Where to park brokerage cash?

[COcheesehead]

The 20% return on CLM is a joke. Almost 10% of it is return of capital, more than 6% is a long term capitol gain. Less than 2% is the actual dividend. It also is DOWN 8.5% over the last 52 weeks and sells at an almost 8% premium.
There are a whole lot better investments than this one.

 

[Lawrencewendall]

20% return? What's the catch?

I haven't seen one but if someone else sees it, let me know. I've been in CLM since 2014. My 23k has grown to 54k dripping the dividends. Almost seems too good to be true but the monthly dividends say otherwise. Please school me.

 

[Lawrencewendall]

The 20% return on CLM is a joke. Almost 10% of it is return of capital, more than 6% is a long term capitol gain. Less than 2% is the actual dividend. It also is DOWN 8.5% over the last 52 weeks and sells at an almost 8% premium.
There are a whole lot better investments than this one.

Such as?

 

[Lawrencewendall]

From Fido

 

[COcheesehead]

Such as?

BGAFX. Up 45% YTD. 18% lifetime return.

 

[Lawrencewendall]

BGAFX. Up 45% YTD. 18% lifetime return.

With a monthly dividend of 0.0021 and share price of $41.56? My calculator can't even go down that far. No thanks. Looking for income, not "potential" value.

 

[COcheesehead]

With a monthly dividend of 0.0021 and share price of $41.56? My calculator can't even go down that far. No thanks. Looking for income, not "potential" value.

You brag about CLM, when its just the same old dog with different fleas.
There’s no free lunch with closed end funds.


You do realize that most of the income from CLM is return of your own money, correct?

 

[Lawrencewendall]

You brag about CLM, when its just the same old dog with different fleas.
There’s no free lunch with closed end funds.


You do realize that most of the income from CLM is return of your own money, correct?

I've already showed that the account is TWICE my money. What am I missing? Please school me. I am not 'bragging" but just wanted to help others. I'll shut up now and let others figure how to double their investments in 6 years.

 

[COcheesehead]

I've already showed that the account is TWICE my money. What am I missing? Please school me. I am not 'bragging" but just wanted to help others. I'll shut up now and let others figure how to double their investments in 6 years.

If you owned BGAFX you would have doubled your money in 4 years.
I’ll leave you alone now. You like it and that is all that matters.

 

[Golden sunsets]

I've already showed that the account is TWICE my money. What am I missing? Please school me. I am not 'bragging" but just wanted to help others. I'll shut up now and let others figure how to double their investments in 6 years.

The subject of this thread is where to hold brokerage cash. Placing "cash" in a closed end mutual fund, which invests in equities, returns capital as part of it's dividend and may, for all I know use leverage, is not a substitute for cash.

 

[gcgang]

I’m thinking of moving some of my brokerage cash into Tesla. The car, not the stock. Oh, this isn’t the blow that dough thread?

 

[phil1ben]

Marcus as of 8/4 now at 0.80 and Synchrony at 0.75 for "High" Yield Savings.

 

[jazz4cash]

Marcus as of 8/4 now at 0.80 and Synchrony at 0.75 for "High" Yield Savings.

Dang. I just put in for the .10 bonus at Marcus late last night and it was 1%.

 

[Lawrencewendall]

The subject of this thread is where to hold brokerage cash. Placing "cash" in a closed end mutual fund, which invests in equities, returns capital as part of it's dividend and may, for all I know use leverage, is not a substitute for cash.

Sorry. I was replying to Target2019 and a roll-over IRA.

 

[target2019]

Sorry. I was replying to Target2019 and a roll-over IRA.

I saw that. I don't know enough about CEF's to make a decision. What I recall from past discussions on M* is that the timing of CEF purchase is very important. Ok, that's true about many investments, I'll admit.

For another example, a person might hold $10K of CSCO. It pays 3%. I cheer about it, ignoring total return and all else, and mention it as a cash holding area. I will likely get challenged about that, and should.

 

[RE2Boys]

For about 18 months I would move brokerage cash into a ETF short term corporate bonds VCSH, yield back then was over 2%. Worked quite well as could sell it anytime the market was open if I wanted to purchase other investments.........until it no longer worked without significantly greater risk. In March 2020 the corporate bond markets locked up and the ETF became mis-priced and I could not get out without taking unacceptably losses. The Fed stepped in buying corporate paper and the market return to "normal" in a couple of weeks. The ETF is currently showing a 7 day SEC yield of 0.99%. I'm a bit wary of using this vehicle in place of a MM, now excess brokerage cash is moved in/out of a linked on-line high yield savings account.

 

[ownyourfuture]

Had been doing one year ladder CDs.
That's not an option anymore.
Good God!

 

[pb4uski]

From Fido

Thanks for sharing your Fido account numbers with us.

 

[pb4uski]

I have not sold any as I cannot find a better place to put the money and CLM is currently over 8% of my portfolio! Again, it's 20.44% AFTER the fees so I don't care what their fees are. Personal Capital keeps griping about CLM's fees, "My what big fees you have" but when I look at the dividends, it's equivalent to missing one month of dividends but I get to pocket the other 11 months. I may be missing something but currently, it's a no brainer to me. Even if they slash their dividends by 50%, it's still 10% returns. I don't think any of the companies they hold are going away and with the current virus/economic situation, I see them holding up if not improving IMO. This is my only exposure to large cap. I use Fido so there is no purchase/sell fee and no minimum. I have CLM shares in 3 different tax deferred accounts. In the account with the largest holdings, I bought at $23.93 in 2014 but with distributions, my cost basis is now $6.25 with current price at $10.86.

$1.84 of the $2.46 of per share of CLM distributions that you received in 2019 were return of capital... in other words, principal. This fund seems to have a history of returning capital to shareholders.

As an contrasting example, $1.406 of the $1.406 of distributions paid to Vanguard Total Stock Admiral share owners in 2019 was from income and none was return of capital.

 

[Golden sunsets]

My problem is our Cash in our IRA's. Can't move that money in and out of HY Savings. This is money that should be invested in FI per our AA, but doing so at this time makes no sense.

 

[RE2Boys]

I have recently used VSGDX Short Term Federal Funds Fund in my IRA, currently 30 day SEC yields is just a bit over 1%

 

[Gotadimple]

My problem is our Cash in our IRA's. Can't move that money in and out of HY Savings. This is money that should be invested in FI per our AA, but doing so at this time makes no sense.

The issue with interest rates today is that HY savings are only about 1%. If you can find a bond fund at your brokers', you may do nearly as well as a HY.

- Rita

 

[Golden sunsets]

Thanks. I need to do some research. I had the funds in an ultra short term 1-3 mo treasury fund(BIL), but the ROR collapsed. I recently moved it back into TMCXX, a fund I've used in the past, which mimicks HY savings, but that rate too is now way below the 1% HY, that internet banks are offering. Even those 1%'s are declining.

I caught a blip on the early morning news this AM reporting that the Fed plans to increase inflation. I wonder if their actions will have any impact on rates.

We have so much cash because I was using a system of setting up a new rung on a 10 year bond ladder each year, roughly equivalent to our RMD's for that year. At the moment we have bonds, all of which are up substantially, maturing through 2026. About 3 years ago, I was unable to find good rates on ten year bonds so I stuck the money in 1 year CD's or treasuries, hoping for higher 10 year rates the next year. Fast forward 3 years and here I am with a pile of cash. Had I held my nose and bought 10 year bonds at the prevailing rate at the time, we'd be much better off today.

 

[Rosedala]

I have about $50K in my brokerage account that is just sitting in cash. I had it invested in munis until they started tanking, and got out (I know, bad idea). This needs to be relatively "safe" money, but not as safe as money market. I was looking at TIPs, but it seems like everyone is expecting inflation and TIPs have gotten relatively expensive. Any suggestions?

Hi, if you haven't heard about depositaccounts.com, you may want to explore its content. They really comb their sources well and pass on to us all the info. On 2 occasions when everyone was getting (like today) under one percent....I got a 5 yr. CD for 6%. Granted, it doesn't happen often but they'll present to you the absolutely highest interest CDs, MMs, Savings, etc. that they find. For parking your money, of course it's MMs. Good luck!

 

[aja8888]

Hi, if you haven't heard about depositaccounts.com, you may want to explore its content. They really comb their sources well and pass on to us all the info. On 2 occasions when everyone was getting (like today) under one percent....I got a 5 yr. CD for 6%. Granted, it doesn't happen often but they'll present to you the absolutely highest interest CDs, MMs, Savings, etc. that they find. For parking your money, of course it's MMs. Good luck!

Where did you get a 6% CD? I haven't seen one of those in 10 years.