife will be switching jobs this year we’ll have 3 w2s, so want to estimate as close as we can and be sure I’m not missing something obvious on each.

Thanks!

 

[Steve Tasker]

Is there a way in which to get a really good estimate of what your taxable income will be (isn’t it box 1 on your W2?) from a YTD paystub? As you don’t receive your w2 until we’ll into the next cal near year, and Roth conversions have to be done inside the calendar year, you’re kinda just going off estimates to see how much you can convert prior to the next tax bracket.

Looking at last years w2 and final December paystub, looks like it’s pretty close to the combined amounts of what was actually direct deposited into my account, any ROTH 401k contributions and withheld taxes - though I’m still off by about $2k. It’s likely close enough, but since my wife will be switching jobs this year we’ll have 3 w2s, so want to estimate as close as we can and be sure I’m not missing something obvious on each.

Thanks!

Usually your paystub will show some sort of "pre-tax deductions" section, things like health insurance premiums, 401k deferral, etc. Subtract that number from your gross wages and voila, box 1 taxable income on your W-2.

 

[matttyl]

Is there a way in which to get a really good estimate of what your taxable income will be (isn’t it box 1 on your W2?) from a YTD paystub? As you don’t receive your w2 until we’ll into the next cal near year, and Roth conversions have to be done inside the calendar year, you’re kinda just going off estimates to see how much you can convert prior to the next tax bracket.

Looking at last years w2 and final December paystub, looks like it’s pretty close to the combined amounts of what was actually direct deposited into my account, any ROTH 401k contributions and withheld taxes - though I’m still off by about $2k. It’s likely close enough, but since my wife will be switching jobs this year we’ll have 3 w2s, so want to estimate as close as we can and be sure I’m not missing something obvious on each.

Thanks!

Usually your paystub will show some sort of "pre-tax deductions" section, things like health insurance premiums, 401k deferral, etc. Subtract that number from your gross wages and voila, box 1 taxable income on your W-2.

Has “deductions”, but doesn’t separate pre and post tax (both traditional and Roth 401k listed, as well as a bunch of other stuff). Like I said I’m pretty close, but being off by 2k on one may mean 6k when making gb the same mistake on 3.

 

[The Z Machine]

The people that will be opposed to this are a) homeowners who think it will decrease the value of their home and b) free-market folks who think that the invisible hand will sorry it out.

What we will have is a few generation of folks that got locked into rentals because they didn't have the generational wealth to leverage home buying until they are 35-40. This will transfer wealth away from middle class folks to corporations that run real estate rental businesses. Sure there may be some upper middle class folks in the GenX and early Millenial generations that do even better because they leveraged their starter home into a bigger home and then into rental properties. But generally when the middle class gets screwed, it's the corporations that do best.

Corporations doing well is great, love that we live in a country where people can prosper.

Corporations doing well is great <> people can prosper

I would rather have more lower middle class folks building wealth than corporations prospering.

 

[Schmeabs]

The people that will be opposed to this are a) homeowners who think it will decrease the value of their home and b) free-market folks who think that the invisible hand will sorry it out.

What we will have is a few generation of folks that got locked into rentals because they didn't have the generational wealth to leverage home buying until they are 35-40. This will transfer wealth away from middle class folks to corporations that run real estate rental businesses. Sure there may be some upper middle class folks in the GenX and early Millenial generations that do even better because they leveraged their starter home into a bigger home and then into rental properties. But generally when the middle class gets screwed, it's the corporations that do best.

Corporations doing well is great, love that we live in a country where people can prosper.

Corporations doing well is great <> people can prosper

I would rather have more lower middle class folks building wealth than corporations prospering.

In a good economy both can prosper

 

[jm192]

Looking to park some cash in a money market account. Favorite option is the Fidelity Municipal Money Market.

I've never done the money market thing. Do I just buy "shares" of it in a brokerage account or how do I got putting the money into that?

 

[Andrew74]

Looking to park some cash in a money market account. Favorite option is the Fidelity Municipal Money Market.

I've never done the money market thing. Do I just buy "shares" of it in a brokerage account or how do I got putting the money into that?

Open Fidelity account, then buy shares. Shares are valued at $1. Not sure if you can buy it outside a Fidelity account.

 

[Sand]

Looking to park some cash in a money market account. Favorite option is the Fidelity Municipal Money Market.

I've never done the money market thing. Do I just buy "shares" of it in a brokerage account or how do I got putting the money into that?

When you setup a Fidelity account they should ask you what your preferred cash sweep account is. I've never had to buy those.

 

[-OZ-]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

 

[jm192]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

 

[gianmarco]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

 

[Nugget]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

If you already have the TD account, you can roll t bills. 4,8, and 13 week are all right around 5.4%. Not fed exempt, but exempt from state and local. I think I’ll put my 2024 I bond money in there and then spread the purchases out across the year.

 

[-OZ-]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

The HYSA isn’t guaranteed to keep that rate. Although It doesn’t seem like much risk right now that they’ll drop soon.

 

[NutterButter]

Looking to park some cash in a money market account. Favorite option is the Fidelity Municipal Money Market.

I've never done the money market thing. Do I just buy "shares" of it in a brokerage account or how do I got putting the money into that?

When you setup a Fidelity account they should ask you what your preferred cash sweep account is. I've never had to buy those.

Similar thing for vanguard without even asking. The default cash sweep account (called settlement fund in vanguard parlance) is their federal money market fund which is currently sitting at 5.26% so I didn't have to do anything besides transferring the money from my bank. I thought that was pretty neat.

 

[jm192]

Looking to park some cash in a money market account. Favorite option is the Fidelity Municipal Money Market.

I've never done the money market thing. Do I just buy "shares" of it in a brokerage account or how do I got putting the money into that?

When you setup a Fidelity account they should ask you what your preferred cash sweep account is. I've never had to buy those.

Similar thing for vanguard without even asking. The default cash sweep account (called settlement fund in vanguard parlance) is their federal money market fund which is currently sitting at 5.26% so I didn't have to do anything besides transferring the money from my bank. I thought that was pretty neat.

WOW.

From all of my reading, I thought the Municipal Money markets were supposed to outperform the Federal after adjusting for taxes. But the Federal Money Market is clearly winning here.

 

[jm192]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

If I was going to do it, I'd go with one of the bigger names. Discover, Ally, Marcus, and maybe not as big but Laurel Road as I have a relationship account via student loans. Laurel Road is currently the best of those at 4.88. But if the Vanguard Federal Money Market is hitting 5+%, I think I'd rather just have the money there.

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

 

[Mitchie]

Looking to park some cash in a money market account. Favorite option is the Fidelity Municipal Money Market.

I've never done the money market thing. Do I just buy "shares" of it in a brokerage account or how do I got putting the money into that?

When you setup a Fidelity account they should ask you what your preferred cash sweep account is. I've never had to buy those.

Similar thing for vanguard without even asking. The default cash sweep account (called settlement fund in vanguard parlance) is their federal money market fund which is currently sitting at 5.26% so I didn't have to do anything besides transferring the money from my bank. I thought that was pretty neat.

WOW.

From all of my reading, I thought the Municipal Money markets were supposed to outperform the Federal after adjusting for taxes. But the Federal Money Market is clearly winning here.

yeah that's not correct, both rates can vary and it can depend, but also highly dependent on your tax rate.

 

[Juxtatarot]

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

Correct. They can certainly change the rate month to month.

Since these HYSA have been a thing, they have outperformed the brokerage money market accounts when interest rates as a whole have been low. Since the Great Recession started, that's been the case except a few years before the pandemic and this recent period.

 

[gianmarco]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

If I was going to do it, I'd go with one of the bigger names. Discover, Ally, Marcus, and maybe not as big but Laurel Road as I have a relationship account via student loans. Laurel Road is currently the best of those at 4.88. But if the Vanguard Federal Money Market is hitting 5+%, I think I'd rather just have the money there.

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

There's no restrictions and rates can change, but the one I've linked a few times, I've been with them now for a few years. They've consistently been higher than everyone else. And they've consistently increased over the last 2 years. Since I last linked a couple weeks ago, it's gone up another 0.1% and it's over 5%.

 

[NutterButter]

Looking to park some cash in a money market account. Favorite option is the Fidelity Municipal Money Market.

I've never done the money market thing. Do I just buy "shares" of it in a brokerage account or how do I got putting the money into that?

When you setup a Fidelity account they should ask you what your preferred cash sweep account is. I've never had to buy those.

Similar thing for vanguard without even asking. The default cash sweep account (called settlement fund in vanguard parlance) is their federal money market fund which is currently sitting at 5.26% so I didn't have to do anything besides transferring the money from my bank. I thought that was pretty neat.

WOW.

From all of my reading, I thought the Municipal Money markets were supposed to outperform the Federal after adjusting for taxes. But the Federal Money Market is clearly winning here.

Possibly. I see the vanguard one is 3% so you can do the math. I know I'd be better off with the other since we're only talking about fed tax exemption.

 

[jm192]

Looking to park some cash in a money market account. Favorite option is the Fidelity Municipal Money Market.

I've never done the money market thing. Do I just buy "shares" of it in a brokerage account or how do I got putting the money into that?

When you setup a Fidelity account they should ask you what your preferred cash sweep account is. I've never had to buy those.

Similar thing for vanguard without even asking. The default cash sweep account (called settlement fund in vanguard parlance) is their federal money market fund which is currently sitting at 5.26% so I didn't have to do anything besides transferring the money from my bank. I thought that was pretty neat.

WOW.

From all of my reading, I thought the Municipal Money markets were supposed to outperform the Federal after adjusting for taxes. But the Federal Money Market is clearly winning here.

Possibly. I see the vanguard one is 3% so you can do the math. I know I'd be better off with the other since we're only talking about fed tax exemption.

The after tax rate is like ~4.4 or 4.5 based on the most recent 3 day SEC Yield info.

 

[Andrew74]

Looking to park some cash in a money market account. Favorite option is the Fidelity Municipal Money Market.

I've never done the money market thing. Do I just buy "shares" of it in a brokerage account or how do I got putting the money into that?

When you setup a Fidelity account they should ask you what your preferred cash sweep account is. I've never had to buy those.

Similar thing for vanguard without even asking. The default cash sweep account (called settlement fund in vanguard parlance) is their federal money market fund which is currently sitting at 5.26% so I didn't have to do anything besides transferring the money from my bank. I thought that was pretty neat.

WOW.

From all of my reading, I thought the Municipal Money markets were supposed to outperform the Federal after adjusting for taxes. But the Federal Money Market is clearly winning here.

The past 6-9 months has been really volatile on muni money rates. They go from way higher than taxable to way lower every other week it seems. Normally if you are in the top tax brackets, munis are a easy yes.

 

[jm192]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

If I was going to do it, I'd go with one of the bigger names. Discover, Ally, Marcus, and maybe not as big but Laurel Road as I have a relationship account via student loans. Laurel Road is currently the best of those at 4.88. But if the Vanguard Federal Money Market is hitting 5+%, I think I'd rather just have the money there.

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

There's no restrictions and rates can change, but the one I've linked a few times, I've been with them now for a few years. They've consistently been higher than everyone else. And they've consistently increased over the last 2 years. Since I last linked a couple weeks ago, it's gone up another 0.1% and it's over 5%.

Can you link them again?

I think you've talked me into it. Once I Switch jobs in November, I'll move my Schwab and Ameritrade to Fidelity and that will cut down on 2. My wife's Prudential account takes zero energy. It's on autopilot. So you're probably right, what's 1 more at that point.

Also--while very small--there IS an expense ratio tied to the money market accounts. And that is going to eat into the gains.

Hilariously, I told you I would probably do Laurel Road since I have an account and experience with them. I have an account with their Mohela branch which handles student loans. But to start a HYSA, I'd have to make a new account on the main Laurel Road website. While googling reviews and such--there are a lot of instances of them freezing people's accounts to do a fraud review. One person on Reddit claims they were frozen out for 2 months. I don't plan on needing the money in 2 months, but I don't need/want the anxiety that comes with that.

 

[NutterButter]

Also--while very small--there IS an expense ratio tied to the money market accounts. And that is going to eat into the gains.

Saw that. I already had a trading account with schwab and an ira with vanguard. Saw the schwab er was 3x higher than vanguard so opened a trading account with vanguard instead of using schwab.

 

[gianmarco]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

If I was going to do it, I'd go with one of the bigger names. Discover, Ally, Marcus, and maybe not as big but Laurel Road as I have a relationship account via student loans. Laurel Road is currently the best of those at 4.88. But if the Vanguard Federal Money Market is hitting 5+%, I think I'd rather just have the money there.

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

There's no restrictions and rates can change, but the one I've linked a few times, I've been with them now for a few years. They've consistently been higher than everyone else. And they've consistently increased over the last 2 years. Since I last linked a couple weeks ago, it's gone up another 0.1% and it's over 5%.

Can you link them again?

I think you've talked me into it. Once I Switch jobs in November, I'll move my Schwab and Ameritrade to Fidelity and that will cut down on 2. My wife's Prudential account takes zero energy. It's on autopilot. So you're probably right, what's 1 more at that point.

Also--while very small--there IS an expense ratio tied to the money market accounts. And that is going to eat into the gains.

Hilariously, I told you I would probably do Laurel Road since I have an account and experience with them. I have an account with their Mohela branch which handles student loans. But to start a HYSA, I'd have to make a new account on the main Laurel Road website. While googling reviews and such--there are a lot of instances of them freezing people's accounts to do a fraud review. One person on Reddit claims they were frozen out for 2 months. I don't plan on needing the money in 2 months, but I don't need/want the anxiety that comes with that.

CIT HYSA -- 5.05%

 

[The Z Machine]

my 18yo works at our local credit union mentioned to me this morning that his credit union is offering 8 month CDs at 5.41%. I’ll probably sell our I bonds in September and buy 20k. That’s either part of our next vehicle fund or EF.
It was either that or roll half into our 5% HYSA and half into our equity pie. Not real sure, it’s probably a coin flip unless the HYSA drops the rate.

I personally favor the HYSA/Money Market route. Mainly because of the liquidity differences.

0.41% isn't worth locking the money up. If I had a HYSA account getting 5%, I'd do that. I currently don't, and REALLY don't want to put money into yet another place. We're spread across Prduential, Fidelity, Vanguard, Schwab, Ameritrade, and Treasury Direct. Not to mention the local bank. Gotta cut down.

So I'm throwing extra cash into the Vanguard Municipal Money Market. The Municipal Money market funds are Federal tax exempt. For Vanguard, The tax equivalent yield is around 4.5% currently.

Opening a HYSA account takes minutes. What's 1 extra account vs earning 0.5% more that's completely liquid and hassle-free?

If I was going to do it, I'd go with one of the bigger names. Discover, Ally, Marcus, and maybe not as big but Laurel Road as I have a relationship account via student loans. Laurel Road is currently the best of those at 4.88. But if the Vanguard Federal Money Market is hitting 5+%, I think I'd rather just have the money there.

My understanding is some of the banks with HYSA will shoot up to the highest rate to draw money in, then drop back below the pack. Is that fair to say? Are there regulations/restrictions on how often they can change the rates on you?

There's no restrictions and rates can change, but the one I've linked a few times, I've been with them now for a few years. They've consistently been higher than everyone else. And they've consistently increased over the last 2 years. Since I last linked a couple weeks ago, it's gone up another 0.1% and it's over 5%.

Can you link them again?

I think you've talked me into it. Once I Switch jobs in November, I'll move my Schwab and Ameritrade to Fidelity and that will cut down on 2. My wife's Prudential account takes zero energy. It's on autopilot. So you're probably right, what's 1 more at that point.

Also--while very small--there IS an expense ratio tied to the money market accounts. And that is going to eat into the gains.

Hilariously, I told you I would probably do Laurel Road since I have an account and experience with them. I have an account with their Mohela branch which handles student loans. But to start a HYSA, I'd have to make a new account on the main Laurel Road website. While googling reviews and such--there are a lot of instances of them freezing people's accounts to do a fraud review. One person on Reddit claims they were frozen out for 2 months. I don't plan on needing the money in 2 months, but I don't need/want the anxiety that comes with that.

CIT HYSA -- 5.05%

Have you used them? Looks like they are a subsidiary of First Citizens Bank. I don't know them or their service. I have ~40k at 4.30% now and it might be nice to get an extra $25/month in interest.