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Where Do You Park Your Cash These Days?
Old 02-04-2021, 12:28 PM   #1
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Where Do You Park Your Cash These Days?

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?

Interest rates on savings have been a joke for years; most Money Market funds are barely any better. Cash at a brokerage seems to be just as bad.

For the last 20 years, I have mostly kept my cash at either Ally Demand Notes (was GMAC) or Ford Interest Advantage - depending on which one was paying the best interest at the time. Those accounts mostly operated like MM, even though they did not technically have that designation. The risk is that those accounts are not insured, but the return was significantly above the other insured options - e.g., during the majority of 2018 & 2019, Ford was paying around 2.5%, but that really started dropping throughout 2020. Now Ally Demand Notes has closed shop, and FIA is down to 1.0%, and I have about $300K that I want better returns on.

I have started putting some of it in no-fee managed portfolios at Ally Invest. I know that these accounts have MUCH more market volatility, but they do seem to allow for easy and almost instant access when I want to pull some cash out. And the no-fee options keep 30% of the investment in cash, which provides some additional protection from market swings along with my ability to choose lower risk portfolios. Of course, that 30% is still only earning 1%, so that is just a trade-off for not paying management fees on the account. And that cash is not really "available" in the traditional sense - if I want to pull $10,000 out during a down market, the portfolio will sell $7,000 of investments low and then reduce the cash balance by $3,000, compared to the ideal situation where I would just use available cash and leave all the investments alone waiting for the recovery.

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?
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Old 02-04-2021, 12:40 PM   #2
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DW still has a "stable-value" fund available in her 401k (Roth & Traditional).

It seemed like it was yielding over 1% last year, but I haven't checked recently.

Here are the current figures from the 401 web site as listed today.

Quote:
Jan 0.12%
Q4 0.48%
1Y 2.04%
-gauss
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Old 02-04-2021, 12:49 PM   #3
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DW still has a "stable-value" fund available in her 401k (Roth & Traditional).

It seemed like it was yielding over 1% last year, but I haven't checked recently.

Here are the current figures from the 401 web site as listed today.



-gauss
Thanx - that is about what I expected. I was getting way more than that with Ford last year, and even today they are still paying a full 1%.
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Old 02-04-2021, 12:50 PM   #4
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... I have about $300K that I want better returns on.
Me too. Welcome to the club.

Quote:
Originally Posted by Mauser View Post
.... are there better choices to get higher returns on the cash without the market risk?
Well you could take credit risk instead of market risk. How about some Argentine bonds?
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Old 02-04-2021, 07:35 PM   #5
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money market funds in banks, "real" and online.
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Old 02-04-2021, 09:12 PM   #6
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high yield savings account
retail bank
credit union
brokerage core position (money market)
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Old 02-04-2021, 09:56 PM   #7
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Years ago I used money markets from Ford, GMAC, Caterpillar & Discover then I got busted for exceeding the withdrawal limits.

Now I'm selling puts on stocks I would not mind owning. If the shares are put to me I hold until time is right to sell. If they expire worthless or bought back at a profit then repeat the exercise.

2 months expenses sits in a schwab checking account.
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Old 02-04-2021, 11:11 PM   #8
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Discover Bank online savings account... drifted down to 0.45%

Dominion Energy Reliability Investment Notes and Toyota IncomeDriver Notes.... can deposit or withdraw at will like a savings account but obviously not FDIC insured... sound similar to your Ally Demand Notes... currently paying 1.5%

I have a lot parked in Vanguard Short-Term Federal Fund Admiral Shares (VSGDX) awaiting investment in equities... 30 Day SEC yield is 0.72%... distribution yield is 0.46%... portfolio yield to maturity is 0.60%... ER is 0.10%.
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Old 02-05-2021, 06:05 AM   #9
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I notice that Discover CD rates are down to .5% for up to 24 months. I think Toyota IncomeDriver might be in our future. Thanks for the tip.

Have to give a lot of thought to several piles of cash and what purpose they serve.
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Where Do You Park Your Cash These Days?
Old 02-05-2021, 06:19 AM   #10
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Where Do You Park Your Cash These Days?

And at yields this low, the expense ratios and fees often most.y wipe out any small advantage of one instrument over another, some of which are more complicated than others. We parked the cash we need soon for our house remodel in savings and otherwise stay fully invested, except for $3,000 or so walking around money in a money market. We also keep one month’s expenses in our checking account as a cash flow buffer.
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Old 02-05-2021, 06:20 AM   #11
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We have about $600k in Ally and NFCU CDs maturing over the next three months. We’re considering putting much of that in a bond ladder. Another $730k is sitting in a USAA Fixed Retirement Annuity that is paying a little over 2%. We’ve had it long enough that there are no penalties for early withdrawal and there are no fees. So we can access it at any time.
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Old 02-05-2021, 07:13 AM   #12
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Ally.

I don't consider I Bonds cash, but others might. While they aren't completely liquid, you'd be getting whatever the inflation rate is.
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Old 02-05-2021, 07:52 AM   #13
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I'm considering EE Savings Bonds for the very bottom of the keel... while they only pay 0.1% they are guaranteed to double in value after 20 years... the government tops up the interest in year 20 if needed.. which increases the 20 year return to 3.53% annually. Only problem is that you can only purchase $10k annually... $20k for a couple.
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Old 02-05-2021, 08:01 AM   #14
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I keep my cash in an American Express Bank savings account at 0.5%. I don't carry much cash, about mid five figure level.
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Old 02-05-2021, 08:20 AM   #15
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Personally, I've given up chasing around a few basis points for my cash. I tell myself the low return is the price I pay for FDIC safety; kind of like paying for insurance.
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Old 02-05-2021, 08:27 AM   #16
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I've learned what stable coins are (crypto with their value pegged to USD - or other fiat) and tried lending platforms: Celsius, BlockFi and Nexo. It's been working perfectly fine so I split my cash into 3 piles and am happy to be collecting 8-10% paid either daily, weekly or monthly. I have treasuries in my IRA but that's garbage - they just lose value. My only hope for those rebounding are negative interest rates. Not an impossibility given that Bank of England is openly floating that - US might be next.
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Old 02-05-2021, 08:28 AM   #17
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I'm considering EE Savings Bonds for the very bottom of the keel... while they only pay 0.1% they are guaranteed to double in value after 20 years... the government tops up the interest in year 20 if needed.. which increases the 20 year return to 3.53% annually. Only problem is that you can only purchase $10k annually... $20k for a couple.

3.53% annually if I have the patience actually sounds pretty good. But that is a lot of patience at 61 years old. It wouldn't hurt to just throw 20k in there for the DW and me. Although she is 65. Maybe it could be our burial fund. On the other hand it would probably just be better if I just throw that 20k in an index fund and act like it is not even there and check it in 20 years.
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Old 02-05-2021, 09:00 AM   #18
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Thanx for all the replies so far - sounds like there is really not much better than what I have been using. The Ford Interest Advantage account has check writing and electronic bill pay with no fees, so I may just stick with that, along with some of it in the Ally Invest Managed Portfolio.

I certainly do not NEED to earn more on this cash, but I'm the sort of person who gets bugged seeing it sit doing nothing at all (might as well be in a coffee can under the bed).

I am intrigued in the possibilities of the Dominion Energy and Toyota accounts that pb4uski mentioned - if they are still paying 1.5% today, then that is a BIG jump over the current 1.0% at Ford - I'll have to see what their history looks like.
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Old 02-05-2021, 09:01 AM   #19
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I'm using Ally bank's 11 month no penalty CD's at 0.50%

It's FDIC insured, totally liquid, and it won't go any lower for 11 months.
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Old 02-05-2021, 09:05 AM   #20
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Another with our cash at Ally, down to 0.5% today. I’ve been meaning to deploy some of it in CDs or bond funds but those aren’t no brainers to me at the moment...
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