Where Do You Park Your Cash These Days?

[pb4uski]

.... if you don't like risk even Apple is paying 4.65%... just now looked it up...

What is the price for that Apple bond that is paying 4.65%?

132.3 for Apple 4.65%...

So while that Apple bond may be paying 4.65% because you have to pay so much more than par to buy it, it is only yielding 2.828%.

 

[JohnnyBGoode]

My easy to access "quick cash" is currently stored in the following:

PRFHX - High Yield Muni Bond Fund - earned 3.77% last quarter mostly in tax free dividends.

Thanks! I have most of my cash in Ally but looking for something with a bit more of a return. Seems like a good risk/reward tradeoff.

 

[Al in Ohio]

2/3rds my cash are in low risk balanced and bond funds by Vanguard. 1/3 in the bank mostly in low interest short term CDs.

 

[RobbieB]

I keep a hundred to 2 in a less than tenth percent MM at the bank. Gonna blow it all this year anyway...

 

[teejayevans]

VUSFX, ultra short term bonds, fairly stable share price.

 

[gauss]

I also just bought Apple bonds, 2.55 coupon, 94.80, 2060, AA+. Nothing to brag about, but better than checking and I have enough higher risk corporates.

Did you look at all at US EE Savings Bonds? They will yield ~ 3.5% if you hold them 20 years -- with the option of cashing them out prior to that without 'principal' loss (after holding a minimum of 1 year).

The downside is that you are limited to $10,000 / year / person investment.

DW and I are building ladders with these with the hopes of augmenting our income down the road.


-gauss

 

[FANOFJESUS]

I keep a hundred to 2 in a less than tenth percent MM at the bank. Gonna blow it all this year anyway...

RobbieB I like you. You get me laughing.

 

[Al in Ohio]

Wow, well maybe this is an age/demographic thing, but I am amazed how few responses have mentioned Bitcoin.

We all know that any cash that is "parked" earns basically zero return (in some cases negative), and will devalue over time. Further, banks can go under, close, limited (or costly to transfer overseas), risk of fraud, tax, confiscation, etc.

In my circle friends are increasingly "parking cash" in Bitcoin. Is then safe, accessible 24/7, does not rely on a bank, free from risk of any bank collapse, confiscation, etc.

Given the future we are heading into, along with possible risk scenarios, I would strongly recommend BTC as a place to put cash.

I see Bitcoin as having the most risk. Banks are guaranteed. What guarantees does Bitcoin have? What assets back up Bitcoin?

 

[mrfeh]

Wow, well maybe this is an age/demographic thing, but I am amazed how few responses have mentioned Bitcoin.

You're kidding, right?

When people ask "where do you put your cash?", they mean "what can I do with money that I will need relatively soon".

Buying BTC would be the equivalent of heading to the local casino.

 

[PatrickA5]

Got several 1.65% Ally CDs coming due this year. I might try to do some bank bonus opportunities, but other than that I'll probably just throw the money back into Ally MM - or maybe another No Penalty CD. With rates at .5%, you're talking just a few bucks a year chasing the extra $$. Not worth it.

 

[RetiredAt55.5]

What assets back up Bitcoin?

Tulips!

 

[zekeboz]

I settled on the following strategy for my short term bucket.

1 - Vanguard MM: 25k
2 - GM Demand Notes (1.5% starting at $500): 25k
3 - Vanguard Short Term Corp Bond: 25k
4 - PIMIX (relatively stable but has a 1% expense ratio): 25k

 

[523HRR]

Synchrony Bank 0.60% APY

 

[slatoid]

TSLA

Long and Strong

 

[24601NoMore]

I settled on the following strategy for my short term bucket.

1 - Vanguard MM: 25k
2 - GM Demand Notes (1.5% starting at $500): 25k
3 - Vanguard Short Term Corp Bond: 25k
4 - PIMIX (relatively stable but has a 1% expense ratio): 25k

Love PIMIX - great long-term performance record and short duration. But candidly don't fully understand all what it can invest in/hold as it's the usual mix of PIMCO black magic. For instance, pulling up the Portfolio holdings on M*, they list the following for Fixed Income:

68.57% Net; 112.65% short; 181.21% long.

HUH?

It does have the ability to employ leverage, mostly via derivatives.

I own several PIMCO funds and they've done quite well over the years, even with the much higher than typical ERs. But truth be told, the PIMCO guys do seem to build portfolios that go way outside the traditional, old boring asset classes of simple bonds and equities into some pretty funky stuff..

Wonder how PIMIX (and my other favorite, PIGIX) will do this year with rates likely to rise. Unlike PIMIX, PIGIX has a pretty long duration (8), which is currently making me pretty nervous..

 

[2177V]

Doesn't matter what cash it is - emergency fund, waiting on the next investment, etc. Doesn't matter how much cash it is - we all have some, even if it is just the daily checking account you use to pay off the credit cards. So the question is, where do you think is the best place to park that stuff to try and earn some return while keeping it safe and easily accessible?

So far, I still cannot bring myself to put more than a small percentage of my total cash in those managed portfolios. So I am looking for other ideas - are there better choices to get higher returns on the cash without the market risk?

I have very little cash except what is minimum necessary in my checking account to maintain my cash flow. If I need some extra cash, I borrow money from my HELOC and pay the low interest rates. I then pay back the HELOC balance using my retirement pay. Here is a link to the Federal Reserve policy on their objective to achieve 2% inflation.

https://www.federalreserve.gov/faqs/economy_14400.htm

Reading between the lines: When the government or any person have a debt and there is 2% inflation, the debt does NOT go up...assuming you are meeting the monthly debt obligations and you are not borrowing more money. The federal government has just borrowed a bunch of money to fund the stimulus...so the government will have a huge debt to pay off.

The government can use 2% inflation to help manage this federal debt because when there is 2% inflation, wages usually go up about 2%. When wages go up about 2%, taxes go up because people are earning 2% more money. Imagine that...a government stealth tax increase with no political consequence. Savers who own a CD at 0.5% may get hurt unless the government raises interest rates. However, raising interest rates will hurt economic growth.

I am facing this dilemma just like everyone else. I decided to cash out some of my IRA and use it as a down payment to buy income producing properties. I have been a landlord for 35+ years so I know how to manage the higher risk. Since I will be in debt just like the federal government, my debt will not increase with inflation. However, my rental income will increase as the tenants gets their 2% pay raises. Debt does not bother me because it is the net worth that is more important to me. If property values also go up 2%, then my net worth increases. As the tenants pay down my monthly debt, part of that payment is equity. This also increases my net worth.

My daughter is a college student and she owns a single family house that is free and clear because she had some help from the Bank of Dad. She is now renting two bedrooms to two other students and learning how to be a landlord. With no mortgage to pay and getting rent income, I expect her to be FIRE at a very young age. She is already talking about buying more income producing properties. Investing in income producing properties is not for everyone...but I acquired landlording experience at a very young age.

 

[TNBigfoot]

With interest rates being what they are, I’ve but -50% of my cash in FJRLX (short tern Bond fund). 30 day yield at 1.9%.

 

[pb4uski]

Do you mean ~50%?

Huh? Fidelity website shows FJRLX 30-day yield at 0.49% and distribution yield at 1.38%. Where did the 1.9% come from?

 

[Helen]

I looked at a couple of investments mentioned here and had some observations. I have some Ally CDs coming due and am looking for a stable place to park the money until I come up with a long term plan. I really don't want to open another bank account.

PRFHX - High Yield Muni Bond Fund

VUBFX - ultra short term bonds

VWINX - Vanguard Wellesley

https://fundresearch.fidelity.com/f...esc/1?order=tickers&tickers=PRFHX,VUBFX,VWINX

1. I'm curious as to why PRFHX dropped in early 2020 when the stock market dumped due to covid. Was it the result of people bailing out of the fund?

2. Based on the chart in the link, it looks like Wellesley has better returns and lower volatility than PRFHX, but PRFHX is much more tax efficient.

3. PRFHX is Federal tax free but has a net E/R of 0.62%

4. VWINX is tax inefficient but has a net E/R of .22%

5. VUBFX preserves capital the best but may not return much more then current CD rates.

 

[Ex Chao]

I've been pleased with BBBMX BBH Limited Duration.

I've been in it for the last 4 years. Over that time it has consistently been in Morningstar's top quartile, with very steady 2-3% total returns. Even for 2020, despite the usual drop wrt the COVID black swan event.

 

[TNBigfoot]

Do you mean ~50%?

Huh? Fidelity website shows FJRLX 30-day yield at 0.49% and distribution yield at 1.38%. Where did the 1.9% come from?

Thx pb4uski.... yes ~50% is correct and I picked out the incorrect number for 30 day yield.

 

[dixonge]

Wow, well maybe this is an age/demographic thing, but I am amazed how few responses have mentioned Bitcoin.

We all know that any cash that is "parked" earns basically zero return (in some cases negative), and will devalue over time. Further, banks can go under, close, limited (or costly to transfer overseas), risk of fraud, tax, confiscation, etc.

In my circle friends are increasingly "parking cash" in Bitcoin. Is then safe, accessible 24/7, does not rely on a bank, free from risk of any bank collapse, confiscation, etc.

Given the future we are heading into, along with possible risk scenarios, I would strongly recommend BTC as a place to put cash.

Some people get it, most don't. Great place for long-term money. The wealthiest man in America even agrees.

 

[NW-Bound]

It's not hard to make more than 10%/year with cash covered puts, although there's a risk of having your stock AA driven up if the market tanks.

Could you suggest a resource for me to learn about cash covered puts? I might be interested in this but have no idea where to start. thanks

You can search the Web using the term "cash covered put" and find numerous articles on this subject. One example is this: https://einvestingforbeginners.com/selling-covered-puts-risks/.

I am a self-taught option seller, and learned by doing it. Slowly and carefully, of course. The idea behind the cash-covered put is simple, but the execution is not. How does one chose an underlying stock to write an option on, and at what strike price and duration? I think everyone who practices this has his own style.

I do options on stocks that I already own. Being a market timer, I either sell covered call on my stocks if I think they are temporarily topping out after a price surge, or sell cash-covered put when the price is in a decline, hopefully short-term because it is not justified by the stock fundamentals in my view.

If I get assigned a put and have to buy the shares, I will immediately look for a chance to write calls on the same shares to lighten up on this position to avoid too much concentration. I currently have about 90 stocks.

 

[Montecfo]

I've been pleased with BBBMX BBH Limited Duration.

I've been in it for the last 4 years. Over that time it has consistently been in Morningstar's top quartile, with very steady 2-3% total returns. Even for 2020, despite the usual drop wrt the COVID black swan event.

That does look fairly interesting.

 

[EA-Sports]

What’s the downside/risk to investing some idle money in bond fund like PRFHX? Assuming this is clearly idle money not part of taxable or non-taxable equity investments. I feel like it’d be a good diversification from my equity and real estate investments.