Tranquility Base
Recycles dryer sheets
- Joined
- Nov 18, 2017
- Messages
- 104
I am curious whether anyone uses a second taxable brokerage account as a substitute for, or in addition to, a savings account.
Here’s what I have in mind. Assume I want to keep $100,000 in a savings account for monthly bills, a rainy day, emergencies and lumpy expenses. I don’t think I will need the entire $100,000 to be immediately available as it would be in a savings account, even a savings account at an online bank which is paying a rate of interest more respectable than the interest rate at a big national bricks-and-mortar bank. I would like to keep part of the $100,000, let’s say $30,000, in some very short-term CDs or Treasury Notes (maybe some Treasury Bills) if I can get a slightly higher yield. I’m not going to worry about every last penny. But as time permits, it can be fun to secure a slightly higher yield. I don’t intend to spend a great deal of time chasing a slightly higher yield. Also, I appreciate the difference between funds in a money market account and funds in a CD or US Treasury.
The problem with using the main brokerage account for this hybrid savings account substitute is that the $100,000, presumably held in some combination of money market funds, CDs, US Treasuries, etc., is going to get lost among everything else in the regular brokerage account which includes other money market funds, CDs, US Treasuries of similar or longer terms. There doesn’t seem to be an easy and practical way for me to segregate or separately track the $100,000 that I am treating as my savings account, and I don’t want to create a separate spreadsheet to do so. I’ve seen in promotions that some online banks offer some kind of bucket feature. I have not looked at any of them, but I presume this feature lets me separately track portions of the savings account that I want to allocate for something (perhaps a trip, a new vehicle, child’s wedding). I haven’t seen anything at Schwab or Fidelity that would allow me to create some kind of separate bucket within a taxable brokerage account.
[FONT="]I’m still noodling this idea but it’s the best solution I’ve come up with so far. Has anyone else tried this? Does anyone see anything terribly wrong with this approach or have a better system? Maybe I’d just be spending a lot of time just to earn an additional couple hundred bucks. But I’d probably have some fun doing so.[/FONT]
Here’s what I have in mind. Assume I want to keep $100,000 in a savings account for monthly bills, a rainy day, emergencies and lumpy expenses. I don’t think I will need the entire $100,000 to be immediately available as it would be in a savings account, even a savings account at an online bank which is paying a rate of interest more respectable than the interest rate at a big national bricks-and-mortar bank. I would like to keep part of the $100,000, let’s say $30,000, in some very short-term CDs or Treasury Notes (maybe some Treasury Bills) if I can get a slightly higher yield. I’m not going to worry about every last penny. But as time permits, it can be fun to secure a slightly higher yield. I don’t intend to spend a great deal of time chasing a slightly higher yield. Also, I appreciate the difference between funds in a money market account and funds in a CD or US Treasury.
The problem with using the main brokerage account for this hybrid savings account substitute is that the $100,000, presumably held in some combination of money market funds, CDs, US Treasuries, etc., is going to get lost among everything else in the regular brokerage account which includes other money market funds, CDs, US Treasuries of similar or longer terms. There doesn’t seem to be an easy and practical way for me to segregate or separately track the $100,000 that I am treating as my savings account, and I don’t want to create a separate spreadsheet to do so. I’ve seen in promotions that some online banks offer some kind of bucket feature. I have not looked at any of them, but I presume this feature lets me separately track portions of the savings account that I want to allocate for something (perhaps a trip, a new vehicle, child’s wedding). I haven’t seen anything at Schwab or Fidelity that would allow me to create some kind of separate bucket within a taxable brokerage account.
[FONT="]I’m still noodling this idea but it’s the best solution I’ve come up with so far. Has anyone else tried this? Does anyone see anything terribly wrong with this approach or have a better system? Maybe I’d just be spending a lot of time just to earn an additional couple hundred bucks. But I’d probably have some fun doing so.[/FONT]