Cash held in MMs like SPAXX - where next ?

[target2019]

This conversation helps.

I've discovered we don't know when we'll need the money. Others here can use the 4-5% interest for a few years. Our needs are met, portfolio is large enough, and so on.

I'm not convinced that SCHD is a good substitute for fixed income asset(s).

 

[PatrickA5]

I am in a high tax state so always looking at avoiding those taxes. Just keep an eye on repurchase agreements in this fund (currently only 2.8% but previously over 40% in the spring). Depending on how long they did that, they can overcome short term diversions as for tax purposes, it only matters what % they publish for their weighted holdings all year at EOY (for example, 2022 here). For simplicity, I just bought FDLXX. Great article on this subject by WSJ earlier this year:

https://www.wsj.com/personal-finance/taxes/bonds-bond-funds-state-taxes-cd066239

+1 I'm guesstimating around 80% for 2023.

 

[gauss]

Rates may start drifting down later in 2024, but will not drop nearly as fast as they rose.

Like gasoline prices?

 

[audreyh1]

How fast rates drop really depends on how fast the economy cools or some other financial crisis that forces the Fed’s hand.

 

[LiveBelowMeans]

I like the inflation protection of hard assets. An interesting company that owns and operates ships is SFL. Current yield just under 9%. Another stock I like for yield and possible price appreciation is PFE, yield just under 6%. JMHO

 

[jazz4cash]

I like the inflation protection of hard assets. An interesting company that owns and operates ships is SFL. Current yield just under 9%. Another stock I like for yield and possible price appreciation is PFE, yield just under 6%. JMHO

Doesn’t seem like a substitute for cash.

 

[Montecfo]

I like the inflation protection of hard assets. An interesting company that owns and operates ships is SFL. Current yield just under 9%. Another stock I like for yield and possible price appreciation is PFE, yield just under 6%. JMHO

PFE has been a good place for price depreciation this year.

 

[GenXguy]

Like gasoline prices?

Still paying $3.19 here. Would like to see them drop down closer to $2 like pre-pandemic, but I don't see it happening.

 

[Tracer]

My checking account at Fidelity is currently earning 5.3% (FDRXX current 7 day yield). Nice return, but that's my checking account. I always like to keep my emergency funds and cash for things I'm saving for on short term basis at anywhere that will return the highest yield possible no matter what level interest rates are at and where they can remain fully liquid. I've always had luck finding those places here....

https://www.doctorofcredit.com/high-interest-savings-to-get/

This site seems to dig up obscure places available nationally paying high yield savings and CD's that most other lists don't. I'm currently earning 5.5% APY on those funds in a HYSA. I don't know how long that rate will last but it's nice while it does.

 

[rayvt]

FDRXX is 5.03%, not 5.3%. Only 32% in Treasuries, so might as well go for FDLXX, 5.01% but 100% in Treasuries.

 

[Tracer]

FDRXX is 5.03%, not 5.3%. Only 32% in Treasuries, so might as well go for FDLXX, 5.01% but 100% in Treasuries.

You're right.. 5.03%

My bad. I copied it wrong.

 

[hotwired]

Finally

These rates and inverted yield curve have pushed many folks into MM funds and short term FI. I think many will be very disappointed when these rate fall eventually. Instead of using MM funds just for liquidity, folks are piling into these as a primary component of their FI allocation because the rates are so attractive. It’s not to late to extend maturities or better yet setup a ladder. I have nearly zero in MM accounts. I expect rates will fall substantially but wont go back to zero.

This is been my thinking all along, it's like those money markets are a dangerous teaser. I've been trying to find things that healed even 1% point less but go out 1 to 5 years. If short-term rates do drop which they're almost certainly going to, even a two year treasury note will get a little bump and value whereas a money market will not. I've got about $600 in my money market and everything else is in brokered cds, t-bills and Treasury bonds. I even took a small percentage of my assets and did a 30-year zero, just for a little bump in the event of dropping long-term rates, and the worst case of that is that I'll get four and a half percent for 30 years. So it's like a win-win, maybe like a grand slam slash base hit but still win-win!

 

[razztazz]

These rates and inverted yield curve have pushed many folks into MM funds and short term FI. I think many will be very disappointed when these rate fall eventually. Instead of using MM funds just for liquidity, folks are piling into these as a primary component of their FI allocation because the rates are so attractive. It’s not to late to extend maturities or better yet setup a ladder. I have nearly zero in MM accounts. I expect rates will fall substantially but wont go back to zero.

If people can pile info MMF's because they look good they can pile out of them when something else becomes good. There's no better vehicle for this than MMF's. I see no indication that people have tied MMF around their necks like an albatross.

 

[imbatman]

I view MMF / core position as solely idle money waiting for the next best thing. And for that, IMO it all depends on how much work you want to do for how much extra return. I don't jump around MMF funds on a daily basis for like a 0.10% yield difference (and that is ANNUALIZED, don't forget).....but you start getting close to 1% difference and higher (factoring tax rates and yield), then I start finding that to be worth a little effort. But my value of my time is different from others.........

 

[rayvt]

I got tired of jumping around for yield and opening new bank accounts, switching money back and forth, and of course not bothering for just a few basis points.

Not directly a MMF and you can't buy in a brokerage account, but take a look at raisin.com. It's kind of a clearing house and one-stop shopping for MM accounts, CDs, and no-penalty CDs.

 

[dmpi]

I'm just piling on to my MMF because so far it has beat or matched what I did buying CDs. The real question is: How long will these good MMF rates last? My thinking is it'll be longer than you think. The goverment needs to borrow money to operate. That's not going to stop soon.

 

[Lakedog]

I'm just piling on to my MMF because so far it has beat or matched what I did buying CDs. The real question is: How long will these good MMF rates last? My thinking is it'll be longer than you think. The goverment needs to borrow money to operate. That's not going to stop soon.

Same here, I think rates will stay up longer than most expect. I am mostly in SUTXX, recently sold some property (house/land) so have a fairly large amount there currently.

 

[dobig]

With this little rebound in the 10 year started moving some funds into PFF and PFXF to lock in some nice 6% income. Really like WFCPRL and BACPRL but decided to minimize risk with corporate preferred etfs instead.

 

[Koolau]

I never seem to have any extra cash to invest. I could move some money around from other investments, but I seem to burn through cash like it's gasoline. I have cash-like investments (like MYGA and SPDA) but loose cash seems to be "used" rather than invested for interest. YMMV

 

[Surewhitey]

We have a boatload of CD's and MM. About to roll in a chunk into 5&6 yr CD's paying 4&4.1%.

My past year average of all cash equivalent is in the 5% range. Mostly 5 yr CD's.

 

[jazz4cash]

We have a boatload of CD's and MM. About to roll in a chunk into 5&6 yr CD's paying 4&4.1%.
.

Sounds callable. If not, where? Those maturities are what I want too!

 

[mickeyd]

I used to chase MMF/LTSA/CD rates for fun and profit but now that the VG MMF is yielding 5.3% I will be parked there for a spell I expect. I see CDs @ 5.5% and 5.8% (varying length) advertised locally.

 

[Surewhitey]

Sounds callable. If not, where? Those maturities are what I want too!

Not callables @ Marcus bank (Goldman Sachs).

Fidelity is a now under 4% for the 5 yr...

 

[pb4uski]

^^^ Checked it out. High-yield savings look competitive with brokerage MMFs but not enough to justify switching. The biggest gap in my ladder is 2027-2029 and their long term CDs are not at all attractive.

 

[Surewhitey]

^^^ Checked it out. High-yield savings look competitive with brokerage MMFs but not enough to justify switching. The biggest gap in my ladder is 2027-2029 and their long term CDs are not at all attractive.

We don't switch, we just move $$ to the highest when we have a CD or Treasury mature. Right now, callable CD's are attractive, but probably short-sighted. Marcus beats Fido on longer term by a bit, enough to transfer it anyhoo.

Having 2 or 3 big bank/brokerage accounts makes sense to us for this reason.