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Where do You Park Your "Dry Powder" Cash?
Old 08-23-2019, 08:57 AM   #1
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Where do You Park Your "Dry Powder" Cash?

If you are an investor that buys on corrections (or dips), where do you keep your "dry powder" cash?

If you have some cash on the sidelines waiting for the next recession, where do you keep it?
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Old 08-23-2019, 09:01 AM   #2
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Vanguard Prime Money Market Fund, VMMXX.
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Old 08-23-2019, 09:02 AM   #3
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If you are an investor that buys on corrections (or dips), where do you keep your "dry powder" cash?

If you have some cash on the sidelines waiting for the next recession, where do you keep it?
I keep the dry powder for buying stocks on dips in the brokerage money market.

For emergency fund and generally the cash portion of my assets, I keep that in Goldman Marcus money market account. At least it has been getting 2-2.5%.
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Old 08-23-2019, 09:12 AM   #4
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I no longer keep any significant cash allocated to dry powder after determining it was a losing strategy. Time in the market beats timing the market.

https://earlyretirementnow.com/2017/...-cash-cushion/
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Old 08-23-2019, 09:40 AM   #5
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I plow just about every dime I don't need into the market immediately when it is available. #accumulation

My ER fund sitting in Vanguard VMMXX. Not much either > 3.5% of total portfolio.

I don't wast time timing the market. Sometimes I dream about what that might look like and realize it could easily become a nightmare.

With 1 exception, I did it once, just to try it. Lol, yes I am THAT guy!
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Old 08-23-2019, 09:47 AM   #6
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We keep our dry stash ($250k) in cash in VMMXX. seems like a lot, but I like to have the cash available to by cars, and other big ticket items as well as funding the next few years without using any other nest egg funds.
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Old 08-23-2019, 09:51 AM   #7
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I have about 10% of my stash in PMMF. I wish it yielded more than 2.2% but not today.
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Old 08-23-2019, 10:17 AM   #8
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Vanguard Prime Money Market Fund, VMMXX.
Ditto.

Post age 70 mine is involuntary RMD.

heh heh heh - I agonize between 'blow that dough' and 'try to run up the score'. Ying and Yang wise.
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Old 08-23-2019, 10:25 AM   #9
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I'm at Fidelity. I've got mine parked in Fidelity's Government Money Market Fund (SPAXX). This is the default position at Fidelity. Mostly US government securities it had a recent 7 day yield of 1.96%

There is also the Fidelity Prime Money Market Fund (SPRXX). Mostly invests in CD's (36%) and financial company's commercial paper (31%). It had a recent 7 day yield of 2.08%.

Moving into a little more risk, there is Fidelity Conservative Income Bond Fund. Recent 30 day yield of 2.29%. Basically ultra short term corporate bonds (mostly from banks) that are rated:
AAA...1.4%
AA....25.4%
A......35.1%
BBB.. 4.0%

Next move would be a low duration bond ETF, like Fidelity's FLDR. Had a recent 30 day yield of 2.66%.

Thinking I should be at least in Fidelity's Prime Money Market fund, SPRXX, but why not squeeze out a little more return with the next couple of options?
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Old 08-23-2019, 12:24 PM   #10
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I don't keep cash as dry powder, but I have plenty of assets in bond funds. Cash doesn't do much, but just look: Today bond funds are UP over 0.4%. Can you earn 0.4% in one day in cash? I don't think so.

I will probably sell some bond fund shares on Monday to buy equities. This weekend I think lots of folks will decide to sell equities, so that Monday will be a good day for buying equities for the Tuesday dead-cat bounce.
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Where do You Park Your "Dry Powder" Cash?
Old 08-23-2019, 12:48 PM   #11
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Where do You Park Your "Dry Powder" Cash?

I have >5% in MM at 2%. Iím fine with this AA and gives me flexibility in downturn. Also have some JPM, which pays 3% dividend. I know dividends get folks riled up, but I like some from steady payers as alternative to MM/Bonds in this market.
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Old 08-23-2019, 12:53 PM   #12
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I'm at Fidelity. I've got mine parked in Fidelity's Government Money Market Fund (SPAXX). This is the default position at Fidelity.
Same here. Non-zero risk, but pretty low.
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Old 08-23-2019, 01:02 PM   #13
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I don't keep cash as dry powder, but I have plenty of assets in bond funds. Cash doesn't do much, but just look: Today bond funds are UP over 0.4%. Can you earn 0.4% in one day in cash? I don't think so.

I will probably sell some bond fund shares on Monday to buy equities. This weekend I think lots of folks will decide to sell equities, so that Monday will be a good day for buying equities for the Tuesday dead-cat bounce.
The owning of bond funds brings up a point related to moving quickly to sell them and get into equities. If I'm in a bond fund and I want to buy equities I must first sell the bond fund, which will settle sometime after the close of the trading day and then buy the equities the next day.

However, if I sell a Fidelity bond fund and I buy a Fidelity equity fund or ETF I believe it would happen on the same day. So long as I stay within the Fidelity family of funds.

Is that correct?
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Old 08-23-2019, 01:07 PM   #14
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I don't keep cash as dry powder, but I have plenty of assets in bond funds. Cash doesn't do much, but just look: Today bond funds are UP over 0.4%. Can you earn 0.4% in one day in cash? I don't think so.
When I came over to Fidelity about 18 months ago, I put a chunk of money into Fidelity Total Bond fund in my IRA, basically as a safer place to put money and as a way to get some monthly income while avoiding taxation. Now I see that the fund has returned 10.0% over those past 18 months (or 6.67% annually) and is at 8.97% Y-T-D. That is outstanding!
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Old 08-23-2019, 01:20 PM   #15
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I no longer keep any significant cash allocated to dry powder after determining it was a losing strategy. Time in the market beats timing the market.

https://earlyretirementnow.com/2017/...-cash-cushion/
Same here, since 1993.
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Old 08-24-2019, 01:39 PM   #16
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My brokerage offers several money market funds that pay from 2% to 2.2%. The maturity is usually one month to as short as less than 7 days.
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Old 08-24-2019, 01:51 PM   #17
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Old 08-24-2019, 02:40 PM   #18
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The owning of bond funds brings up a point related to moving quickly to sell them and get into equities. If I'm in a bond fund and I want to buy equities I must first sell the bond fund, which will settle sometime after the close of the trading day and then buy the equities the next day.

However, if I sell a Fidelity bond fund and I buy a Fidelity equity fund or ETF I believe it would happen on the same day. So long as I stay within the Fidelity family of funds.

Is that correct?
One can exchange Mutual Funds without waiting for them to settle as long as one exchanges within the same family: FXNAX -> FSKAX for instance. The exchange happens at the next NAV calculation which is typically close-of-market.

One can also sell a bond ETF and immediately buy another ETF in most instances: AGG -> ITOT. The reason "most" and not "all" is one must avoid something called "free riding", too.
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Old 08-24-2019, 02:49 PM   #19
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I'm at Fidelity. I've got mine parked in Fidelity's Government Money Market Fund (SPAXX). This is the default position at Fidelity. Mostly US government securities it had a recent 7 day yield of 1.96%

There is also the Fidelity Prime Money Market Fund (SPRXX). Mostly invests in CD's (36%) and financial company's commercial paper (31%). It had a recent 7 day yield of 2.08%.

Moving into a little more risk, there is Fidelity Conservative Income Bond Fund. Recent 30 day yield of 2.29%. Basically ultra short term corporate bonds (mostly from banks) that are rated:
AAA...1.4%
AA....25.4%
A......35.1%
BBB.. 4.0%

Next move would be a low duration bond ETF, like Fidelity's FLDR. Had a recent 30 day yield of 2.66%.

Thinking I should be at least in Fidelity's Prime Money Market fund, SPRXX, but why not squeeze out a little more return with the next couple of options?
FZDXX has a 2.23% yield at Fidelity, but need 100k.
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Old 08-24-2019, 03:20 PM   #20
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We have a chunk sitting in a default Vanguard sweep account - looks like it has the same 7 day SEC yield as the other VG money market account right now. That will cover some buy orders we have in should the market drop like it did 12/24/18. Have a silly amount in short term CDs and savings accounts due to mature before the end of the year. I mean a really silly amount. Those bring in about 2.15% average. Some 5 year CDs at 3.5%.

I am reminded on a fairly regular basis that back in 2007 I opted to buy 6.25% CDs from PenFed for a 3 year term, not 6 or 7 or 10. Will I feel bad if interest rates continue to drop? I don't think so. Something to be said for having an available stack of cash.
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