Personal Finance Advice and Education! (4 Viewers)

[jm192]

I’m trying to keep adding. My dilemma is add in April to catch the 6.89 for 6 months, wait until May to see the new fixed rate, or punt to November and keep the money in Ally.

I'm going to see what shakes out come May 1st.

I-bonds are going to average around 5% over the next year, which isn't awful. But HYSA are getting right around that. If your HYSA is 4.5 or 4.75--you're probably just as good. With I-bonds, you'll end up forfeiting 3 months interest--or you hold it when the intrest rates are low and get a worse return. Either way, that 0.25 to 0.5% isn't going to matter.

And then you don't have the liquidity issues.

Barring some insane fixed rate, I'm probably done with the I-bond game until the next big spike in inflation.

 

[-OZ-]

it was a good run. So if you're less than 5 years, wait until 3 months after the new rate is released so that's the 3 months of interest you lose? This is probably way way too much thought for saving a few bucks.

Just keep in mind you need to wait 3 months after your I bonds fall to the lower rate. If you bought in May or November that’s the same thing but if you bought in January or another month you’ll want to wait 15, 21, or 27 (etc) months after you bought.

I'm just going to wait out the 5 years. No telling what inflation will do and it's good diversification.

Yeah, I think I’ll keep our remaining $40k as an EF for a while at least. These funds double as the EF and as our next vehicle funds (hopefully a year or more away). We had just sold $20k worth and cashed out our Fundrise account ($22k) to pay for the bathroom and put $6500 into my wife’s Roth IRA. I might regret cashing in the Fundrise but it was a PITA for taxes.

 

[Runkle]

Potentially dumb question...

So, if interest rates go up, the value of bond funds usually declines a bit... because they're holding a bunch of bonds at the older rate that get a bit of a haircut. But at some point, those bond funds will start to acquire bonds at the new rate, and should start returning better than they have been over the last 10-15 years, right? And if interest rates start to decline, those bond funds will have more value as they hold the higher rate.

So, is there a good way to determine what bond funds would now be attractive in the new interest rate environment? Are any more focused on the newer issues with the higher rates we're seeing now?

 

[Sand]

Potentially dumb question...

So, if interest rates go up, the value of bond funds usually declines a bit... because they're holding a bunch of bonds at the older rate that get a bit of a haircut. But at some point, those bond funds will start to acquire bonds at the new rate, and should start returning better than they have been over the last 10-15 years, right? And if interest rates start to decline, those bond funds will have more value as they hold the higher rate.

So, is there a good way to determine what bond funds would now be attractive in the new interest rate environment? Are any more focused on the newer issues with the higher rates we're seeing now?

On the first point, yes. From my understanding you have to hold for some reasonable fraction of the duration to see that flip. I don't know enough to answer the second one.

 

[Andrew74]

Potentially dumb question...

So, if interest rates go up, the value of bond funds usually declines a bit... because they're holding a bunch of bonds at the older rate that get a bit of a haircut. But at some point, those bond funds will start to acquire bonds at the new rate, and should start returning better than they have been over the last 10-15 years, right? And if interest rates start to decline, those bond funds will have more value as they hold the higher rate.

So, is there a good way to determine what bond funds would now be attractive in the new interest rate environment? Are any more focused on the newer issues with the higher rates we're seeing now?

Yes to paragraph one.

I have no idea on paragraph two. I guess you could search by funds’ average coupon, but there are so many variables I’m not sure that’s really useful. Filtering by fund flows could work, looking for funds with big inflows. But I’d pose that’s a poor data point since people tend to chase “hot” funds. I think you should just find a fund with a good long-term track record and a low expense ratio. It will work out.

 

[Desert_Power]

So, is there a good way to determine what bond funds would now be attractive in the new interest rate environment? Are any more focused on the newer issues with the higher rates we're seeing now?

It isn't just when the bond is issued, it is when it is purchased by the fund and for what price. You can look at the fund's duration to try and proxy a view on how it responds to rates.

 

[-OZ-]

Potentially dumb question...

So, if interest rates go up, the value of bond funds usually declines a bit... because they're holding a bunch of bonds at the older rate that get a bit of a haircut. But at some point, those bond funds will start to acquire bonds at the new rate, and should start returning better than they have been over the last 10-15 years, right? And if interest rates start to decline, those bond funds will have more value as they hold the higher rate.

So, is there a good way to determine what bond funds would now be attractive in the new interest rate environment? Are any more focused on the newer issues with the higher rates we're seeing now?

Same as others said. No idea on number two. For me that was the early attraction to I bonds - you won’t lose money either due to future higher rates or rising inflation. Of course you don’t really make it (much anyway) either.

 

[shuke]

I got a class action lawsuit notice in the mail this week about people who bought Workhorse Group stock a few years ago. I never personally did but I assume I was notified because it was in a fund I owned? How would I even go about looking for this to confirm my eligibility?

 

[Nugget]

I’m trying to keep adding. My dilemma is add in April to catch the 6.89 for 6 months, wait until May to see the new fixed rate, or punt to November and keep the money in Ally.

I'm going to see what shakes out come May 1st.

I-bonds are going to average around 5% over the next year, which isn't awful. But HYSA are getting right around that. If your HYSA is 4.5 or 4.75--you're probably just as good. With I-bonds, you'll end up forfeiting 3 months interest--or you hold it when the intrest rates are low and get a worse return. Either way, that 0.25 to 0.5% isn't going to matter.

And then you don't have the liquidity issues.

Barring some insane fixed rate, I'm probably done with the I-bond game until the next big spike in inflation.

4.3% - Fixed at 0.9% is higher than I anticipated. I missed the April window, so I think I will try to add between May and October.

 

[-OZ-]

I’m trying to keep adding. My dilemma is add in April to catch the 6.89 for 6 months, wait until May to see the new fixed rate, or punt to November and keep the money in Ally.

I'm going to see what shakes out come May 1st.

I-bonds are going to average around 5% over the next year, which isn't awful. But HYSA are getting right around that. If your HYSA is 4.5 or 4.75--you're probably just as good. With I-bonds, you'll end up forfeiting 3 months interest--or you hold it when the intrest rates are low and get a worse return. Either way, that 0.25 to 0.5% isn't going to matter.

And then you don't have the liquidity issues.

Barring some insane fixed rate, I'm probably done with the I-bond game until the next big spike in inflation.

4.3% - Fixed at 0.9% is higher than I anticipated. I missed the April window, so I think I will try to add between May and October.

Just saw that. The 4.3% isn’t much better than we can get in HYSA or CDs right now But the fixed rate (highest in 16 years) makes these attractive again to build our cash cushion for retirement.
They’re no longer ideal for planned expenses 18-24 months out.
I had bought $20k worth for my then Junior’s college fund (fall and spring) which we’ll probably cash out after 3 months at the 3.4% rate. (Don’t lose the 6%)

 

[Mitchie]

I’m trying to keep adding. My dilemma is add in April to catch the 6.89 for 6 months, wait until May to see the new fixed rate, or punt to November and keep the money in Ally.

I'm going to see what shakes out come May 1st.

I-bonds are going to average around 5% over the next year, which isn't awful. But HYSA are getting right around that. If your HYSA is 4.5 or 4.75--you're probably just as good. With I-bonds, you'll end up forfeiting 3 months interest--or you hold it when the intrest rates are low and get a worse return. Either way, that 0.25 to 0.5% isn't going to matter.

And then you don't have the liquidity issues.

Barring some insane fixed rate, I'm probably done with the I-bond game until the next big spike in inflation.

4.3% - Fixed at 0.9% is higher than I anticipated. I missed the April window, so I think I will try to add between May and October.

fyi Fixed at 0.9% highest since 2007.

 

[Orange&Blue]

I’m trying to keep adding. My dilemma is add in April to catch the 6.89 for 6 months, wait until May to see the new fixed rate, or punt to November and keep the money in Ally.

I'm going to see what shakes out come May 1st.

I-bonds are going to average around 5% over the next year, which isn't awful. But HYSA are getting right around that. If your HYSA is 4.5 or 4.75--you're probably just as good. With I-bonds, you'll end up forfeiting 3 months interest--or you hold it when the intrest rates are low and get a worse return. Either way, that 0.25 to 0.5% isn't going to matter.

And then you don't have the liquidity issues.

Barring some insane fixed rate, I'm probably done with the I-bond game until the next big spike in inflation.

4.3% - Fixed at 0.9% is higher than I anticipated. I missed the April window, so I think I will try to add between May and October.

Just saw that. The 4.3% isn’t much better than we can get in HYSA or CDs right now But the fixed rate (highest in 16 years) makes these attractive again to build our cash cushion for retirement.
They’re no longer ideal for planned expenses 18-24 months out.
I had bought $20k worth for my then Junior’s college fund (fall and spring) which we’ll probably cash out after 3 months at the 3.4% rate. (Don’t lose the 6%)

you don't get that fixed rate if you bought in 18-24 months ago, right?

at what point is it best to liquidate and move to HYSA or something else getting better returns?

 

[jm192]

I’m trying to keep adding. My dilemma is add in April to catch the 6.89 for 6 months, wait until May to see the new fixed rate, or punt to November and keep the money in Ally.

I'm going to see what shakes out come May 1st.

I-bonds are going to average around 5% over the next year, which isn't awful. But HYSA are getting right around that. If your HYSA is 4.5 or 4.75--you're probably just as good. With I-bonds, you'll end up forfeiting 3 months interest--or you hold it when the intrest rates are low and get a worse return. Either way, that 0.25 to 0.5% isn't going to matter.

And then you don't have the liquidity issues.

Barring some insane fixed rate, I'm probably done with the I-bond game until the next big spike in inflation.

4.3% - Fixed at 0.9% is higher than I anticipated. I missed the April window, so I think I will try to add between May and October.

Just saw that. The 4.3% isn’t much better than we can get in HYSA or CDs right now But the fixed rate (highest in 16 years) makes these attractive again to build our cash cushion for retirement.
They’re no longer ideal for planned expenses 18-24 months out.
I had bought $20k worth for my then Junior’s college fund (fall and spring) which we’ll probably cash out after 3 months at the 3.4% rate. (Don’t lose the 6%)

you don't get that fixed rate if you bought in 18-24 months ago, right?

at what point is it best to liquidate and move to HYSA or something else getting better returns?

Keep in mind you get a 3 month penalty if you pull out. I think you probably want to let them ride at 3 months in the lowest interest rate unless you've got something to make up the difference.

 

[-OZ-]

I’m trying to keep adding. My dilemma is add in April to catch the 6.89 for 6 months, wait until May to see the new fixed rate, or punt to November and keep the money in Ally.

I'm going to see what shakes out come May 1st.

I-bonds are going to average around 5% over the next year, which isn't awful. But HYSA are getting right around that. If your HYSA is 4.5 or 4.75--you're probably just as good. With I-bonds, you'll end up forfeiting 3 months interest--or you hold it when the intrest rates are low and get a worse return. Either way, that 0.25 to 0.5% isn't going to matter.

And then you don't have the liquidity issues.

Barring some insane fixed rate, I'm probably done with the I-bond game until the next big spike in inflation.

4.3% - Fixed at 0.9% is higher than I anticipated. I missed the April window, so I think I will try to add between May and October.

Just saw that. The 4.3% isn’t much better than we can get in HYSA or CDs right now But the fixed rate (highest in 16 years) makes these attractive again to build our cash cushion for retirement.
They’re no longer ideal for planned expenses 18-24 months out.
I had bought $20k worth for my then Junior’s college fund (fall and spring) which we’ll probably cash out after 3 months at the 3.4% rate. (Don’t lose the 6%)

you don't get that fixed rate if you bought in 18-24 months ago, right?

at what point is it best to liquidate and move to HYSA or something else getting better returns?

Right - fixed rate remains from the time you buy to sell. Which is a reason the 0.9% makes these compelling again even if slightly lower than a CD right now.
There’s a fair chance we sell the ones bought for college and buy new into our own SSNs fairly quickly after we get past the 6% months.

 

[Sand]

Keep in mind you get a 3 month penalty if you pull out.

But that still leaves you 6 months ahead of the other blokes.

at what point is it best to liquidate and move to HYSA or something else getting better returns?

With the .9% fixed probably when you can generate 1-2% more on a decently long CD.

 

[Steeler]

I bought Ibonds in April 2022. I know Ibonds deposit interest 6 months... when does that happen? Also, if you sell between the 6 months do you get the prorated interest for that period of time?

I know there is a 3 month penalty of interest so I'm trying to figure out if I should sell now and get into a ~4.5% interest MM or wait for the next interest payment.

 

[-OZ-]

I bought Ibonds in April 2022. I know Ibonds deposit interest 6 months... when does that happen? Also, if you sell between the 6 months do you get the prorated interest for that period of time?

I know there is a 3 month penalty of interest so I'm trying to figure out if I should sell now and get into a ~4.5% interest MM or wait for the next interest payment.

If you bought in April 22, you’ll get the November rate until October. So don’t sell until January (To account for the 3 month penalty)

That might be the most confusing thing in this thread

 

[Steeler]

I bought Ibonds in April 2022. I know Ibonds deposit interest 6 months... when does that happen? Also, if you sell between the 6 months do you get the prorated interest for that period of time?

I know there is a 3 month penalty of interest so I'm trying to figure out if I should sell now and get into a ~4.5% interest MM or wait for the next interest payment.

If you bought in April 22, you’ll get the November rate until October. So don’t sell until January (To account for the 3 month penalty)

That might be the most confusing thing in this thread

It actually makes sense, lol. So based on your "don't sell until Jan" comment it seems like they will prorate the interest at the time of the sell and give it to you before applying the 3 month penalty?

 

[-OZ-]

I bought Ibonds in April 2022. I know Ibonds deposit interest 6 months... when does that happen? Also, if you sell between the 6 months do you get the prorated interest for that period of time?

I know there is a 3 month penalty of interest so I'm trying to figure out if I should sell now and get into a ~4.5% interest MM or wait for the next interest payment.

If you bought in April 22, you’ll get the November rate until October. So don’t sell until January (To account for the 3 month penalty)

That might be the most confusing thing in this thread

It actually makes sense, lol. So based on your "don't sell until Jan" comment it seems like they will prorate the interest at the time of the sell and give it to you before applying the 3 month penalty?

It’s not really prorated, the 3 months just doesn’t get added to the value of your bonds until year 5. The interest is added monthly after the 3rd month.

 

[Steeler]

I bought Ibonds in April 2022. I know Ibonds deposit interest 6 months... when does that happen? Also, if you sell between the 6 months do you get the prorated interest for that period of time?

I know there is a 3 month penalty of interest so I'm trying to figure out if I should sell now and get into a ~4.5% interest MM or wait for the next interest payment.

If you bought in April 22, you’ll get the November rate until October. So don’t sell until January (To account for the 3 month penalty)

That might be the most confusing thing in this thread

It actually makes sense, lol. So based on your "don't sell until Jan" comment it seems like they will prorate the interest at the time of the sell and give it to you before applying the 3 month penalty?

It’s not really prorated, the 3 months just doesn’t get added to the value of your bonds until year 5. The interest is added monthly after the 3rd month.

So is this a good way to represent how the interest is calculated? For the first three months I get nothing and then start getting the interest rate from 3 months prior for 6 months?

Interest	Month	Year
	2022​	APR
	2022​	MAY
	2022​	JUN
7.12%​	2022​	JUL
7.12%​	2022​	SEP
7.12%​	2022​	OCT
7.12%​	2022​	NOV
7.12%​	2022​	DEC
7.12%​	2023​	JAN
9.62%​	2023​	FEB
9.62%​	2023​	MAR
9.62%​	2023​	APR
9.62%​	2023​	MAY
9.62%​	2023​	JUN
9.62%​	2023​	JUL
6.48%​	2023​	SEP
6.48%​	2023​	OCT
6.48%​	2023​	NOV
6.48%​	2023​	DEC
6.48%​	2024​	JAN

 

[-OZ-]

I bought Ibonds in April 2022. I know Ibonds deposit interest 6 months... when does that happen? Also, if you sell between the 6 months do you get the prorated interest for that period of time?

I know there is a 3 month penalty of interest so I'm trying to figure out if I should sell now and get into a ~4.5% interest MM or wait for the next interest payment.

If you bought in April 22, you’ll get the November rate until October. So don’t sell until January (To account for the 3 month penalty)

That might be the most confusing thing in this thread

It actually makes sense, lol. So based on your "don't sell until Jan" comment it seems like they will prorate the interest at the time of the sell and give it to you before applying the 3 month penalty?

It’s not really prorated, the 3 months just doesn’t get added to the value of your bonds until year 5. The interest is added monthly after the 3rd month.

So is this a good way to represent how the interest is calculated? For the first three months I get nothing and then start getting the interest rate from 3 months prior for 6 months?

Interest	Month	Year
	2022​	APR
	2022​	MAY
	2022​	JUN
7.12%​	2022​	JUL
7.12%​	2022​	SEP
7.12%​	2022​	OCT
7.12%​	2022​	NOV
7.12%​	2022​	DEC
7.12%​	2023​	JAN
9.62%​	2023​	FEB
9.62%​	2023​	MAR
9.62%​	2023​	APR
9.62%​	2023​	MAY
9.62%​	2023​	JUN
9.62%​	2023​	JUL
6.48%​	2023​	SEP
6.48%​	2023​	OCT
6.48%​	2023​	NOV
6.48%​	2023​	DEC
6.48%​	2024​	JAN

Basically. Until year 5

 

[-OZ-]

More I bond math. Presuming we actually want to keep some long term, I think it makes sense to sell when the ones we hold have hit 3 months at 3.4%, lose that $85 (3 months at $28/m) by selling $10k worth. Then the fixed rate of 0.9% makes an additional $90/year until we sell. Of course you’d need to hold another 12 months. But unless you need those funds this seems like an easy choice.

Am I missing anything?

 

[matttyl]

More I bond math. Presuming we actually want to keep some long term, I think it makes sense to sell when the ones we hold have hit 3 months at 3.4%, lose that $85 (3 months at $28/m) by selling $10k worth. Then the fixed rate of 0.9% makes an additional $90/year until we sell. Of course you’d need to hold another 12 months. But unless you need those funds this seems like an easy choice.

Am I missing anything?

I don’t think you’re missing anything, but is a .9% base enough to go through all that for?

 

[-OZ-]

More I bond math. Presuming we actually want to keep some long term, I think it makes sense to sell when the ones we hold have hit 3 months at 3.4%, lose that $85 (3 months at $28/m) by selling $10k worth. Then the fixed rate of 0.9% makes an additional $90/year until we sell. Of course you’d need to hold another 12 months. But unless you need those funds this seems like an easy choice.

Am I missing anything?

I don’t think you’re missing anything, but is a .9% base enough to go through all that for?

Maybe, maybe not. One of the biggest risks in retirement is inflation. So far I haven’t seen better inflation hedges for the cash bucket part of our portfolio - first two years expenses (minus pensions). To lock in better than inflation seems a decent plan. But this is only going to be 5-10% of our retirement portfolio. Plus larger expenses between 1-5 years away, if the market has dropped (or not recovered by then)

 

[Juxtatarot]

It wasn’t too long ago that a guaranteed 0.9% rate (plus the expectation for more) was pretty fantastic.

 

[matttyl]

More I bond math. Presuming we actually want to keep some long term, I think it makes sense to sell when the ones we hold have hit 3 months at 3.4%, lose that $85 (3 months at $28/m) by selling $10k worth. Then the fixed rate of 0.9% makes an additional $90/year until we sell. Of course you’d need to hold another 12 months. But unless you need those funds this seems like an easy choice.

Am I missing anything?

I don’t think you’re missing anything, but is a .9% base enough to go through all that for?

Maybe, maybe not. One of the biggest risks in retirement is inflation. So far I haven’t seen better inflation hedges for the cash bucket part of our portfolio - first two years expenses (minus pensions). To lock in better than inflation seems a decent plan. But this is only going to be 5-10% of our retirement portfolio. Plus larger expenses between 1-5 years away, if the market has dropped (or not recovered by then)

Sounds good. You and I are just at different point in life, and our savings plans. So your above makes perfect sense.

 

[shuke]

Hey guys I wanted to get some opinions on how safe you all view different options to put cash in right now. For example, my dilemma is I watch cash of mine sit in a large bank MM account right now making 2.5% because I feel a level of safety knowing it’s insured and if I had to there’s a branch down the street I could go to. Meanwhile my Vanguard MM is yielding over 4%. No brainer right, yet I worry going all in at Vanguard as it’s off in cyber space somewhere. I know this is ridiculous but wanted to get some other views when you have time. How much safety os needed really?

I feel like if Vanguard MM loses money, the world would be so ****ed it doesn’t really matter anymore.

Indeed, Vanguard Federal MM’s invest’s in short term U.S. government securities. You can invest directly in Treasuries if you want and cut out the middle man but MM saves time to buy and sell the individual securities.

If either defaults it will only be because the world went topsy-turvy.

There are some HY savings accounts out there that will be FDIC insured and pay a percentage point or more than 2.5% right now if someone still wants that safety.

Reading back on this thread, I current have my cash in my bank's MM but it is about 3%. I'm looking at Vanguard, but they have multiple options. What is best way to choose?

Fund	Strategy	Initial investment	Average 7-day SEC yield as-of May 05, 2023	Expense ratio***
VMRXX Vanguard Cash Reserves Federal Money Market Fund Admiral Shares	Short-term U.S. government securities	$3,000	4.91%	0.10%
VMFXX Vanguard Federal Money Market Fund	Short-term U.S. government securities	$3,000	4.89%	0.11%
VUSXX Vanguard Treasury Money Market Fund	Short-term U.S. Treasuries	$3,000	4.71%	0.09%
VMSXX Vanguard Municipal Money Market Fund	Short-term tax-exempt securities	$3,000	3.39%	0.15%
VCTXX Vanguard California Municipal Money Market Fund	Short-term California municipal securities	$3,000	2.86%	0.16%
VYFXX Vanguard New York Municipal Money Market Fund	Short-term New York municipal securities	$3,000	3.33%	0.16%

 

[gianmarco]

Hey guys I wanted to get some opinions on how safe you all view different options to put cash in right now. For example, my dilemma is I watch cash of mine sit in a large bank MM account right now making 2.5% because I feel a level of safety knowing it’s insured and if I had to there’s a branch down the street I could go to. Meanwhile my Vanguard MM is yielding over 4%. No brainer right, yet I worry going all in at Vanguard as it’s off in cyber space somewhere. I know this is ridiculous but wanted to get some other views when you have time. How much safety os needed really?

I feel like if Vanguard MM loses money, the world would be so ****ed it doesn’t really matter anymore.

Indeed, Vanguard Federal MM’s invest’s in short term U.S. government securities. You can invest directly in Treasuries if you want and cut out the middle man but MM saves time to buy and sell the individual securities.

If either defaults it will only be because the world went topsy-turvy.

There are some HY savings accounts out there that will be FDIC insured and pay a percentage point or more than 2.5% right now if someone still wants that safety.

Reading back on this thread, I current have my cash in my bank's MM but it is about 3%. I'm looking at Vanguard, but they have multiple options. What is best way to choose?

Fund	Strategy	Initial investment	Average 7-day SEC yield as-of May 05, 2023	Expense ratio***
VMRXX Vanguard Cash Reserves Federal Money Market Fund Admiral Shares	Short-term U.S. government securities	$3,000	4.91%	0.10%
VMFXX Vanguard Federal Money Market Fund	Short-term U.S. government securities	$3,000	4.89%	0.11%
VUSXX Vanguard Treasury Money Market Fund	Short-term U.S. Treasuries	$3,000	4.71%	0.09%
VMSXX Vanguard Municipal Money Market Fund	Short-term tax-exempt securities	$3,000	3.39%	0.15%
VCTXX Vanguard California Municipal Money Market Fund	Short-term California municipal securities	$3,000	2.86%	0.16%
VYFXX Vanguard New York Municipal Money Market Fund	Short-term New York municipal securities	$3,000	3.33%	0.16%

There are cash savings options close to or at 5%. Why go with a substantially lower rate or are you looking to invest it instead?

 

[shuke]

Hey guys I wanted to get some opinions on how safe you all view different options to put cash in right now. For example, my dilemma is I watch cash of mine sit in a large bank MM account right now making 2.5% because I feel a level of safety knowing it’s insured and if I had to there’s a branch down the street I could go to. Meanwhile my Vanguard MM is yielding over 4%. No brainer right, yet I worry going all in at Vanguard as it’s off in cyber space somewhere. I know this is ridiculous but wanted to get some other views when you have time. How much safety os needed really?

I feel like if Vanguard MM loses money, the world would be so ****ed it doesn’t really matter anymore.

Indeed, Vanguard Federal MM’s invest’s in short term U.S. government securities. You can invest directly in Treasuries if you want and cut out the middle man but MM saves time to buy and sell the individual securities.

If either defaults it will only be because the world went topsy-turvy.

There are some HY savings accounts out there that will be FDIC insured and pay a percentage point or more than 2.5% right now if someone still wants that safety.

Reading back on this thread, I current have my cash in my bank's MM but it is about 3%. I'm looking at Vanguard, but they have multiple options. What is best way to choose?

Fund	Strategy	Initial investment	Average 7-day SEC yield as-of May 05, 2023	Expense ratio***
VMRXX Vanguard Cash Reserves Federal Money Market Fund Admiral Shares	Short-term U.S. government securities	$3,000	4.91%	0.10%
VMFXX Vanguard Federal Money Market Fund	Short-term U.S. government securities	$3,000	4.89%	0.11%
VUSXX Vanguard Treasury Money Market Fund	Short-term U.S. Treasuries	$3,000	4.71%	0.09%
VMSXX Vanguard Municipal Money Market Fund	Short-term tax-exempt securities	$3,000	3.39%	0.15%
VCTXX Vanguard California Municipal Money Market Fund	Short-term California municipal securities	$3,000	2.86%	0.16%
VYFXX Vanguard New York Municipal Money Market Fund	Short-term New York municipal securities	$3,000	3.33%	0.16%

There are cash savings options close to or at 5%. Why go with a substantially lower rate or are you looking to invest it instead?

Just looking to put my cash somewhere. Show me the way.

 

[Juxtatarot]

I’ve had VMRXX for a long time. I don’t know why it would be better or worse than VMFXX. (Other than it’s slightly higher current yield.)

 

[Mitchie]

Hey guys I wanted to get some opinions on how safe you all view different options to put cash in right now. For example, my dilemma is I watch cash of mine sit in a large bank MM account right now making 2.5% because I feel a level of safety knowing it’s insured and if I had to there’s a branch down the street I could go to. Meanwhile my Vanguard MM is yielding over 4%. No brainer right, yet I worry going all in at Vanguard as it’s off in cyber space somewhere. I know this is ridiculous but wanted to get some other views when you have time. How much safety os needed really?

I feel like if Vanguard MM loses money, the world would be so ****ed it doesn’t really matter anymore.

Indeed, Vanguard Federal MM’s invest’s in short term U.S. government securities. You can invest directly in Treasuries if you want and cut out the middle man but MM saves time to buy and sell the individual securities.

If either defaults it will only be because the world went topsy-turvy.

There are some HY savings accounts out there that will be FDIC insured and pay a percentage point or more than 2.5% right now if someone still wants that safety.

Reading back on this thread, I current have my cash in my bank's MM but it is about 3%. I'm looking at Vanguard, but they have multiple options. What is best way to choose?

Fund	Strategy	Initial investment	Average 7-day SEC yield as-of May 05, 2023	Expense ratio***
VMRXX Vanguard Cash Reserves Federal Money Market Fund Admiral Shares	Short-term U.S. government securities	$3,000	4.91%	0.10%
VMFXX Vanguard Federal Money Market Fund	Short-term U.S. government securities	$3,000	4.89%	0.11%
VUSXX Vanguard Treasury Money Market Fund	Short-term U.S. Treasuries	$3,000	4.71%	0.09%
VMSXX Vanguard Municipal Money Market Fund	Short-term tax-exempt securities	$3,000	3.39%	0.15%
VCTXX Vanguard California Municipal Money Market Fund	Short-term California municipal securities	$3,000	2.86%	0.16%
VYFXX Vanguard New York Municipal Money Market Fund	Short-term New York municipal securities	$3,000	3.33%	0.16%

Municipal is tax free from federal taxes and then from the state if you live in the state, so can calc a tax equiv rate by dividing the rate by 1-tax rate. Depends on your tax rate but yields will end up pretty similar.

 

[gianmarco]

Hey guys I wanted to get some opinions on how safe you all view different options to put cash in right now. For example, my dilemma is I watch cash of mine sit in a large bank MM account right now making 2.5% because I feel a level of safety knowing it’s insured and if I had to there’s a branch down the street I could go to. Meanwhile my Vanguard MM is yielding over 4%. No brainer right, yet I worry going all in at Vanguard as it’s off in cyber space somewhere. I know this is ridiculous but wanted to get some other views when you have time. How much safety os needed really?

I feel like if Vanguard MM loses money, the world would be so ****ed it doesn’t really matter anymore.

Indeed, Vanguard Federal MM’s invest’s in short term U.S. government securities. You can invest directly in Treasuries if you want and cut out the middle man but MM saves time to buy and sell the individual securities.

If either defaults it will only be because the world went topsy-turvy.

There are some HY savings accounts out there that will be FDIC insured and pay a percentage point or more than 2.5% right now if someone still wants that safety.

Reading back on this thread, I current have my cash in my bank's MM but it is about 3%. I'm looking at Vanguard, but they have multiple options. What is best way to choose?

Fund	Strategy	Initial investment	Average 7-day SEC yield as-of May 05, 2023	Expense ratio***
VMRXX Vanguard Cash Reserves Federal Money Market Fund Admiral Shares	Short-term U.S. government securities	$3,000	4.91%	0.10%
VMFXX Vanguard Federal Money Market Fund	Short-term U.S. government securities	$3,000	4.89%	0.11%
VUSXX Vanguard Treasury Money Market Fund	Short-term U.S. Treasuries	$3,000	4.71%	0.09%
VMSXX Vanguard Municipal Money Market Fund	Short-term tax-exempt securities	$3,000	3.39%	0.15%
VCTXX Vanguard California Municipal Money Market Fund	Short-term California municipal securities	$3,000	2.86%	0.16%
VYFXX Vanguard New York Municipal Money Market Fund	Short-term New York municipal securities	$3,000	3.33%	0.16%

There are cash savings options close to or at 5%. Why go with a substantially lower rate or are you looking to invest it instead?

Just looking to put my cash somewhere. Show me the way.

The way

 

[shuke]

Hey guys I wanted to get some opinions on how safe you all view different options to put cash in right now. For example, my dilemma is I watch cash of mine sit in a large bank MM account right now making 2.5% because I feel a level of safety knowing it’s insured and if I had to there’s a branch down the street I could go to. Meanwhile my Vanguard MM is yielding over 4%. No brainer right, yet I worry going all in at Vanguard as it’s off in cyber space somewhere. I know this is ridiculous but wanted to get some other views when you have time. How much safety os needed really?

I feel like if Vanguard MM loses money, the world would be so ****ed it doesn’t really matter anymore.

Indeed, Vanguard Federal MM’s invest’s in short term U.S. government securities. You can invest directly in Treasuries if you want and cut out the middle man but MM saves time to buy and sell the individual securities.

If either defaults it will only be because the world went topsy-turvy.

There are some HY savings accounts out there that will be FDIC insured and pay a percentage point or more than 2.5% right now if someone still wants that safety.

Reading back on this thread, I current have my cash in my bank's MM but it is about 3%. I'm looking at Vanguard, but they have multiple options. What is best way to choose?

Fund	Strategy	Initial investment	Average 7-day SEC yield as-of May 05, 2023	Expense ratio***
VMRXX Vanguard Cash Reserves Federal Money Market Fund Admiral Shares	Short-term U.S. government securities	$3,000	4.91%	0.10%
VMFXX Vanguard Federal Money Market Fund	Short-term U.S. government securities	$3,000	4.89%	0.11%
VUSXX Vanguard Treasury Money Market Fund	Short-term U.S. Treasuries	$3,000	4.71%	0.09%
VMSXX Vanguard Municipal Money Market Fund	Short-term tax-exempt securities	$3,000	3.39%	0.15%
VCTXX Vanguard California Municipal Money Market Fund	Short-term California municipal securities	$3,000	2.86%	0.16%
VYFXX Vanguard New York Municipal Money Market Fund	Short-term New York municipal securities	$3,000	3.33%	0.16%

There are cash savings options close to or at 5%. Why go with a substantially lower rate or are you looking to invest it instead?

Just looking to put my cash somewhere. Show me the way.

The way

Is that a variable rate?

What are pros/cons of a savings account and money market fund?

 

[Juxtatarot]

Hey guys I wanted to get some opinions on how safe you all view different options to put cash in right now. For example, my dilemma is I watch cash of mine sit in a large bank MM account right now making 2.5% because I feel a level of safety knowing it’s insured and if I had to there’s a branch down the street I could go to. Meanwhile my Vanguard MM is yielding over 4%. No brainer right, yet I worry going all in at Vanguard as it’s off in cyber space somewhere. I know this is ridiculous but wanted to get some other views when you have time. How much safety os needed really?

I feel like if Vanguard MM loses money, the world would be so ****ed it doesn’t really matter anymore.

Indeed, Vanguard Federal MM’s invest’s in short term U.S. government securities. You can invest directly in Treasuries if you want and cut out the middle man but MM saves time to buy and sell the individual securities.

If either defaults it will only be because the world went topsy-turvy.

There are some HY savings accounts out there that will be FDIC insured and pay a percentage point or more than 2.5% right now if someone still wants that safety.

Reading back on this thread, I current have my cash in my bank's MM but it is about 3%. I'm looking at Vanguard, but they have multiple options. What is best way to choose?

Fund	Strategy	Initial investment	Average 7-day SEC yield as-of May 05, 2023	Expense ratio***
VMRXX Vanguard Cash Reserves Federal Money Market Fund Admiral Shares	Short-term U.S. government securities	$3,000	4.91%	0.10%
VMFXX Vanguard Federal Money Market Fund	Short-term U.S. government securities	$3,000	4.89%	0.11%
VUSXX Vanguard Treasury Money Market Fund	Short-term U.S. Treasuries	$3,000	4.71%	0.09%
VMSXX Vanguard Municipal Money Market Fund	Short-term tax-exempt securities	$3,000	3.39%	0.15%
VCTXX Vanguard California Municipal Money Market Fund	Short-term California municipal securities	$3,000	2.86%	0.16%
VYFXX Vanguard New York Municipal Money Market Fund	Short-term New York municipal securities	$3,000	3.33%	0.16%

There are cash savings options close to or at 5%. Why go with a substantially lower rate or are you looking to invest it instead?

Just looking to put my cash somewhere. Show me the way.

The way

Is that a variable rate?

What are pros/cons of a savings account and money market fund?

Variable at the whim of the bank.

My recommendation is to have both a high rate bank account and a money market account (such as with Vanguard) so you can easily switch back and forth when the rates change.

 

[-OZ-]

Hey guys I wanted to get some opinions on how safe you all view different options to put cash in right now. For example, my dilemma is I watch cash of mine sit in a large bank MM account right now making 2.5% because I feel a level of safety knowing it’s insured and if I had to there’s a branch down the street I could go to. Meanwhile my Vanguard MM is yielding over 4%. No brainer right, yet I worry going all in at Vanguard as it’s off in cyber space somewhere. I know this is ridiculous but wanted to get some other views when you have time. How much safety os needed really?

I feel like if Vanguard MM loses money, the world would be so ****ed it doesn’t really matter anymore.

Indeed, Vanguard Federal MM’s invest’s in short term U.S. government securities. You can invest directly in Treasuries if you want and cut out the middle man but MM saves time to buy and sell the individual securities.

If either defaults it will only be because the world went topsy-turvy.

There are some HY savings accounts out there that will be FDIC insured and pay a percentage point or more than 2.5% right now if someone still wants that safety.

Reading back on this thread, I current have my cash in my bank's MM but it is about 3%. I'm looking at Vanguard, but they have multiple options. What is best way to choose?

Fund	Strategy	Initial investment	Average 7-day SEC yield as-of May 05, 2023	Expense ratio***
VMRXX Vanguard Cash Reserves Federal Money Market Fund Admiral Shares	Short-term U.S. government securities	$3,000	4.91%	0.10%
VMFXX Vanguard Federal Money Market Fund	Short-term U.S. government securities	$3,000	4.89%	0.11%
VUSXX Vanguard Treasury Money Market Fund	Short-term U.S. Treasuries	$3,000	4.71%	0.09%
VMSXX Vanguard Municipal Money Market Fund	Short-term tax-exempt securities	$3,000	3.39%	0.15%
VCTXX Vanguard California Municipal Money Market Fund	Short-term California municipal securities	$3,000	2.86%	0.16%
VYFXX Vanguard New York Municipal Money Market Fund	Short-term New York municipal securities	$3,000	3.33%	0.16%

There are cash savings options close to or at 5%. Why go with a substantially lower rate or are you looking to invest it instead?

Just looking to put my cash somewhere. Show me the way.

The way

I’d probably go that way but M1 just opened their savings accounts at 5% for M1+ members. There’s an annual fee but I like the other features anyway so I’ll happily go this way.

 

[gianmarco]

Hey guys I wanted to get some opinions on how safe you all view different options to put cash in right now. For example, my dilemma is I watch cash of mine sit in a large bank MM account right now making 2.5% because I feel a level of safety knowing it’s insured and if I had to there’s a branch down the street I could go to. Meanwhile my Vanguard MM is yielding over 4%. No brainer right, yet I worry going all in at Vanguard as it’s off in cyber space somewhere. I know this is ridiculous but wanted to get some other views when you have time. How much safety os needed really?

I feel like if Vanguard MM loses money, the world would be so ****ed it doesn’t really matter anymore.

Indeed, Vanguard Federal MM’s invest’s in short term U.S. government securities. You can invest directly in Treasuries if you want and cut out the middle man but MM saves time to buy and sell the individual securities.

If either defaults it will only be because the world went topsy-turvy.

There are some HY savings accounts out there that will be FDIC insured and pay a percentage point or more than 2.5% right now if someone still wants that safety.

Reading back on this thread, I current have my cash in my bank's MM but it is about 3%. I'm looking at Vanguard, but they have multiple options. What is best way to choose?

Fund	Strategy	Initial investment	Average 7-day SEC yield as-of May 05, 2023	Expense ratio***
VMRXX Vanguard Cash Reserves Federal Money Market Fund Admiral Shares	Short-term U.S. government securities	$3,000	4.91%	0.10%
VMFXX Vanguard Federal Money Market Fund	Short-term U.S. government securities	$3,000	4.89%	0.11%
VUSXX Vanguard Treasury Money Market Fund	Short-term U.S. Treasuries	$3,000	4.71%	0.09%
VMSXX Vanguard Municipal Money Market Fund	Short-term tax-exempt securities	$3,000	3.39%	0.15%
VCTXX Vanguard California Municipal Money Market Fund	Short-term California municipal securities	$3,000	2.86%	0.16%
VYFXX Vanguard New York Municipal Money Market Fund	Short-term New York municipal securities	$3,000	3.33%	0.16%

There are cash savings options close to or at 5%. Why go with a substantially lower rate or are you looking to invest it instead?

Just looking to put my cash somewhere. Show me the way.

The way

Is that a variable rate?

What are pros/cons of a savings account and money market fund?

It can change, but it's only gone up over the last almost 2 years. And it's never huge jumps. It's not going to go from 4.75 to 3.0. It might go to 4.6, then 4.5, then 4.35 over the course of a few months, for example. It's a savings account, so it's straightforward and very liquid with no fees or anything else needed.

 

[Nugget]

Hey guys I wanted to get some opinions on how safe you all view different options to put cash in right now. For example, my dilemma is I watch cash of mine sit in a large bank MM account right now making 2.5% because I feel a level of safety knowing it’s insured and if I had to there’s a branch down the street I could go to. Meanwhile my Vanguard MM is yielding over 4%. No brainer right, yet I worry going all in at Vanguard as it’s off in cyber space somewhere. I know this is ridiculous but wanted to get some other views when you have time. How much safety os needed really?

I feel like if Vanguard MM loses money, the world would be so ****ed it doesn’t really matter anymore.

Indeed, Vanguard Federal MM’s invest’s in short term U.S. government securities. You can invest directly in Treasuries if you want and cut out the middle man but MM saves time to buy and sell the individual securities.

If either defaults it will only be because the world went topsy-turvy.

There are some HY savings accounts out there that will be FDIC insured and pay a percentage point or more than 2.5% right now if someone still wants that safety.

Reading back on this thread, I current have my cash in my bank's MM but it is about 3%. I'm looking at Vanguard, but they have multiple options. What is best way to choose?

Fund	Strategy	Initial investment	Average 7-day SEC yield as-of May 05, 2023	Expense ratio***
VMRXX Vanguard Cash Reserves Federal Money Market Fund Admiral Shares	Short-term U.S. government securities	$3,000	4.91%	0.10%
VMFXX Vanguard Federal Money Market Fund	Short-term U.S. government securities	$3,000	4.89%	0.11%
VUSXX Vanguard Treasury Money Market Fund	Short-term U.S. Treasuries	$3,000	4.71%	0.09%
VMSXX Vanguard Municipal Money Market Fund	Short-term tax-exempt securities	$3,000	3.39%	0.15%
VCTXX Vanguard California Municipal Money Market Fund	Short-term California municipal securities	$3,000	2.86%	0.16%
VYFXX Vanguard New York Municipal Money Market Fund	Short-term New York municipal securities	$3,000	3.33%	0.16%

There are cash savings options close to or at 5%. Why go with a substantially lower rate or are you looking to invest it instead?

Just looking to put my cash somewhere. Show me the way.

The way

Is that a variable rate?

What are pros/cons of a savings account and money market fund?

It can change, but it's only gone up over the last almost 2 years. And it's never huge jumps. It's not going to go from 4.75 to 3.0. It might go to 4.6, then 4.5, then 4.35 over the course of a few months, for example. It's a savings account, so it's straightforward and very liquid with no fees or anything else needed.

It’s tied to the rate increases we have been seeing from the Fed for the most part. They are an aggressive bank and are paying slightly more than other online banks. They were paying 2.7% back in October. Everyone is trying to hold on to their deposits these days.

 

[STEADYMOBBIN 22]

Daughter has saved almost 15k. We’ve convinced her to put it in a Roth.

Ours is through work so we have no clue where to start one.

Suggestions?

 

[New Binky the Doormat]

Daughter has saved almost 15k. We’ve convinced her to put it in a Roth.

Ours is through work so we have no clue where to start one.

Suggestions?

Vanguard ...Fidelity would be my next choice.

 

[matttyl]

Daughter has saved almost 15k. We’ve convinced her to put it in a Roth.

Ours is through work so we have no clue where to start one.

Suggestions?

She won’t be able to put the whole amount in at once, though. Why are you suggesting Roth?

 

[SFBayDuck]

Daughter has saved almost 15k. We’ve convinced her to put it in a Roth.

Ours is through work so we have no clue where to start one.

Suggestions?

She won’t be able to put the whole amount in at once, though. Why are you suggesting Roth?

Yup, $6,500 annual limit and must have earned income in that year to match.

Should be able to open a Roth pretty much anywhere - I have investment accounts at Etrade and Fidelity, and both offer Roths. I opened one at Fidelity for my daughter a couple of years ago, a "Roth IRA for Minor" that I need to figure out how to convert now that she's no longer <18.

 

[STEADYMOBBIN 22]

Daughter has saved almost 15k. We’ve convinced her to put it in a Roth.

Ours is through work so we have no clue where to start one.

Suggestions?

She won’t be able to put the whole amount in at once, though. Why are you suggesting Roth?

I’m a Neanderthal. I don’t know anything about any of this stuff. I just put in as much as I can every year and I don’t look at it.

Any suggestions would be extremely helpful.

 

[shuke]

Daughter has saved almost 15k. We’ve convinced her to put it in a Roth.

Ours is through work so we have no clue where to start one.

Suggestions?

She won’t be able to put the whole amount in at once, though. Why are you suggesting Roth?

I’m a Neanderthal. I don’t know anything about any of this stuff. I just put in as much as I can every year and I don’t look at it.

Any suggestions would be extremely helpful.

Vanguard is pretty easy, but keep in mind these accounts expect you to know the rules on what you are eligible for.

 

[Nugget]

Daughter has saved almost 15k. We’ve convinced her to put it in a Roth.

Ours is through work so we have no clue where to start one.

Suggestions?

She won’t be able to put the whole amount in at once, though. Why are you suggesting Roth?

I’m a Neanderthal. I don’t know anything about any of this stuff. I just put in as much as I can every year and I don’t look at it.

Any suggestions would be extremely helpful.

How old is your daughter? I just opened a teen account through Fidelity for my son - it was pretty easy. My daughter has her Roth through Schwab.

 

[Sand]

Daughter has saved almost 15k. We’ve convinced her to put it in a Roth.

Ours is through work so we have no clue where to start one.

Suggestions?

She won’t be able to put the whole amount in at once, though. Why are you suggesting Roth?

I’m a Neanderthal. I don’t know anything about any of this stuff. I just put in as much as I can every year and I don’t look at it.

Any suggestions would be extremely helpful.

Suggestion: Keep doing this.

 

[STEADYMOBBIN 22]

Daughter has saved almost 15k. We’ve convinced her to put it in a Roth.

Ours is through work so we have no clue where to start one.

Suggestions?

She won’t be able to put the whole amount in at once, though. Why are you suggesting Roth?

I’m a Neanderthal. I don’t know anything about any of this stuff. I just put in as much as I can every year and I don’t look at it.

Any suggestions would be extremely helpful.

How old is your daughter? I just opened a teen account through Fidelity for my son - it was pretty easy. My daughter has her Roth through Schwab.

18

 

[Sand]

So half of US workers drain their 401ks when changing jobs. Oof. I'm sure some of those are by necessity and some by hedonism. We wonder why folks hit 65 with nothing saved. This stuff is why.

Nearly half of Americans cash out 401(k)s when changing jobs

Almost half of Americans have withdrawn funds from their 401(k) plans after leaving jobs, with some completely draining their balances. But doing so before reaching retirement age can trigger taxes and penalties. Here’s what you need to know.

www.foxbusiness.com

 

[The Z Machine]

So half of US workers drain their 401ks when changing jobs. Oof. I'm sure some of those are by necessity and some by hedonism. We wonder why folks hit 65 with nothing saved. This stuff is why.

Nearly half of Americans cash out 401(k)s when changing jobs

Almost half of Americans have withdrawn funds from their 401(k) plans after leaving jobs, with some completely draining their balances. But doing so before reaching retirement age can trigger taxes and penalties. Here’s what you need to know.

www.foxbusiness.com

Are they accounting for rollovers? I mean technically that's a full withdrawal and transfer to a new 401k account.

 

[matttyl]

It’s also 41%, so not quite what I’d call half. Also, depending on the company match, it might be a better place to have emergency funds for a job loss than a traditional savings account. I mean ideally a person would have both, but if you only have $200 at the end of the month to put somewhere, it might be matched in a 401k or get nearly 0 interest in a savings account.

 

[The Z Machine]

It’s also 41%, so not quite what I’d call half. Also, depending on the company match, it might be a better place to have emergency funds for a job loss than a traditional savings account. I mean ideally a person would have both, but if you only have $200 at the end of the month to put somewhere, it might be matched in a 401k or get nearly 0 interest in a savings account.

Not sure people are thinking that deeply. Rather, there are lots of folks that simply have no capacity to voluntarily save money for retirement. Whether through circumstances, willpower, or something else.

I think that retirement savings beyond SS should somehow be compulsory, like jury service.